Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County No. VS013199, Raul H. Sahagun, Judge.
McDougal, Love, Eckis, Smith, Boehmer & Foley, James P. Lough, and Jeremy A. Jung for Plaintiff and Appellant.
Best Best & Krieger, Jack B. Clarke, Jr., Douglas S. Phillips, and Kira L. Klatchko for Defendants and Respondents.
SUZUKAWA, J.
Plaintiff Phillip W. Lough has brought a taxpayer action for writ of mandate, declaratory judgment, and injunctive relief against defendants Lowell Joint School District (district or Lowell) and Darin Barber, an attorney who serves on the district’s board of trustees (board). Allegedly, defendants contracted with Gallagher Pediatric Therapy (Gallagher) in violation of Government Code section 1090, which prohibits public officials from having a financial interest in any contract made by them in their official capacity. On the parties’ cross-motions for summary judgment, the trial court denied plaintiff’s motion and granted summary judgment for defendants after finding no triable issues of material fact. We affirm.
Unless otherwise indicated, all further undesignated statutory references are to the Government Code. Section 1090 provides: “Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. . . .”
BACKGROUND
I. The Allegations
The complaint alleged the following. In September 2003, the board contracted with Gallagher to provide consulting and occupational therapy services. In November 2003, Barber became a board member and filed financial documents that did not disclose Gallagher as a source of income. In October 2004, the board, with Barber’s participation, voted to renew Gallagher’s consulting contract for September 2004 to August 2005. In November 2004, the board, with Barber’s participation, also voted to renew Gallagher’s occupational therapy contract for the 2004-2005 school year.
The complaint alleged that Gallagher’s October and November 2004 contracts were invalid under section 1090 because of Barber’s financial interest in the contracts. Barber’s financial interest allegedly stemmed from his relationship with Gallagher in special education matters. The issue was first brought to the board’s attention at a February 7, 2005 board meeting, at which the district staff informed the board of Barber’s relationship with Gallagher but stated that there was no conflict of interest. While Barber abstained, the board voted to ratify Gallagher’s October and November 2004 contracts. Thereafter, the district paid Gallagher $72,160 for services performed under the contracts.
The complaint further alleged that the February 7 ratification of the contracts was invalid because, under plaintiff’s interpretation of section 1092, Barber must resign from the board in order for the contracts to be ratified. Section 1092 provides: “Every contract made in violation of any of the provisions of Section 1090 may be avoided at the instance of any party except the officer interested therein. No such contract may be avoided because of the interest of an officer therein unless such contract is made in the official capacity of such officer, or by a board or body of which he is a member.”
Contending that the contracts were void, plaintiff filed suit against the district and Barber. In the first cause of action, plaintiff sought a writ of mandate: (1) directing the district either to affirm or rescind Gallagher’s contracts in a manner consistent with section 1092; (2) directing the district to cease paying Gallagher’s contracts until the section 1090 violation is cured; and (3) placing the district under the court’s continuing jurisdiction until it complies with section 1090. In the second cause of action, plaintiff sought declaratory relief to render Gallagher’s contracts invalid and unenforceable under section 1090 until Barber resigns from the board. In the third cause of action, plaintiff requested an injunction: (1) requiring Barber to disgorge any income received from Gallagher while serving on the board; and (2) prohibiting the district from paying Gallagher until Barber resigns from the board, which will allow the board to ratify the contracts in accordance with section 1092.
II. Plaintiff’s Summary Judgment Motion
Plaintiff moved for summary judgment or, alternatively, summary adjudication. Plaintiff argued that the October and November 2004 contracts were illegal, as a matter of law, because they were approved while Barber was on the board and had a financial interest in the contracts. As evidence of Barber’s financial interest in the contracts, plaintiff pointed to three instances. The first occurred on September 1, 2004, when Barber provided a seminar for Gallagher’s employees on “Occupational Therapy & Physical Therapy in 2004: Meeting the Educational Needs of Students in the Public School System,” for which Gallagher paid Barber a speaker’s fee of $450. The second occurred on September 2, 2004, when Barber sent Gallagher an email explaining due process requirements under federal and state special education laws. The third occurred on December 20, 2004, when Barber and Gallagher entered into a legal services agreement in which Barber agreed to defend Gallagher in a lawsuit that was filed against the district and Gallagher. After Barber secured Gallagher’s dismissal from the lawsuit, he billed Gallagher for $500 in legal fees (which was discounted from the actual bill of $1,440), but subsequently waived his fee.
After the above instances were brought to the district staff’s attention, Barber spoke at a February 7, 2005 board meeting concerning his relationship with Gallagher. According to the February 7 minutes, Barber explained to the board that he was not paid for representing Gallagher in the lawsuit, and “that he has now ceased any and all affiliation with Gallagher” and “would be recusing himself from any items pertaining to Gallagher.” After Barber left the meeting, the board voted to approve new contracts with Gallagher for the 2004-2005 school year.
Plaintiff argued below that the February 7 contracts were void as a matter of law under section 1090 because, although Barber did not cast a vote, he still had a conflict of interest and was able to influence the other members to approve the contracts. Plaintiff contended that the February 7 contracts could not be upheld under section 1091’s remote interest exception, which provides: “An officer shall not be deemed to be interested in a contract entered into by a body or board of which the officer is a member within the meaning of this article if the officer has only a remote interest in the contract and if the fact of that interest is disclosed to the body or board of which the officer is a member and noted in its official records, and thereafter the body or board authorizes, approves, or ratifies the contract in good faith by a vote of its membership sufficient for the purpose without counting the vote or votes of the officer or member with the remote interest.” (§ 1091, subd. (a).)
III. Defendants’ Summary Judgment Motion
Defendants also moved for summary judgment. Defendants argued that plaintiff’s claims for relief regarding the October and November 2004 contracts were rendered moot by the cancellation of those contracts prior to the February 7, 2005 board meeting. Defendants submitted evidence that prior to the February 7, 2005 board meeting, the October and November 2004 contracts were canceled. Gallagher’s president, Mary Kay Gallagher, attested that after learning of plaintiff’s claim that the October and November 2004 contracts were void, she had agreed with district staff that “it would be best to start the contract process all over again. On February 4, 2005, I cancelled the two contracts between [Gallagher] and the District. A copy of my letter canceling those cont[r]acts is attached hereto as Exhibit ‘C.’ [¶] . . . On February 7, 2005, I am informed and believe that the Board voted on new contracts with [Gallagher]. I signed those contracts on or near February 28, 2005. Copies of those contracts are attached hereto as Exhibit ‘D[.’]”
Defendants contended that if Barber had a financial interest in the February 7, 2005 contracts, it was only a remote interest that did not violate section 1090. Defendants relied on the remote interest exception of section 1091, subdivision (b)(6), which states that a remote interest includes that “of an attorney of the contracting party . . ., if [he has] not received and will not receive remuneration, consideration, or a commission as a result of the contract and if [he has] an ownership interest of 10 percent or more in the law practice or firm . . . .” Defendants argued that subdivision (b)(6) was applicable because Barber, a sole practitioner, was never paid any legal fees for representing Gallagher in the lawsuit, and was never given or would be given remuneration, consideration, or a commission as a result of Gallagher’s contracts.
Ms. Gallagher denied in her declaration that Barber had any financial interest in Gallagher’s contracts, stating: “I did not speak to Mr. Barber about those contracts and I did not know if Mr. Barber voted on approving those contracts. Further, I did not pay or provide Mr. Barber with any money, commission, or anything else as a result of the District Board’s approval of those contracts. Again, [Gallagher] had been doing contract therapy for Lowell Joint School District children since at least 1990.” The $450 lecture fee was “the only money [Gallagher] has ever paid to Mr. Barber.” She had asked Barber a “general question” regarding “how administrative hearing officers reviewed benefits to children,” which he answered as in-house counsel for the Whittier Area Cooperative Special Education Program (WACSEP). When Barber defended Gallagher in the lawsuit, which was dismissed as to Gallagher on January 3, 2005, Barber initially billed Gallagher $500 for his services but subsequently decided to “perform the services pro-bono.”
Similarly, Barber attested that he “never received any remuneration, compensation, or commission from [Gallagher] as a result of voting, as a Board Member, on any contract [Gallagher] has or had with Lowell Joint School District.” Regarding the seminar that he provided to Gallagher’s employees, Barber explained that he has presented over 100 similar lectures since becoming WACSEP’s in-house counsel in 1999. Prior to 2004, Barber never received any income from Gallagher. In 2004, he received the $450 lecture fee, but did not have to report it because it fell below the $500 reporting requirements of section 87207. Since then, Barber has had no further dealings with Gallagher. At the February 7, 2005 board meeting, Barber “publicly stated that I would no longer do any work for [Gallagher], and recused myself from voting on all matters concerning [Gallagher]. After my explanation, I left the room until the issue was addressed by the Board. Since that time, I have not and will not participate in the review or approval of any contracts or matters concerning [Gallagher].”
Defendants argued that Barber’s $450 speaker’s fee, which was the only fee that Barber ever received from Gallagher, did not create an unlawful financial interest in Gallagher’s contracts. Defendants cited People v. Vallerga (1977) 67 Cal.App.3d 847, 867, footnote 5, for the proposition that providing a specific service, for a sum certain, does not create a section 1090 violation.
IV. The Trial Court’s Ruling
The trial court found that, based on the “virtually undisputed” chronology of events, there were no triable issues of material fact. The trial court stated that the October and November 2004 contracts were “either rescinded or cancelled” before “new contract[s] between the parties [were] approved by the board in February 2005.” There was no evidence that Barber either influenced the board to vote for the new contracts or received any remuneration as a result of the new contracts. The $450 lecture fee did not create an unlawful financial interest in the new contracts because the lecture fee was “relatively small” and “the parties had an ongoing contractual relation for years and the [2004-2005] agreement was considered a rollover contract.” Even assuming that Barber had a financial interest in the February 2005 contracts, it was at most a remote interest that was disclosed to the board under section 1091. Accordingly, the trial court denied plaintiff’s motion and granted defendant’s motion for summary judgment.
The October 5, 2006 notice of appeal states that the appeal is taken from the August 24, 2006 order granting summary judgment in favor of defendants, and it does not expressly refer to the judgment that was entered on September 20, 2006. An order granting summary judgment is not an appealable order. (Levy v. Skywalker Sound (2003) 108 Cal.App.4th 753, 761, fn. 7.) We therefore deem the appeal to be taken from the judgment. (Zwicker v. Altamont Emergency Room Physicians Medical Group (2002) 98 Cal.App.4th 26, 29-30, fn. 2.)
DISCUSSION
The standard of review for summary judgment is well established. The motion “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) We independently review an order granting summary judgment, viewing the evidence in the light most favorable to the nonmoving party. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768; Lackner v. North (2006) 135 Cal.App.4th 1188, 1196.) In performing our independent review of the evidence, “we apply the same three-step analysis as the trial court. First, we identify the issues framed by the pleadings. Next, we determine whether the moving party has established facts justifying judgment in its favor. Finally, if the moving party has carried its initial burden, we decide whether the opposing party has demonstrated the existence of a triable, material fact issue.” (Chavez v. Carpenter (2001) 91 Cal.App.4th 1433, 1438.) Where “the facts are undisputed, the issue is one of law and the ‘appellate court is free to draw its own conclusions of law from the undisputed facts.’ [Citations.]” (Suburban Motors, Inc. v. State Farm Mut. Auto. Ins. Co. (1990) 218 Cal.App.3d 1354, 1359.)
According to section 437c, subdivision (p)(2) of the Code of Civil Procedure, “A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. The plaintiff or cross-complainant may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.”
I. Section 1090
Section 1090 prohibits public officials from being financially interested in any contract made by them in their official capacity. The purpose of this prohibition “is to insure absolute loyalty and undivided allegiance to the best interest of the [government agency] they serve and to remove all direct and indirect influence of an interested officer as well as to discourage deliberate dishonesty. [Citations.]” (Fraser-Yamor Agency, Inc. v. County of Del Norte (1977) 68 Cal.App.3d 201, 215.) Section 1090 is directed not only at dishonesty, but also any conduct that creates “‘the appearance of impropriety.’ [Citation.]” (Thomson v. Call (1985) 38 Cal.3d 633, 648; Thorpe v. Long Beach Community College Dist. (2000) 83 Cal.App.4th 655, 659-660 (Thorpe).)
Plaintiff contends that unless Barber resigns from the board, his unlawful financial interest in Gallagher’s contracts renders the agreements void under section 1090, notwithstanding his abstention from the board’s February 7, 2005 approval of the new contracts following the disclosure of his relationship with Gallagher. Plaintiff relies on the principle that “[u]nder section 1090, the mere presence of one member on a board with a financial interest in a transaction is sufficient to invalidate the transaction even if the member has not voted on the matter or participated in the discussions leading up to the vote. (Thomson v. Call[, supra,] 38 Cal.3d 633, 649-650.) Thus, when it applies, section 1090 effectively disqualifies the entire board from acting.” (Finnegan v. Schrader (2001) 91 Cal.App.4th 572, 581-582.) Plaintiff contends that Barber’s mere presence on the board is improper because “[w]here section 1090 applies, it is an absolute bar to a board or commission entering into the prohibited contract. Even if the interested board or commission member abstains from any participation in the matter, section 1090 applies to prevent fellow board or commission members from being influenced by their colleague. (Thomson v. Call, supra, 38 Cal.3d at p. 649; Fraser-Yamor Agency, Inc. v. County of Del Norte[, supra,]68 Cal.App.3d 201, 215.)” (Thorpe, supra, 83 Cal.App.4th at p. 659.)
For the reasons that follow, however, we conclude that section 1090 does not apply because Barber has no financial interest in Gallagher’s contracts and any perceived interest is a remote interest that does not violate section 1090.
II. Barber’s Receipt of the Speaker’s Fee
The record was undisputed that Barber’s sole income from Gallagher was the $450 speaker’s fee for providing a seminar in September 2004. There is nothing in the record to indicate that the speaker’s fee was related to the subsequent renewal of Gallagher’s contracts; there is nothing to suggest that Barber stood to gain or lose anything as a result of the renewal or nonrenewal of Gallagher’s contracts. In People v. Vallerga, supra,67 Cal.App.3d at page 867, footnote 5, the court stated: “If defendant had done no more in this case than perform the consulting services rendered by him in Spartanburg on March 14 through March 16, 1973, and accepted in payment therefor the sum of $714 tendered by Spartanburg County for fees and expenses, no conflict of interest within the meaning of Government Code section 1090 would have been shown. The interest proscribed by Government Code section 1090 is an interest in the contract. The purpose of the prohibition is to prevent a situation where a public official would stand to gain or lose something with respect to the making of a contract over which in his official capacity he could exercise some influence. Defendant’s consulting services were performed and the fee for them earned prior to the execution of the contract, and the evidence would support an inference that defendant was to be paid for those services whether or not the contract was consummated.” Applying the above reasoning to this case, we conclude the speaker’s fee does not create a triable issue of material fact as to whether Barber was unlawfully interested in Gallagher’s contracts, because the fee was earned prior to the execution of the October and November 2004 contracts, as well as the February 2005 contracts.
III. Section 1091
Notwithstanding section 1090’s conflict of interest prohibition, section 1091 provides that “[a]n officer shall not be deemed to be interested in a contract entered into by a body or board of which the officer is a member within the meaning of this article if the officer has only a remote interest in the contract and if the fact of that interest is disclosed to the body or board of which the officer is a member and noted in its official records, and thereafter the body or board authorizes, approves, or ratifies the contract in good faith by a vote of its membership sufficient for the purpose without counting the vote or votes of the officer or member with the remote interest.” (§ 1091, subd. (a).)
Under section 1091, subdivision (b)(6), the remote interest exception applies to “an attorney of the contracting party . . . if [he has] not received and will not receive remuneration, consideration, or a commission as a result of the contract and if [he has] an ownership interest of 10 percent or more in the law practice or firm . . . .”
In this case, the evidence was undisputed that Barber, as a sole practitioner and an attorney of the contracting party: (1) has not received and will not receive remuneration as a result of Gallagher’s contracts, and (2) has an ownership interest of 10 percent or more in his law practice. Thus, plaintiff’s claim that Barber’s representation of Gallagher created an unlawful interest in the contracts is unavailing. Although plaintiff speculates that Barber might yet collect attorney fees from Gallagher, “[a]n issue of fact can only be created by a conflict of evidence. It is not created by ‘speculation, conjecture, imagination or guess work.’ [Citation.] Further, an issue of fact is not raised by ‘cryptic, broadly phrased, and conclusory assertions’ [citation], or mere possibilities [citation].” (Sinai Memorial Chapel v. Dudler (1991) 231 Cal.App.3d 190, 196-197.)
We note that in his brief, plaintiff states that “Barber served as legal counsel for Gallagher, while voting on Gallagher’s contract, and helping shape the District’s legal position as a Board Member. This divided loyalty gave Barber the ability to shape the case for the benefit of the party who had already paid him to demonstrate how to handle a Due Process hearing.” The record, however, shows that Barber did not begin representing Gallagher in the litigation until December 2004, which was after the execution of the October and November 2004 contracts, and that he was never paid for providing those services.
Plaintiff has presented no relevant authority to support his position that Barber’s continued presence on the board rendered the February 2005 contracts void notwithstanding the disclosure of his remote interest, if any, in Gallagher’s contracts. Contrary to plaintiff’s position, there is no evidence in the record that Barber was financially interested in either the October and November 2004 contracts, or the February 2005 contracts. And even if Barber had a financial interest in the February 2005 contracts, the evidence is undisputed that the contracts were validly formed under the remote interest exception of section 1091. Accordingly, summary judgment was properly granted to defendants and denied as to plaintiff.
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs.
We concur: EPSTEIN, P. J. MANELLA, J.