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City of San Diego v. San Diegans for Open Government

California Court of Appeals, Fourth District, First Division

October 17, 2016

CITY OF SAN DIEGO, Plaintiff and Appellant,
v.
SAN DIEGANS FOR OPEN GOVERNMENT, Defendant and Respondent.

         [Modification of opinion (3 Cal.App.5th 568,___Cal.Rptr.3d __), upon denial of rehearing.]

         THE COURT.—

         We have read and considered San Diegans for Open Government's (SDOG) petition for rehearing. We deny the petition.

         In its petition, SDOG claims that a rehearing is warranted because our opinion in the instant matter was grounded on two "irrelevant"' statutes. Revenue and Taxation Code sections 19719 and 23301 (statutory references are to this code unless otherwise specified). We disagree. Our holding in City of San Diego v. San Diegans for Open Government (Sept. 22, 2016) 2016 Cal.App.LEXIS 783 was not contingent on a finding that SDOG and/or its attorney, the Briggs Law Corporation (BLC), committed a criminal act. Instead, we determined that a suspended corporation may not recover attorney fees under Code of Civil Procedure section 1021.5 when the corporation filed an answer in a validation action while both it and its attorney knew it was suspended.

         In its petition for rehearing, SDOG, for the first time, directly addresses the City of San Diego's (City) argument that BLC engaged in criminal activity in violation of section 19719. SDOG acknowledges that the City raised this issue in the superior court, but "SDOG stayed on point and did not respond to the inflammatory allegations of criminal misconduct." In other words. SDOG did not feel compelled to provide any defense for its actions or those of its attorney despite being accused of criminal activity.

         Further, the allegations of criminal activity did not end with the City's arguments in the superior court. In its notice of ruling and statement of reasons, the superior court explained why it was "greatly concerned" by BLC's actions in representing SDOG in the underlying litigation, specifically referring to BLC's "litigation misconduct" as "at best, an ethical lapse, and, at worst, criminal behavior." And in its opening brief, the City again cited to section 19719 and argued BLC "participated in the litigation knowing they faced the risk of potential and criminal liability." Nevertheless. SDOG did not argue in its respondent's brief that it did not commit any crime. At most.

Page 1331b

SDOG offered a passing argument that it was not suspended for a failure to pay taxes. It did not discuss section 19719 or otherwise contend that BLC did not violate that statute.

         We observe that not only did SDOG and BLC previously fail to argue that their actions were not criminal, they offered no explanation or justification for their actions. They did not do so in the superior court. They did not do so in this court. Now, as part of the petition for rehearing, SDOG insists that it is entitled to yet another opportunity "to establish facts to explain its actions." Not so. SDOG was given multiple opportunities to explain its actions. It made the strategic decision not to do so. Merely because SDOG's strategy did not ultimately prove successful does not compel this court to provide SDOG with another bite of the proverbial apple.

         In short, it is clear that when SDOG filed an answer in the validation action, both SDOG and its attorney knew SDOG was suspended. It is undisputed that SDOG was not revived until after the time lapsed by which an interested party had to file an answer in the validation action. As such, we determined that SDOG could not recover attorney fees under Code of Civil Procedure section 1021.5. Nothing raised in the petition for rehearing changes this conclusion.

         That said, this court reached no conclusion that SDOG or BLC committed a crime. We merely cited to what the superior court stated in its notice of ruling and statement of reasons that BLC's conduct could be criminal (a statement SDOG did not challenge until now). As SDOG insists in its petition for rehearing that neither it nor BLC have engaged in any criminal activity by appearing in the underlying litigation and such a finding is immaterial to our conclusion, in an abundance of caution, we will slightly modify our opinion.

         The opinion filed on September 22, 2016 is modified as follows:

         On page 11, a footnote is added after the citation to Revenue and Taxation Code section 23301 within the quotation from Center for Self-Improvement & Community Development v. Lennar Corp. (2009) 173 Cal.App.4th 1543, 1552 [94 Cal.Rptr.3d 74] [3 Cal.App.5th 577, advance report, last par., line 7], as follows: Similarly, a domestic corporation that has failed to file a tax return also may be suspended. (Rev. & Tax. Code, § 23301.5.)

         On page 11, second paragraph, the second sentence [3 Cal.App.5th 578, advance report, 1st full par., line 4] is modified to read: Additionally, BLC's explicit approval of SDOG's appearance and representation of SDOG was, as ...


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