>HUB CITY
SOLID WASTE SERVICES, INC., v. CITY OF >COMPTON >



















Filed 7/19/10













CERTIFIED FOR
PUBLICATION











IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE DISTRICT



DIVISION FOUR






>

HUB CITY SOLID WASTE SERVICES, INC., et al., Plaintiffs, Cross-defendants, and Appellants, v. CITY OF COMPTON, Defendant, Cross-complainant, and Respondent.

B196639 (Los Angeles County Super. Ct. No. BC323801)

APPEAL from a judgment of the Superior
Court of Los Angeles
County, Joanne O'Donnell, Judge.
Affirmed.

Philip D. Dapeer, A Law Corporation, Philip D. Dapeer; Law
Office of Edward M. Medvene, and Edward M. Medvene, for Plaintiffs, Cross-defendants
and Appellants.

Goodstein & Berman, Gary J. Goodstein and Bruce A.
Berman, for Defendant, Cross-complainant and Respondent.





____________________________

This conflict of interest case grew out of a suit and
cross-action centering on the activities of appellants Michael Aloyan and HUB
City Solid Waste Services, Inc. (HUB).
The city of Compton had
awarded a 15-year waste collection franchise to HUB. Some years later, Compton
terminated the franchise. HUB sued for
breach of contract. Compton
cross-complained against HUB and Aloyan, seeking to void the contract and
disgorge funds from appellants.

The trial court found that Aloyan was HUB's alter ego, and
granted summary adjudication in favor of Compton
on its claim for declaratory relief
that it did not breach the franchise agreement when terminating it. At trial, Compton advanced two conflict of
interest theories under Government Code section 1090 (section 1090), arguing
that Aloyan had a prohibited financial interest in the franchise because of his
role in managing Compton's in-house waste division, and the franchise was void
because members of the Compton city council had illegal interests related to
campaign contributions and favors given by HUB and Aloyan. A jury unanimously found that appellants had
violated section 1090 and were liable for over $22 million in damages to Compton. Compton's
motion for nonsuit was then granted as to appellants' complaint.

This
appeal followed. Appellants argue
section 1090 does not apply because neither Aloyan nor HUB was an official or
employee of the city, and there was insufficient evidence to prove bribery of
city council members. We disagree. Evidence presented at trial supported a
finding that Aloyan, through AUS, acted as a public official in advising Compton
on its waste collection operations.
There also was sufficient evidence showing that the campaign
contributions and jobs for the council members' relatives were provided in
return for the council members' approval of the franchise agreement with
HUB. The trial court did not abuse its
discretion in allowing the introduction of evidence about Aloyan's prior
involvement with payments to public officials in connection with government
contracts.

Appellants also claim that the trial court erred in
determining that Aloyan was HUB's alter ego, and that disgorgement was not the
appropriate remedy. As we shall explain,
we do not agree.

FACTUAL AND
PROCEDURAL SUMMARY

Following well-established
rules on appellate review after a trial on the merits, we construe the facts in the light most
favorable to the judgment. (Woodman
Partners v. Sofa U Love (2001) 94 Cal.App.4th 766, 771.)

Private vendors held franchises for Compton's
waste collection operations. These
agreements were due to expire in 2000.
In 1999, Compton's assistant
city manager, Lawrence Adams, was instructed to study the feasibility of the
city internalizing its waste management services. Requests for proposals for new franchise
agreements were suspended. A feasibility
study and an associated business plan projected more than $700,000 in annual
savings for Compton if it brought
its waste management â€