Filed 5/29/13 Debro v. Los Angeles Raiders CA1/3
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opinion has not been certified for publication or ordered published for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.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
THREE
JOSEPH
DEBRO,
Plaintiff and Appellant,
v.
LOS ANGELES
RAIDERS,
Defendant and Respondent.
A136456
(Alameda
County
Super. Ct.
No. RG12618107)
Plaintiff
Joseph Debro has filed a number of lawsuits since the mid-1990’s in which he
has alleged that loans made by governmental entities in 1995 to induce the Los
Angeles Raiders (Raiders) to return to Oakland
from Los
Angeles were, in fact, gifts made without any expectation the loaned amounts
would be repaid. (See
943-944 (Debro I).) In one earlier case, Debro alleged the
Raiders violated the California False Claims Act (Gov. Code,
§§ 12650-12655)
name="_ftnref1" title="">[1]
(the Act) in connection with the 1995 loans by knowingly presenting a false
claim to a public entity. (
In Debro I, Division Five of
this court concluded that Debro’s claim was barred by the applicable statute of
limitations. (Debro I, at pp. 955-956.) In
this action, Debro again alleges the Raiders violated the Act as a result of
their acceptance of the 1995 loans, only now the claim is that the Raiders were
the beneficiary of an inadvertent submission of a false claim. The trial court sustained the Raiders’
demurrer to Debro’s complaint without leave to amend, reasoning the action is
barred by direct estoppel and the applicable
Factual and
Procedural Background
When
we review an order sustaining a demurrer, we ordinarily take the factual
background from the properly pleaded material allegations of the operative
complaint. (Estate of Dito (2011) 198 Cal.App.4th 791, 795.) In this case, however, because one of the
grounds for the demurrer is the purported direct estoppel effect of prior
litigation between the parties, we must necessarily consider the action that is
claimed to have preclusive effect. (
Therefore, we begin by summarizing the prior litigation that allegedly
precludes Debro’s current complaint.
of Debro I
“On
August 7, 1995, [the Raiders] and entities known as the East Bay Entities (the
City of Oakland, the County of Alameda, the Oakland-Alameda County Coliseum
Authority, the Oakland-Alameda County Coliseum Financing Corporation, and the
Oakland-Alameda County Coliseum, Inc.) entered into certain agreements by which
the Raiders would play professional football in Oakland through 2011.†(Debro
I, supra, 92 Cal.App.4th at p.
943.) Pursuant to the terms of a master
agreement, the Oakland-Alameda County Coliseum was to be expanded and
modernized. Under a loan agreement that
was part of the master agreement, the East Bay Entities authorized loans of “up
to $85 million to the Raiders to finance the renovation of the stadium, $10
million to finance the construction and development of a training facility, and
$53.9 million for operations purposes.â€
(Ibid.) The loans to the Raiders were
nonrecourse. (Ibid.)
Debro
filed a lawsuit against the City of Oakland
and others in 1995 seeking to void the master agreement. The court dismissed the action in 1996. Debro then filed a lawsuit against the
Oakland-Alameda County Coliseum Authority in 1997 in which he sought damages
for professional misconduct relating to the loan agreement and the contracts to
renovate the Coliseum. That lawsuit was
dismissed in 1999. (Debro I, supra, 92
Cal.App.4th at p. 944.)
In
1999, Debro filed the lawsuit giving rise to the appellate decision in
(Debro I, supra, 92
Cal.App.4th at p. 944.) As relevant
here, Debro alleged in the second cause of action that the Raiders violated the
Act by “ ‘negotiat[ing] and accept[ing] $64.9 million of public money as a
payment for relocating of the Raiders to Oakland and fraudulently conspir[ing]
to hide the relocation payment in a public document by calling said relocation
payment a loan in violation of Government Code Section 12651.’ †(Id.
at p. 945.) After the trial court
sustained a demurrer to Debro’s complaint, he filed an appeal that was limited
to the second cause of action. (
The
issue on appeal in Debro I concerned
the proper interpretation and application of former section 12654, subdivision
(a), which sets forth the statute of limitations applicable to actions under
the Act.
I, supra, 92 Cal.App.4th at pp. 948-956.)
Former section 12654, subdivision (a) provides in relevant part that a
civil action under the Act “may not be filed more than three years after the
date of discovery by the official of the state or political subdivision charged
with responsibility to act in the circumstances or, in any event, no more than
10 years after the date on which the violation of Section 12651 is
committed.†The court held that the three-year
“limitations period under [former] section 12654, subdivision (a), commences
when the ‘official . . . charged with responsibility to act in the
circumstances’ either knows of the false claim or knows of facts which would
lead a reasonably prudent person to suspect it.†(Debro
I, at p. 953.)
The
appellate court in Debro I began its
analysis by characterizing the alleged false claim as one in which the Raiders
requested and accepted $64.9 million as a purported loan when in fact it was a
“ ‘payoff’ or gift.†(Debro
I, supra, 92 Cal.App.4th at p. 948, fn. omitted.) The court concluded that “the facts known to
Oakland and Alameda County officials in August 1995 reasonably put them on
inquiry notice of the Raiders’ purported intention to treat the transaction as a gift, whether that was the legal effect
of the loan agreement or not.†(
that Debro himself had appeared before the Oakland City Council in July 1995,
where he characterized the loans to the Raiders as a gift of public
monies. (Ibid.) The court in
dismissal on the ground the three-year limitations period had expired before
Debro filed his complaint in October 1999.
(Id. at p. 956.)
Action
Debro
filed his complaint against the Raiders in the action giving rise to this
appeal on February 22, 2012. The
operative first amended complaint (hereafter “complaintâ€) contains five causes
of action against the Raiders under the Act.
The basis for Debro’s current complaint is the 1995 loan agreement
between the Raiders and the East Bay Entities.
The allegations are largely identical to those considered in
the 1995 loan agreement was exposed “as a misleading document[] and a false
claim†on June 3, 2002, when the Los Angeles County Superior Court issued a
statement of decision in a dispute between the Raiders and the National
Football League (NFL). As set forth in
the complaint, the Raiders brought an action against the NFL in 1999 seeking,
among other things, a declaration that the 1995 loans were not “revenue†that
had to be shared with other NFL owners.
The trial court in Los Angeles disagreed and characterized the loans as
revenue in its statement of decision.
Debro
alleges the 2002 Los Angeles trial court decision exposed the loans as a false
claim. As relevant here, in the fifth
cause of action in the complaint, Debro alleges a violation of subdivision
(a)(8) of section 12651, in that the Raiders purportedly were “a beneficiary of
an inadvertent submission of a false claim to East Bay Entities, subsequently
discover[ed] the falsity of the claim and fail[ed] to disclose the false claim
to East Bay Entities within a reasonable time after the discovery of the false
claim.â€
The
Raiders filed a demurrer to all five causes of action in the complaint, arguing
they were untimely as a matter of direct estoppel in light of the decision in
In addition, the Raiders argued the causes of action were time-barred,
failed to state a claim, and failed for uncertainty. The Raiders included with their demurrer a
request for judicial notice of the Debro
I decision and Debro’s operative complaint in the 1999 action.
The
trial court granted the Raiders’ request for judicial notice, sustained the
demurrer without leave to amend as to all five causes of action, and dismissed
the entire action. Debro timely appealed
from the judgment of dismissal.
Discussion
On
review of an order sustaining a demurrer without leave to amend, we exercise
independent judgment in assessing whether the complaint states a cause of
action as a matter of law. (
Francisco (2010) 185 Cal.App.4th 424, 433.)
“ ‘ “We treat the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions or conclusions of fact or
law. [Citation.] We also consider matters which may be
judicially noticed.†’ â€
v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) When a demurrer is sustained without leave to
amend, we reverse if there is a reasonable possibility an amendment could cure
the defect. (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.)
On
appeal, Debro concedes he has abandoned the first four causes of action in his
complaint, leaving for our consideration the fifth cause of action under
section 12651, subdivision (a)(8).
Whereas subdivisions (a)(1) through (a)(7) of section 12651 involve
intentional or willful presentation of a false claim to a public entity,
subdivision (a)(8) provides in relevant part that a “beneficiary of an
inadvertent submission of a false claim†who “subsequently discovers the
falsity of the claim[] and fails to disclose the false claim to the
. . . political subdivision within a reasonable time after discoveryâ€
is subject to civil liability under the Act.
In Debro I, the action was
premised on a claim the Raiders intentionally
submitted a false claim, in violation of subdivisions (a)(1) through (a)(3) of
section 12651. (See Debro I, supra, 92 Cal.App.4th at p. 947.) Here, by contrast, Debro contends the Raiders
were the beneficiaries of an inadvertent
submission of a false claim and later failed to disclose the matter to
public officials after learning of the claim’s falsity, in violation of
subdivision (a)(8) of section 12651.
The
threshold question raised on appeal is whether Debro’s cause of action for the
inadvertent submission of a false claim is precluded by the determination in
expired long ago on a cause of action alleging that the Raiders intentionally
submitted a false claim to the East Bay Entities. (Debro
I, supra, 92 Cal.App.4th at p. 956.)
To answer this question, we consider principles governing when a party
is precluded from relitigating an issue decided in a previous action.
“Issue
preclusion is one component of the doctrine of res judicata. In contrast to claim preclusion, in which a
prior judgment bars a second suit between the same parties, in issue preclusion
‘[t]he prior judgment is not a complete bar, but it “operates as an estoppel or
conclusive adjudication as to such issues in the second action as were actually
litigated and determined in the first action.†[Citation.]’
[Citation.] Most commonly, issue
preclusion arises from successive suits on different claims; this is referred
to as collateral estoppel. If, however,
the second action is on the same claim . . . issue preclusion based
on the earlier determination is described as ‘direct estoppel.’ †(Sabek,
Inc. v. Engelhard Corp. (1998) 65 Cal.App.4th 992, 997; see also
Diego (2006) 142 Cal.App.4th 1538, 1563.)
For purposes of direct estoppel, a second action involves the same claim
if it concerns the same cause of action or primary right adjudicated in the
prior action. (South Sutter, LLC v. LJ Sutter Partners, L.P. (2011) 193
Cal.App.4th 634, 661.) The primary right
is the right of the plaintiff to be free from a particular injury and is
distinguished from the legal theory on which liability for that injury is
premised. (Id. at p. 660.) One injury
gives rise to one claim for relief even though recovery may be predicated on
multiple legal theories. (
Both collateral and direct estoppel serve the duel purposes of promoting
judicial economy and relieving litigants of the burden of relitigating an
identical issue with the same party. (
A
prior decision precludes relitigation of an issue only if certain threshold
requirements are met. “First, the issue
sought to be precluded from relitigation must be identical to that decided in a
former proceeding. Second, this issue
must have been actually litigated in the former proceeding. Third, it must have been necessarily decided
in the former proceeding. Fourth, the
decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is
sought must be the same as, or in privity with, the party to the former
proceeding.†(Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.)
In
this case, all five requirements for applying direct estoppel are met. First, the statute of limitations issue
presented by this action is the same as that actually litigated and decided in
the 1999 action—i.e., when did the three-year limitations period specified in
former section 12654, subdivision (a) commence for claims alleging that the
1995 loans to the Raiders constituted a false claim under the Act? In addition, the issue was actually litigated
between the same parties in the former proceeding, was necessary to the decision,
and resulted in a final decision on the merits for purposes of issue
preclusion.
title="">[3] Thus, the principle of direct estoppel
dictates that Debro is bound by the prior determination that the limitations
period for his claims under the Act expired in August 1998, or three years
after the responsible officials from the East Bay Entities knew of the false
claim or had knowledge of facts that would lead a reasonably prudent person to
suspect the claim was false. (See
953-956.)
Debro
claims he is not bound by Debro I because
it concerned intentional false claims
and did not consider unintentional or
inadvertent false claims, such as the one presented by his fifth cause of
action under section 12651, subdivision (a)(8).
We are not persuaded. Although
his cause of action under section 12651, subdivision (a)(8) presents a new
theory of liability, the cause of action turns on the same alleged false claim
and primary right considered by the court in Debro I—i.e., the 1995
loans that were allegedly a gift of public monies to the Raiders. Because the cause of action rests on the same
alleged false claim as the causes of action held to be time-barred in
beneficiary†theory of liability is immaterial to the direct estoppel
analysis. “For purposes of issue
preclusion, . . . , an ‘issue’ includes any legal theory or factual
matter which could have been asserted in support of or in opposition to the
issue which was litigated.†(
Diego, supra, 142 Cal.App.4th at pp. 1565-1566.)
Further,
Debro’s argument ignores the basis on which the appellate court decided the
statute of limitations issue in Debro
I. The decision turned on when the
officials at the East Bay Entities with responsibility for taking action knew
or had reason to know of the true nature of the 1995 loans. (Debro
I, supra, 92 Cal.App.4th at pp. 953-956.)
The court concluded the responsible officials were on notice of the
facts supporting a characterization of the loans as a false claim as early as
August 1995. (Ibid.) For purposes of
assessing the public officials’ knowledge, which is the pertinent inquiry for
statute of limitations purposes, it is irrelevant whether the false claim was
submitted intentionally or inadvertently.
As the court recognized in Debro
I, “[i]t is not necessary that all of the facts be discovered for the
limitations period to commence.
[Former] [s]ection 12654, subdivision (a) merely requires that the
responsible government officials be placed on notice of the facts giving rise
to the claim, not that they learn of every detail or determine the particular
legal theory the plaintiff would later assert.â€
(Id. at p. 955.)
Moreover,
it is of no consequence that a trial court in Los Angeles rendered a decision
in 2002 characterizing the 1995 loans as revenue under the NFL’s
constitution and bylaws. That determination did not restart the
limitations period or change the fact that responsible officials knew of the
true nature of the loans seven years earlier.
Accordingly, as a matter of direct estoppel, we conclude Debro is bound
by the court’s determination in Debro I that
the limitations period for his claims under the Act expired in August
1998. The trial court did not err in
sustaining the demurrer to the complaint on that basis.
Even
if direct estoppel did not apply under the circumstances presented here,
Debro’s claim would still be time-barred under a straightforward application of
the rule in Debro I that claims under
the Act expire three years after the responsible public official “either knows
of the false claim or knows of facts which would lead a reasonably prudent
person to suspect it.†(
953.) The issuance of the 2002 Los Angeles
trial court decision as alleged in the complaint would have caused a prudent
public official to suspect that grounds existed to characterize the 1995 loans
as false claims under the Act, even if that official had no reason to know the
true nature of the loans before that date.
Thus, even if we focus solely on the allegations of the complaint and
ignore the prior determination in Debro I,
the limitations period expired no later than 2005, three years after the
issuance of the Los Angeles trial court’s decision. Because Debro’s complaint was filed seven
years after the limitations period expired, it is untimely and subject to
dismissal.
Debro
contends the rule announced in Debro I does
not apply to inadvertent false claims alleged under subdivision (a)(8) of
section 12651. He also makes a novel
argument that the statute of limitations has not yet begun to run on the
violation because the Raiders have not yet notified the East Bay Entities of
the false claim following their discovery of the claim’s falsity. According to Debro, the limitations period on
an inadvertent beneficiary claim does not commence until the beneficiary
discovers the falsity of the claim and
notifies the responsible government official of the claim. The argument is frivolous.
Debro’s
interpretation is in direct conflict with the language of former section 12654,
subdivision (a), which establishes that the limitations period commences when
the responsible government official discovers the false claim. By its plain terms, former section 12654,
subdivision (a) applies to any “civil action†filed under the Act and is not
limited to intentional or willful false claims under subdivisions (a)(1)
through (a)(7) of section 12651, as Debro contends. Thus, the critical inquiry for purposes of
determining when the limitations period commences on an “inadvertent
submission†claim is the point in time the responsible public official
discovers the false claim, irrespective of if or when an inadvertent
beneficiary notifies the official of the existence of the false claim.
As
a final matter, we consider whether the trial court acted within its discretion
in sustaining the demurrer without leave to amend. Debro bears the burden of establishing a
reasonable probability that an amendment could cure the defects in his
complaint. (See Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th
39, 44.) Because Debro has offered no
allegations to support the possibility of amendment and no legal authority
showing the viability of new causes of action, we discern no abuse of
discretion in denying leave to amend.
The
judgment is affirmed. Respondent shall
recover its costs on appeal.
_________________________
McGuiness,
P.J.
We concur:
_________________________
Pollak, J.
_________________________
Siggins, J.
Government Code unless otherwise specified.
effective January 1, 2010, and again on January 1, 2013. (Stats. 2009, ch. 277, § 4; Stats. 2012,
ch. 647, § 6.) We use the term
“former section 12654, subdivision (a)†to refer to the version of the statute
last amended by Statutes 1996, chapter 1051, section 1.
