Fung v. City of Los Angeles

Filed 4/4/07 Fung v. City of Los Angeles CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from a judgment of the Superior Court of Los Angeles County.

James R. Dunn, Judge. Affirmed.

Park & Lim and S. Young Lim Plaintiff and Appellant.

Rockard J. Delgadillo, City Attorney, Laurie Rittenberg, Assistant City Attorney, and Melody B. Bormaster, Deputy City Attorney for Defendants and Respondents.

_________________________

Thomas Fung (Fung) appeals from the trial courts dismissal of his second amended complaint for promissory estoppel, intentional misrepresentation and negligent misrepresentation after sustaining the demurrer filed by respondents the City of Los Angeles (City), Robert M. Sainz (Sainz) and Ann Giagni (Giagni). On appeal, Fung contends that the trial court erred. This contention is not born out by Fungs scant and deficient arguments, nor by the record. Among other things, the facts alleged fail to show that it would comport with public policy for promissory estoppel to be applied against the City, that Fung reasonably relied on any promises made by Sainz or Giagni, or that the immunity for public employees set forth in Government Code section 822.2 does not absolve Sainz and Giagni of liability.

If we are not inclined to reverse, which we are not, Fung alternatively requests an opportunity to amend his pleading. But he failed to demonstrate that a successful amendment is possible and, in any event, he waived his request by not making it to the trial court and preserving the issue.

We affirm.

FACTS

The Second Amended Complaint

Fung sued the City for promissory estoppel and Giagni and Sainz for intentional and negligent misrepresentation on the following allegations.

For several years, the Economic Development and Employment Committee (the Committee) funded Advanced Computing Institute, Inc. (Advanced), a worksource center. Eventually Advanced experienced financial difficulty. On June 22, 2003, Fung entered into a purchase contract with Rodger Lee (Lee), the owner of Advanced, to purchase Advanced for $200,000. The Committee met on June 23, 2003, and approved its budget for the 2004 fiscal year. At that time, the Community Development Department (the Department) recommended that Advanced not receive funding. That issue was tabled until the next session on August 8, 2003, and the Committee instructed the Department to reassess the viability of Advanced in light of Fungs desire to purchase it and infuse it with capital.

Sainz, the Departments assistant general manager, told Fung that the only obstacles to further funding for Advanced were its financial problems and the presence of Lee. Sainz confirmed this with his supervisor, Giagni, the director of the Department. Fung represented that he would perform the purchase contract rather than cancel it if Sainzs statement was true. At that point, Sainz assured Fung that the Department would reverse its recommendation to the Committee if Advanced was able to meet its payroll, pay its lease and cover all other expenses, and that if the recommendation was reversed, funding would be renewed.

In justifiable reliance upon Sainzs assurances, Fung paid $53,857.60 in rent on behalf of Advanced, paid all of its employees and vendors and then paid Lee the $200,000 purchase price.

On July 22, 2003, the Department recommended against giving Advanced funding for the 2004 fiscal year and did not put the matter back on for the Committees August 8, 2003 agenda.

The City, Sainz and Giagni knew or should have known that Fung would rely on their representations by executing a sublease for Advanceds business premises. Further, Fung reasonably relied on their representations by covering Advanceds payroll and other expenses, and by paying Lee. To avoid injustice, Sainzs and Giagnis representations should be enforced against the City.

When Sainz and Giagni made their representations, they made false statements of material fact and knew or should have known that they were false.

The demurrer and subsequent ruling

The City, Sainz and Giagni demurred to the second amended complaint and argued that Fung could not have relied on any representations made to him because they were made after he entered into the purchase contract. Even if his subsequent actions were induced by the representations, they argued that his reliance was unreasonable because the Committee had no obligation to follow the Departments recommendations, and the Committee did not make any representations to Fung. Sainz and Giagni argued that they were immune from liability under Government Code section 822.2 because they were acting in the scope of their employment and the allegations were insufficient to show actual fraud, corruption or malice.

The demurrer was sustained without leave to amend. Fung did not request a further opportunity to plead. The case was subsequently dismissed.

This timely appeal followed.

STANDARD OF REVIEW

The specifics of our review were explained by our Supreme Court thusly: The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. [Citations.] The court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.] The judgment must be affirmed if any one of the several grounds of demurrer is well taken. [Citations.] [Citation.] However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. [Citation.] And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment. [Citation.] (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966967.)

DISCUSSION

Fung contends that the second amended complaint alleged all the necessary elements of promissory estoppel, intentional misrepresentation and negligent misrepresentation. Alternatively, he contends he should be given leave to amend to ameliorate any deficiencies.

We disagree.

1. Promissory estoppel (against the City).

a. The law.

Promissory estoppel is a doctrine which employs equitable principles to satisfy the requirement that consideration must be given in exchange for [a] promise sought to be enforced. [Citation.] [Citation.] (US Ecology, Inc. v. State of California (2001) 92 Cal.App.4th 113, 130.) The doctrine applies against the government where the application of the doctrine would further public policies and prevent injustice. (Id. at p. 131.) The elements of promissory estoppel are (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance. (US Ecology, Inc. v. State of California(2005) 129 Cal.App.4th 887, 901.)

b. Factual sufficiency.

Fung lobbies us to reverse the trial courts ruling with respect to his first cause of action for promissory estoppel by citing equitable estoppel[1]law and purporting to apply it by arguing: [The City] [focuses] on the fact that the [second amended complaint] conceded that [Fung] entered into a contract to buy [Advanced] from the prior owner one day before [Fungs] meeting with Sainz. . . .  However, the [second amended complaint] also makes it clear that payment [for Advanced] was not due until a later date, and that contractual performance by [Fung]and the harm of losing in excess of $200,000did not occur until after [Fung] confirmed with Sainz that the only obstacles to the resumption of funding of [Advanced] were [Advanceds] financial problems and the presence of [Lee]

This analysis is cursory and incomplete at best.

Fung did not endeavor to explain how the application of promissory estoppel against the City would further public policy and prevent an injustice. This leads to but one conclusion. He waived his challenge to the finding that the first cause of action is factually deficient. (Tan v. California Fed. Sav. & Loan Assn. (1983) 140 Cal.App.3d 800, 811.) We note that in his reply brief Fung argues that promissory estoppel needs to be applied to avoid an injustice. But fairness to the City militates against the consideration of points first raised in a reply brief. (See Varjabedian v. City of Madera (1977) 20 Cal.3d 285, 295, fn. 11.)

Even if we were to reach the sufficiency of Fungs allegations, we would find that they are lacking. When this claim is boiled down, Fung wants to enforce the promise that Advanced will be funded. In our view, public policy does not require a public body such as the Committee to honor a promise made by the employee of a wholly separate public body like the Department. Enforcement of such a promise would deprive public bodies of the power to control their functions and purse strings, which could undermine their ability to provide the public with much needed services. Moreover, the second amended complaint does not contain any facts establishing that it was reasonable for Fung to rely on Sainzs promise that the Committee would renew funding. There is no allegation that Sainz or Giagni had the authority to make such a promise, or that they had the power to dictate how the Committee spent its money. (See Hilltop Properties v. State of California (1965) 233 Cal.App.2d 349, 364 [promissory estoppel was properly pleaded because the complaint alleged that the promises were made by the defendants authorized agents].)

2. Intentional and Negligent misrepresentation (against Sainz and Giagni).

a. The law.

Pursuant to Civil Code section 1710, there are four types of deceit that are actionable: (1) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true. (2) The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true. (3) The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact. (4) A promise made without any intention of performing it.

Because Fung alleges that Sainz, Giagni and the City injured him by failing to fulfill their promise to recommend renewed funding and their promise that renewed funding would occur, Fung alleged a cause of action based on Civil Code section 1710, subdivision (4). The action is one of deceit, which requires proof that the defendant made a misrepresentation of fact or a promise without any intention of performing it. [Citation.] A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages. [Citation.] Every element must be specifically pleaded. (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.)

b. Factual sufficiency.

In the opening brief, Fung provides some case citations regarding fraud and then gives us only two sentences pertaining to the viability of the second and third causes of action. According to Fung: [He] . . . raised claims against Sainz and Giagni for intentional misrepresentation and negligent misrepresentation, and [t]he elements of both intentional and negligent misrepresentation are present in the [second amended complaint].

Fungs analysis is conclusionary and insufficient. It is not our responsibility to develop an appellants argument. (Alvarez v. Jacmar Pacific Pizza Corp. (2002) 100 Cal.App.4th 1190, 1206, fn. 11.) Any attempt by Fung to analyze these causes of action in the reply brief is too little, too late.

Our analysis could stop here.

It bears mention that [a] public employee acting in the scope of his employment is not liable for an injury caused by his misrepresentation, whether or not such misrepresentation be negligent or intentional, unless he is guilty of actual fraud, corruption or actual malice. (Gov. Code, 822.2.) This immunity applies unless, in addition to the essentials of common law deceit, a public employee is motivated by corruption or actual malice, i.e., a conscious intent to deceive, vex, annoy or harm the injured party in his business. (Schonfeld v. City of Vallejo (1975) 50 Cal.App.3d 401, 410, overruled on other grounds in Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 743.) Based on this immunity, Sainz and Giagni cannot be liable for negligent misrepresentation.[2]

As for intentional misrepresentation, the second amended complaint does not contain allegations of corruption. Further, Fung did not allege actual malice, i.e., that Sainz and Giagni harbored a conscious intent to deceive, vex, annoy or harm. All Fung alleged was that Sainz and Giagni made various misrepresentations out of self interest so that they could shield themselves from the repercussions of Advanceds financial problems, and that they knew or should have known that Fung would be induced to rely.
Because Fung did not allege intent to deceive, or any other fact suggesting actual malice, the pleading is deficient. It is deficient for the further reason that the facts alleged do not demonstrate reasonable reliance.

3. There is no basis for allowing Fung to amend.

Fung contends that the trial court denied him an opportunity to amend the second amended complaint. Based on the appellate briefs, it appears that no request was made, which means that Fung forfeited his right to argue this point on appeal. (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1092.) Even if Fung did make the request but simply neglected to provide us with a record citation evincing that request, he did not meet his burden of demonstrating a reasonable possibility that he can cure the pleading defects. He simply informs us that [a]ny omissions in [his] pleading could have been rectified without contradicting the factual content of the [second amended complaint]. Simply put, he did not address the plethora of defects in his pleading, which amply ends the issue.

DISPOSITION

The judgment of dismissal is affirmed. The City, Sainz and Giagni shall recover their costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

______________________________, J.

ASHMANN-GERST

We concur:

_______________________________, Acting P. J.

DOI TODD

_______________________________, J.

CHAVEZ

Publication courtesy of California pro bono lawyer directory.

Analysis and review provided by Chula Vista Property line attorney.

[1] Promissory estoppel and equitable estoppel are different. The former involves a promise and the latter involves a misrepresentation of an existing fact. (Panno v. Russo (1947) 82 Cal.App.2d 408, 412.)

[2] The negligent misrepresentation cause of action is based on allegedly false promises and is factually defective as a matter of course. The court in Tarmann v. State FarmMut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 159 established the rule when it stated: Simply put, making a promise with an honest but unreasonable intent to perform is wholly different from making one with no intent to perform and, therefore, does not constitute a false promise. Moreover, we decline to establish a new type of actionable deceit: the negligent false promise.