2010-00093999-CU-CR

C2PM Inc vs. CA Department of Transportation

Nature of Proceeding:    Motion to Strike Punitive Damages in Third Amended Complaint

Filed By:  Ahern, James F.

Defendant State of California, Department of Transportation (“Caltrans”) and David
Pang  (collectively “Defendants”) motion to strike punitive damages (Prayer, para. 2)
from Plaintiff C2PM, Inc.’s (“Plaintiff” or “C2PM”) third amended complaint (“TAC”) is
GRANTED without leave to amend.

In order to state claim for punitive damages, a plaintiff must allege that the defendant
is guilty of “oppression, fraud, or malice.” (Civil Code §3294(a).) “Malice” under Civil
Code §3294(c)(1) means conduct intended to injure the plaintiff or despicable conduct
by the defendant with a willful and
conscious disregard of others. “‘Fraud’ means an intentional misrepresentation, deceit,
or concealment of a material fact known to the defendant with the intention on the part
of the defendant of thereby depriving a person of property or legal rights or otherwise
causing injury.” (Civil Code §3294(c)(3).)

Paragraph 2 of the Prayer seeks “exemplary damages against the individual              defendants.”  Caltrans moves to strike this allegation because it cannot be liable for
punitive damages (Gov’t Code section 818).  However, as pled, Plaintiffs do not seek
punitive damages against Caltrans, but only against the individual defendant, David
Pang.

Nonetheless, the Court agrees with Defendants that as pled against Pang, the TAC
does not sufficiently plead malice, oppression or fraud.

The Court declines to grant leave to amend as Plaintiff has had a number of
opportunities to cure the defects noted in the motion.

The minute order is effective immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.

Item   3     2010-00093999-CU-CR

C2PM Inc vs. CA Department of Transportation

Nature of Proceeding:      Hearing on Demurrer to Third Amended Complaint

Filed By:    Ahern, James F.

***  If oral argument is requested, the parties must at the time oral argument is
requested notify the clerk and opposing counsel of the causes of action that will
be addressed at the hearing.  Counsel are also reminded that pursuant to local
court rules, only limited oral argument is permitted on law and motion matters.
***

Defendant State of California, Department of Transportation (“Caltrans”) and David
Pang  (collectively “Defendants”) demurrer to Plaintiff C2PM, Inc.’s (“Plaintiff” or
“C2PM”) third amended complaint (“TAC”) is ruled upon as follows.

Defendants’ request for judicial notice is granted, with the exception of Exhibit D.
Plaintiff’s request for judicial notice is granted.  In taking judicial notice of these
documents, the court accepts the fact of their existence, not the truth of their contents.
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(See Professional Engineers v. Dep’t of Transp. (1997) 15 Cal.4   543, 590 [judicial
notice of findings of fact does not mean that those findings of fact are true]; Steed v.
Department of Consumer Affairs (2012) 204 Cal.App.4th 112, 120-121.)

In this action, Plaintiff alleges that it was selected by The San Francisco County
Transportation Authority (“SFCTA”) to provide construction management services for
the Doyle Drive Project (“Project”).  SFCTA was working in partnership with Caltrans
for the project.  Plaintiff alleges that Caltrans thereafter improperly interfered with
Plaintiff’s role on the Project, substantially reducing the amount of work and its portion
of the budget.  Plaintiff further alleges that Caltrans rejected its bids for other projects
and wrongfully decertified Plaintiff’s status as a Disadvantaged Business Enterprise
(“DBE”).  Plaintiff alleges that these actions were taken in retaliation for Ali Altaha’s, a C2PM employee, complaints against Caltrans.

The TAC contains the following causes of action: (1) Intentional Interference with
Contractual Relations, (2) Intentional Interference with Prospective Economic
Advantage, (3) Violation of 49 CFR §§ 26.1 et seq., (4) Violation of Gov’t Code
§9149.23, (5) Violation of Public Contracts Code §10344, and (6) Civil Conspiracy
(Penal Code §152)

As an initial matter, the Court disagrees with Caltrans that the TAC was not timely filed
pursuant to the Court’s July 12, 2013 order.  The TAC was filed and served via mail on
July 17, 2013 as directed by the Court.  However, given a backlog at the Court, the
TAC was not processed by the Court and scanned into the CCMS system until August
8, 2013.

Demurrer to “General Allegations” and references to “Retaliation”

Defendants demur to certain paragraphs/lines in the “General Allegations” section of
the TAC and references to “Retaliation” throughout the TAC are OVERRULED.  A
demurrer may only be taken as to the complaint as a whole or an entire cause of
action.  (CCP §430.50(a).)  The proper procedure to strike such allegations is a motion
to strike.

Intentional Interference with Contractual Relations, Intentional Interference with
Prospective Economic Advantage, and Civil Conspiracy (Penal Code §152)

Defendants demurs to these causes of action on the grounds that they are based
entirely on common law, and non-statutory tort theories and are thus precluded by
Gov’t Code §815(a).  Defendants further argues that it cannot be vicariously liable for
the actions of Defendant David Pang (“Pang”), a Caltrans employee, because Pang
was exercising his discretion in doing his job. Pursuant to Gov’t Code §820.2, “a public
employee is not liable for an injury resulting from his act or omission where the act or
omission was the result of the exercise of the discretion vested in him, whether or not
such discretion be abused.”  Moreover, Gov’t Code §815.2(b) provides that “a public
entity is not liable for an injury resulting from an act or omission of an employee of the
public entity where the employee is immune from liability.”

In opposition, Plaintiff argues that the TAC explicitly alleges that pursuant to Gov’t
Code §815.2(a), Caltrans is vicariously liable for Pang’s actions because his actions
would have given rise to a cause of action against Pang personally.  Moreover, the
TAC lists a number of other statutes under which Plaintiff alleges Caltrans may be
vicariously liable.  (TAC, ¶ 40.)

At this stage of the proceedings, these allegations are sufficient.  Moreover, whether
Pang was “exercising his discretion” in doing his job is a factual determination that is
outside the scope of a demurrer.

Accordingly, the demurrer to these three causes of action is OVERRULED.

Violation of 49 CFR §§ 26.1 et seq.

49 CFR §§26.1 was enacted to ensure nondiscrimination in the award and
administration of DOT-assisted contracts and regulates the participation of DBEs.
The TAC alleges that C2PM’s president and owner is Rowena Altaha. Defendants
demur to this cause of action on the grounds that Ms. Altaha’s presidency is a sham
because she is only president of C2PM in order to be qualified as a DBE.  Defendants
proffer the DOT’s letter of preliminary determination of ineligibility as a DBE as
evidence that Ms. Altaha admitted that she is not qualified to operate or manage
C2PM.  (Defendants’ RJN, Ex. F.)  The Court notes, however, that while it has taken
judicial notice of the letter, it does not accept the truth of their contents.  Thus, Ms.
Altaha’s “admission” is outside the scope of the demurrer.

Accordingly, the demurrer is OVERRULED.

Violation of Gov’t Code §9149.23

Gov’t Code §9149.23 prohibits a government employee from directly or indirectly using
his authority to intimidate, threaten, coerce, command any person for the purpose of
interfering that that person’s right to disclose improper governmental activities to a
legislative committee.

Defendants demur to this cause of action on the grounds that it is barred by collateral
estoppel because it was fully litigated in the Alameda Superior Court case C2PM, Inc.
v. California Department of Transportation, case no. RG08409876 (“Alameda Action”).
In the Alameda Action , the superior court granted Caltrans’ motion for summary
judgment and summary adjudication as to Plaintiff’s Gov’t Code §9149.23 cause of
action.  At issue were six projects for which C2PM was not awarded a contract.  With
respect to the Gov’t Code §9149.23 cause of action, the court found that because
Caltrans was not an “employee” and Plaintiff did not name any Caltrans employee as a
defendant, Caltrans could not have violated the statute. The court further stated
“whether Caltrans would be liable, pursuant to Government Code section 815.2(a), for
any judgment rendered under section 9149.23 against an “employee” of Caltrans
acting within the course and scope of employment is irrelevant.”  (Defendants’ RJN,
Ex. E.)

Collateral estoppel precludes re-litigation of issues argued and decided in prior
proceedings. Traditionally, courts have applied the doctrine only if several threshold
requirements are fulfilled. First, the issue sought to be precluded from re-litigation 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.)

Here, although the Alameda Action included a cause of action for violation of Gov’t
Code §9149.23, the Court cannot conclude that Plaintiff is collaterally estopped.  First,
there is no indication as to whether the contracts at issue in this litigation were the
same contracts at issue in the Alameda Action .  Indeed, it appears that in the Alameda
Action six contracts were at issue.  In the instant litigation, however, there appears to
be at least twelve contracts at issue.  (See TAC, ¶ 37.)  Moreover, in this instant
action, Plaintiff has now named Pang as a defendant. As noted above, whether Pang
was “exercising his discretion” in doing his job (and thus immune from liability) is a
factual determination that is outside the scope of a demurrer.
Accordingly, the demurrer is OVERRULED.

Violation of Public Contracts Code §10344

Public Contracts Code §10344 provides the criteria upon which request for proposals
will be evaluated and contractor selected.

Defendants demur to this cause of action on the grounds that Plaintiff fails to allege
that a contract existed between Defendants and Plaintiff.

In opposition, Plaintiff argues that Public Contracts Code §10344 does not require a
contract, but rather pertains to matters before a contract is entered into or awarded.

The demurrer is SUSTAINED with leave to amend.  Here, the TAC alleges that Plaintiff
submitted a proposal to SFCTA.  (TAC ¶15.)  Thereafter, SFCTA interviewed Plaintiff’s
team members as part of the bid selection process.  (TAC ¶16.)  SFCTA selected
C2PM as its team for the Project.  (TAC, ¶17.)  There are no allegations in the TAC
that Caltrans was involved in any way in the review and selection of Plaintiff as the
contractor.

The Court grants leave to amend as this is Defendants first challenge to this cause of
action.

Where leave to amend is granted, Plaintiff may file and serve a fourth amended
complaint (“FAC”); CalTrans to file and serve it responsive pleading(s) within 10 days
thereafter, 15 days if the FAC is served by mail. (Although not required by any statute
or rule of court, C2PM is requested to attach a copy of the instant minute order to the
FAC to facilitate the filing of the pleading.)

The minute order is effective immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.

The court notes that moving party has indicated the incorrect address in its notice of
motion.  The correct address for Department 54 of the Sacramento County Superior
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Court is 800 9   Street, Sacramento California  95814.  Moving party shall notify
responding party(ies) immediately.