California Court of Appeals, Fourth District, First Division
of opinion (3 Cal.App.5th 568,___Cal.Rptr.3d __), upon denial
read and considered San Diegans for Open Government's
(SDOG) petition for rehearing. We deny the petition.
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.
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.
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.
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.
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.
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.
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.
opinion filed on September 22, 2016 is modified as follows:
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.)
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 ...