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McAnally v. Marugg

United States District Court, Ninth Circuit

July 3, 2013

ERNEST L. MARUGG, et al., Defendants.


THOMAS J. WHELAN, District Judge.

Pending before the Court is a motion to dismiss the First Amended Complaint ("FAC" [Doc. 21]) filed by Defendants County of San Diego, Dominic Dugo, Bonnie Dumanis, and David Lattuca (the "Supervisor Defendants"). Plaintiff Tamara McAnally opposes.

The Court decides the matter on the papers submitted and without oral argument. See Civ. L. R. 7.1(d.1). For the reasons discussed below, the Court DENIES the motion [Doc. 25].


The following facts are taken from the FAC.

In December 2002, Plaintiff Tamara McAnally and her husband, Jon McAnally, formed a construction company, McAnally Inc., dba JDM Enterprises ("JDM"). ( FAC, ¶ 21.) JDM did general contracting work, and also acted as a subcontractor on jobs for other general contractors. ( Id. ) Tamara was JDM's Secretary. ( Id. )

In 2001, JDM worked as a framing subcontractor for Landco Construction Inc. ( Id., ¶ 23.) Eventually, a dispute arose between JDM and Landco that resulted in litigation. ( Id. ) Tamara contends that in retribution for the litigation, Landco filed a complaint with the San Diego District Attorney's office alleging, among other things, that JDM and its officers, including Tamara and Jon, were mischaracterizing their employees' status in order to defraud their workers compensation insurance carrier, the State Compensation Insurance Fund ("SCIF").[1] ( Id., ¶¶ 22, 24.) Tamara contends the allegations were false. ( Id., ¶ 22.)

As a result of Landco's allegations, SCIF conducted an audit, in conjunction with the D.A.'s Office. ( FAC, ¶ 25.) Defendant Ernest L. Marugg was the Deputy D.A. in charge of the matter, and Defendant Alexander Lutzi was the investigator working for Marugg. ( Id. ) The audit was completed on March 6, 2003. ( Id., ¶ 25.) Despite the lack of evidence of intentional wrongdoing, Tamara and Jon were indicted for insurance and tax fraud. ( Id., ¶ 33.)

On April 19, 2004, Tamara and Jon pled guilty to conspiracy to commit insurance fraud. ( FAC, ¶¶ 43, 44.) Tamara contends the guilty pleas were entered in response to the threat that they could go to prison if convicted, and because Marugg represented that JDM and Jon would be allowed to retain their contractor license. ( Id., ¶ 42.) Jon's plea agreement, therefore, provided:

#2. I have not been induced to enter this plea by any promise or representation of any kind, EXCEPT:.... The District Attorney will cooperate with Contractors State License Board to allow Mr. McAnally to maintain his contractors license.
* * *
#16. Could lose Contractors License ONLY if prison sentence.

( Id., ¶ 49.) The plea agreement also required Tamara and Jon to pay $334, 940.30 in restitution to SCIF, and $87, 156.69 in restitution to EDD, in monthly installments of $300 and $100, respectively. ( Id., ¶¶ 45, 46.)

Notwithstanding the plea agreement, Tamara contends that Marugg essentially feigned cooperating with the Contractors State License Board (the "Board") to assist Jon in maintaining his contractor license. Instead, Marugg used his position, and exploited the McAnally's dependence on him, to pursue a sexual relationship with Tamara. As a result, from 2004 through 2009, Jon's license was continually placed on hold, causing significant financial problems for the McAnallys.

In late 2009, after Tamara had repeatedly refused Marugg's pleas to start a sexual relationship, Marugg stopped responding to Tamara's requests for assistance with the Board regarding Jon's contractor license. ( FAC, ¶¶ 79-84.) Then in December 2009, Tamara received a call from Kim Alvarez, who identified herself as Marugg's girlfriend, and demanded to know why Tamara was calling Marugg. ( Id., ¶ 85.) During the conversation, Tamara learned that Marugg had also prosecuted Kim and her ex-husband. ( Id., ¶ 85.) In subsequent conversations, Kim told Tamara that Marugg admitted having numerous relationships with female defendants, both during and after he prosecuted them for insurance fraud. ( Id., ¶ 86.)

Based on the information Tamara learned from Kim, Tamara began investigating Marugg. ( FAC, ¶ 90.) Tamara contends that she learned that in 2001, Marugg's supervisors received a complaint that he was having an affair with Defendant Bradley, who was in charge of investigating insurance fraud allegations on behalf of SCIF. ( Id., ¶ 91.) She also learned that between 2001 and 2009, Marugg had "taken numerous female defendants that he had prosecuted to functions sponsored by the D.A.'s Office, or where County officials were present, as well as on official business trips where supervisory person[nel], including DUGO and LATUCCA were present." ( Id., ¶ 92.) Tamara also discovered that "numerous other criminal defendants had filed complaints with the D.A.'s Office and other agencies alleging that MARUGG was having inappropriate relationships with female criminal defendants, and falsifying evidence during prosecution." ( Id., ¶ 95.)

In August 2010, Tamara contacted the D.A.'s Office regarding the information she learned about Marugg. ( FAC, ¶ 103.) "On August 26, 2010, MARUGG received notice of an Administrative Investigation related to allegations lodged by [Tamara]." ( Id., ¶ 104.) During the investigation, Marugg allegedly admitted many of the allegations, "including that he had inappropriate relationships with several former defendants." ( Id., ¶ 106.) In exchange for the D.A.'s Office's agreement to forgo further investigation, Marugg agreed to retire. ( Id., ¶ 107.) Therefore, no "further disciplinary action was taken by the D.A., nor was any report made to the California State Bar." ( Id. )

On April 12, 2011, Tamara filed a Writ of Coram Nobis seeking to have her conviction overturned. ( FAC, Ex. 4 at 2:1-2.) Based on the information gathered from its investigation, the D.A. agreed not to oppose the writ, which was granted. ( Id. ) Then on May 16, 2011, the San Diego Superior Court entered an Order for Factual ...

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