Opinion
E051962 E052077 E053089
02-17-2012
FREDRIC SCANE, Cross-complainant and Appellant, v. MITCHELL WAGNER, Cross-defendant and Respondent. FREDRIC SCANE, Plaintiff and Appellant, v. JACK VAN HAASTER, Defendant and Respondent. GARY BRYANT et al., Cross-complainants and Appellants, v. JACK VAN HAASTER, Cross-defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Super.Ct.No. RIC539660)
OPINION
(Super.Ct.No. RIC494290)
(Super.Ct.No. RIC539660)
APPEAL from the Superior Court of Riverside County. Sharon J. Waters and Stephen J. Qmnison, Judges. Affirmed.
Retired judge of the Riverside Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Gary J. Bryant, for Plaintiff, Cross-complainants and Appellants Fredric Scane and Gary Bryant.
Dabney Finch, for Cross-defendant and Respondent, Mitchell Wagner, and Defendant and Respondent, Jack VanHaaster.
Mitchell S. Wagner, for Defendant, Cross-defendant and Respondent, Jack Van Haaster.
I
INTRODUCTION
Jack Van Haaster (Van Haaster) is a former city council member and mayor for the City of Murrieta. His daughter, Rachael Van Haaster (Rachael), planned to build and operate a child care facility and swim school, California Oaks Childcare, Preschool and Swim Academy. Seven plaintiffs, represented by Gary Bryant (Bryant), filed an action in June 2004, challenging the city's approval of the project. In three previous appeals, this court found in favor of Rachael concerning three anti-SLAPP motions and related awards of attorney's fees. (Code Civ. Proc., §§ 425.16, subd. (c), 685.040 and 685.080.)
The seven plaintiffs included Fred Scane and Diane Cochran.
E039855, E044059, and E050649.
2
The present three consolidated appeals involve two subsequent legal actions, one brought by Fred Scane (Scane) against Van Haaster and one brought by Scane and Bryant against Van Haaster and Mitchell S. Wagner (Wagner), a lawyer who represented both the Van Haasters. (RIC494290 and RIC539660.) The four parties to the consolidated appeals are Scane, Bryant, Van Haaster, and Wagner. Rachael is not a party to these appeals.
We deny the requests for judicial notice filed on July 8, 2011, and August 16, 2011 in E052077. (Evid. Code, §§ 452 and 459.) We deny without prejudice the motion for sanctions and related request for judicial notice filed in E051962 on March 21 and March 24, 2011. Although we deny the motion for sanctions, we observe that, in prolonging this litigation and these appeals, Bryant's conduct is close to being sanctionable.
We affirm the judgment in the case of Scane against Van Haaster. The court's findings in that action are dispositive in the related case of Scane and Bryant against Van Haaster and Wagner. We reject all three appeals by Scane and Bryant.
II
FACTUAL AND PROCEDURAL BACKGROUND
A. The 2008 Action, Fred Scane v. Jack Van Haaster
1. The Complaint
In 2008, Scane filed an action against Van Haaster, alleging that, as a member of the Murrieta City Council, he had violated the Political Reform Act of 1974 (PRA), Government Code section 81000 et seq. and section 91004, by failing to disclose his financial interest in the proposed child care facility. Van Haaster had pleaded guilty and was convicted of violating section 87100, relating to his vote on road improvements and the conditional use permit for the child care center. In his first amended complaint (FAC), Scane alleged that, in 2004 and 2005, Van Haaster had failed to disclose income received from several individuals, including $30,000 from Wagner, and his financial interest in California Oaks Childcare.
All statutory references are to the Government Code unless stated otherwise.
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2. The Trial
A two-day bench trial was conducted before Judge Stephen J. Cunnison. Van Haaster testified he became licensed as a certified public accountant in 1981. While he served on the Murrieta City Council from 1994 to 2005, he filed an annual statement of economic interest, California Fair Political Practices Commission (FPPC) Form 700. In his statements for 2003, 2004, and 2005, Van Haaster did not fully disclose about $255,000 in loans received from Gerald Pollack and about $120,000 in loans from Mildred Fletcher. Van Haaster also did not disclose a $30,000 loan from Wagner in 2005.
In February 2003, Van Haaster had cosigned on a secured note for Rachael's residence where she operated a family day care for a maximum of 12 children. Van Haaster handled the bookkeeping for his daughter's business.
In September 2003, Van Haaster helped Rachael negotiate a $300,000 option to purchase three acres for an expanded childcare center. Between September 2003 and April 2004, Van Haaster deposited money in a bank account to make payments on the option. In November 2003, Van Haaster had obtained a loan from Pollack.
In early 2004, Van Haaster helped his daughter prepare a proposal for California Oaks Childcare. On May 4, 2004, as a member of the Murrieta City Council, Van Haaster voted to approve paving an adjacent dirt road as part of the proposed project.
In July 2004, Van Haaster obtained another loan from Pollack. The option agreement was changed to include the purchase of three and one-half acres, including a residence, for $745,000. Fletcher contributed money for the down payment. Van Haaster made various deposits to the child care center's bank accounts. Van Haaster did not disclose his loans or deposits to his daughter's business on the Form 700 for 2003, 2004, or 2005.
In a 15-count criminal prosecution, Van Haaster ultimately pleaded guilty to one felony, a violation of Penal Code section 115 for offering a false and forged FPPC Form 700, and one misdemeanor, a violation of section 87100, for voting on road improvements in which he had a financial interest. Van Haaster paid a fine of $9,000. He served 30 days in jail and wore an ankle bracelet while on a work/home program. He received three years probation and an additional fine of $6,500 from the State Board of Accountancy.
3. The Statement of Decision
The court issued a statement of decision finding that Van Haaster's failure to report loans received from Pollack and Fletcher was inadvertent but his failure to report a $30,000 loan from his lawyer, Wagner, was negligent and a violation of section 91004. The court also found Van Haaster did not have an ownership or investment interest in California Oaks Childcare and his loans to Rachael, "were no more than a father helping his daughter out . . . which he was not required to report on his Statements of Economic Interest since such family transactions are excluded from the reporting requirements." Because Van Haaster had already suffered a criminal conviction, the court exercised its discretion to award no damages against him. The court also determined there was no prevailing party and each party should bear his own costs. Scane appealed. B. The 2010 Cross-Complaint, Bryant and Scane v. Van Haaster and Wagner
In 2009, Diane Cochran filed a complaint for malpractice against Bryant, her former lawyer, alleging that he included her in the original 2004 case without her consent and he never disclosed to her the potential liability as a plaintiff. In 2010, Bryant filed a cross-complaint for equitable indemnity against Van Haaster, alleging that, because Van Haaster did not disclose his financial interest in the proposed daycare center, he caused Cochran to suffer liability for anti-SLAPP attorney's fees. Bryant and Scane then filed an amended cross-complaint (FAC) against Van Haaster, Rachael, and Wagner.
Wagner filed a special anti-SLAPP motion to strike against the FAC, relying in part on Judge Cunnison's decision. The motion to strike was granted and the court awarded attorney's fees of $4,740 to Wagner.
Bryant and Scane filed a second amended complaint (SAC) against Van Haaster and Rachael only. Van Haaster demurred to the SAC and the trial court sustained the demurrer without leave to amend.
Bryant and Scane appealed.
III
DISCUSSION
We first consider Scane's appeal against Van Haaster (E052077) because its disposition affects the other two appeals. We review the evidence in a light favorable to Van Haaster and with deference to the findings of the trial court: "In determining the sufficiency of the evidence to support a judgment, a reviewing court does not reweigh the evidence. Instead, it must resolve all conflicts in favor of the prevailing party and view the evidence in the light most favorable to that party. (Hasson v. Ford Motor Co. (1982) 32 Cal.3d 388, 398.) It must give the prevailing party the benefit of every reasonable inference from the evidence. (In re Marriage of Mix (1975) 14 Cal.3d 604, 614.) In other words, while the appellate court will examine all the evidence, it will consider only the evidence supporting the successful party, and will disregard the contrary showing. (Campbell v. Southern Pacific Co. (1978) 22 Cal.3d 51, 60; 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 282, pp. 293-294.)" (Community Cause v. Boatwright (1987) 195 Cal.App.3d 562, 569.)
A. The Trial of Scane v. Van Haaster, E052077
As already noted above, in the trial of Scane against Van Haaster, Judge Cunnison found that Van Haaster negligently failed to report a $30,000 loan from his lawyer, Wagner, in violation of section 91004. The court also found Van Haaster did not have an ownership or investment interest in California Oaks Childcare and he was not required to report his loans to his daughter because family transactions are exempt from disclosure requirements. The court did not award damages, determining there was no prevailing party and each party should bear his own costs.
On appeal, Scane first contends Van Haaster should have disclosed under the PRA a financial interest in Rachael's business. Next, he asserts the trial court should not have considered Van Haaster's criminal conviction and financial circumstances when deciding liability under the PRA. Finally, he maintains the trial court could not decline to award any damages against Van Haaster.
1. The Meaning of Financial Interest under the PRA
The PRA requires financial disclosures from candidates and officeholders to enable "the public to determine whether their elected officials are free from conflicts of interest and are not abusing the power of their positions. This objective is reflected in the preamble to the Act, which declares: 'Assets and income of public officials which may be materially affected by their official actions should be disclosed and in appropriate circumstances the officials should be disqualified from acting in order that conflicts of interest may be avoided.' (Gov. Code, § 81002, subd. (c).) Thus, the definition of materiality must be broad enough to encompass this purpose as well. [¶] We therefore conclude that, in a perjury prosecution based on a failure to comply with the disclosure provisions of the Act, an omission or misstatement of fact is material if there is a substantial likelihood that a reasonable person would consider it important in evaluating (1) whether a candidate should be elected to, or retained in, public office, or (2) whether a public official can perform the duties of office free from any bias caused by concern for the financial interests of the official or the official's supporters." (People v. Hedgecock (1990) 51 Cal.3d 395, 406-407.)
Section 82034 defines "investment": "'Investment' means any financial interest in . . . options, debt instruments, and any partnership or other ownership interest owned directly, indirectly, or beneficially by the public official . . . or his or her immediate family. . . . An asset shall not be deemed an investment unless its fair market value equals or exceeds two thousand dollars ($2,000)."
Section 82030 defines "income" and expressly excludes from disclosure requirements "[a]ny loan from or payments received on a loan made to an individual's spouse, child, parent, grandparent, grandchild, brother, sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, uncle, aunt, or first cousin, or the spouse of any such person. . . ." (§ 82030, subd. (b)(9).)
Scane argues that Van Haaster's financial interest in the proposed child care center, included "obtaining a personal loan used to pay the deposit on the bank loan to purchase the site of the proposed project" which "certainly created a bias in favor of the approval of the project in order to protect that financial interest." In other words, Van Haaster borrowed money to lend money to his daughter for the project. Scane reasons that Van Haaster admitted his financial interest when he pleaded guilty based on his vote approving the road improvements. Additionally, Scane insists that a loan between family members is not excluded from reporting requirements as expressly provided in section 82030.
Substantial evidence supports the trial court's factual finding that Van Haaster did not invest in his daughter's project but either gave or loaned her money to facilitate her purchase of the property. Moreover, Van Haaster did not admit to having a financial interest in the project. Instead, the basis for his guilty plea was that his daughter, as a member of his immediate family, had a financial interest that it was reasonably foreseeable would be affected by his vote on the road improvements. (§ 87103.) We reject Scane's strained effort to characterize Van Haaster's assistance to his daughter as an investment or income qualifying as a financial interest that should have been disclosed on Form 700.
2. The Award of No Damages
Section 91009 provides: "In determining the amount of liability under Sections 91004 or 91005, the court may take into account the seriousness of the violation and the degree of culpability of the defendant. [Emphasis added.]" The use of the word "may" makes a damages award discretionary. (People v. Roger Hedgecock for Mayor Committee (1986) 183 Cal.App.3d 810, 815.)
The court did not impose an award of damages for the nondisclosure of the $30,000 loan from Wagner because Van Haaster had already received a jail sentence, probation, and fines. Under these circumstances, Scane has not shown it was a miscarriage of justice and a clear abuse of discretion to spare Van Haaster from additional financial penalties. (Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, 449.)
B. Scane's Anti-SLAPP Appeal, E051962
As previously set forth, Cochran, a plaintiff from the original 2004 case, sued Bryant for attorney malpractice because of the liability she incurred for anti-SLAPP attorney's fees awarded to Rachael. Bryant and Scane ultimately filed the SAC seeking recovery from Wagner for the award of anti-SLAPP attorney's fees.
Scane appeals the court's order granting Wagner's special anti-SLAPP motion to strike, a ruling the appellate court reviews de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325-326.) The operative pleading against Wagner is the FAC. In the fourth cause of action for unjust enrichment, Scane asserts that Wagner should not have been awarded attorney's fees of $170,000 for his successful representation of Rachael in anti-SLAPP proceedings in the original 2004 action.
Wagner filed a special anti-SLAPP motion to strike, arguing there was no viable claim for unjust enrichment. Wagner relied partly on the Cunnison decision, ruling that Van Haaster did not have a financial interest in Rachael's business.
On appeal, Scane argues the anti-SLAPP statute does not apply to claims for unjust enrichment, restitution, and extrinsic fraud. Wagner responds that Scane's claims arose out of Wagner's litigation conduct as an attorney, which is protected under the anti-SLAPP statute, and Scane cannot show the probability of prevailing. (Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 961-964, 969-972; Navellier v. Sletten (2002) 29 Cal.4th 82, 90.) We wholly agree. The anti-SLAPP attorney's fees were awarded to Wagner because he represented Rachael in her prevailing anti-SLAPP motions against Scane and the other plaintiffs. The anti-SLAPP statute protects Wagner's litigation-related conduct. Scane cannot demonstrate any probability of prevailing against Wagner, especially because his claims against Van Haaster had already failed in the trial before Judge Cunnison.
We affirm the trial court's ruling granting Wagner's anti-SLAPP motion and awarding attorney's fees.
C. Bryant and Scane's Appeal, E053089
Bryant and Scane both appeal from the trial court's order and judgment sustaining without leave to amend Van Haaster's demurrer to their SAC. Bryant and Scane persist in their bootless assertions that Van Haaster did not disclose his financial interest in Rachael's business, the fundamental factual predicate of their claims.
The SAC asserts Van Haaster violated the PRA and committed fraud and conspiracy to commit fraud by not reporting his financial interest in Rachael's business. Van Haaster demurred, in part based on the Cunnison decision that he did not have a financial interest. The trial court agreed that the doctrines of res judicata and collateral estoppel barred the claims against Van Haaster.
We affirm the judgment for all of the following reasons. First, Bryant is prohibited from making Van Haaster liable for Cochran's claims for Bryant's alleged attorney malpractice. In Munoz v. Davis (1983) 141 Cal.App.3d 420, 427, the court confirmed "[t]here is no equitable basis for shifting malpractice liability from the negligent lawyer to the tortfeasor whose actions caused the client's original injuries." Munoz elaborated: "We have found no case which allowed the subsequent tortfeasor to be indemnified by the initial tortfeasor. This is not surprising since the subsequent tortfeasor is not held liable as a matter of law for the injury caused by the initial tortfeasor but only for the injury caused by his own dereliction in aggravating or contributing to the original injury. [Citations.] [¶] In addition to the equitable considerations . . . there are strong public policy reasons for not permitting equitable indemnity in favor of a negligent lawyer from his client's adversary.[] The effect of allowing a negligent attorney to recover indemnity from his client's adversary would be to judicially repeal the statutes of limitation, make every tortfeasor the guarantor of his victim's adequate compensation as well as the malpractice insurer of his victim's attorney and undermine the fiduciary duty of the nonnegligent attorney to his client." (Munoz, at p. 429.)
Second, Scane and Bryant have omitted addressing the trial court's finding that there was no causation, meaning they have forfeited the issue on appeal. (Christoff v. Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118, 125-126.) Additionally, in their SAC, Bryant and Scane did not and cannot allege justifiable actual reliance, constituting actionable fraud. (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1087, 1094-1095; Carroll v. Dungey (1963) 223 Cal.App.2d 247, 254; Sevidal v. Target Corp. (2010) 189 Cal.App.4th 905, 928.) In the SAC, Bryant and Scane did not allege they relied on Van Haaster's statements of economic interest. Furthermore, Bryant and Scane knew about Van Haaster's nondisclosure of his purported financial interest before the original action was filed in June 2004. Therefore, they could not have justifiably relied on the statements of economic interest filed for 2004 and 2005.
Finally, res judicata and collateral estoppel unquestionably apply to the circumstances of the present case. The issue of Van Haaster's financial interest in Rachael's business was the subject of the original 2004 litigation by Scane. It was also the primary issue in the 2010 trial between Bryant, Scane, and Van Haaster before Judge Cunnison. Collateral estoppel operates "if: (1) the issue necessarily decided in the previous suit is identical to the issue sought to be relitigated; (2) there was a final judgment on the merits of the previous suit; and (3) the party against whom the plea is asserted was a party, or in privity with a party, to the previous suit. [Citation.]" (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 910; Roos v. Red (2005) 130 Cal.App.4th 870, 880.)
IV
DISPOSITION
All three appeals by Bryant and Scane fail. We affirm the judgments in both cases. Van Haaster and Wagner are the prevailing parties entitled to their costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Codrington
J.
We concur:
Richli
Acting P.J.
King
J.