OCCORD’s Loss to Anaheim re. GardenWalk Giveaway translated into understandable terms.

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Case dismissed — on a combination of technicalities and failure of anti-corruption legislation.

(1) Case Dismissed, Merits Remain

Yesterday, OCCORD lost its lawsuit against the City of Anaheim’s giveaways to Bill O’Connell, owner of the GardenWalk hotel project in front of Judge David McEachen of what Matt Cunningham’s unconscious mind describes in his story as the “Superior Curt.”  Seriously.  Somewhere, Sigmund Freud is applauding.

Normally, I don’t like to pick on other people’s typos, but this one is just SO FUNNY.

Interest declared: your humbe author is CATER’s General Counsel and, as the Cunningblog notes, OCCORD “has been represented in this suit by liberal litigator Cory Briggs (who is also CATER’s partner-in-litigation against the Anaheim Convention Center expansion)” — which is true if by “is” one means “was, but hasn’t been since the matter was settled half a year ago.”  CATER doesn’t disclaim our former association with Briggs, though: another judge might have come to a different conclusion in this case (something that Anaheim certainly recognizes when it loses) and we admire and appreciate Briggs’s and OCCORD’s willingness to put the city’s kleptocracy to the test.

The value of such a loss can be in its forcing a city to publicly acknowledge facts that it very much would prefer not to.  This is what happened in CATER’s suit over the Convention Center, in which the City acknowledged that in its view a bare Council majority could spend literally any amount it wanted without the need to abide by state law, the City Charter, or to go to a public vote — a shocking assertion that the general public surely has not yet quite come to understand.  But it soon might … especially now that we’re entering budgeting season and the City has apparently decided to publicly acknowledge some inconvenient truths about bond indebtedness.  (More on that coming up….)

One welcome bit of candor: the Cunningblog notes that the “ruling clears the way for the development of two luxury hotels next to the GardenWalk,” omitting any mention of them as “four-star” hotels, because — as recently acknowledged in the debate over putting Mayor Tait’s anti-giveaway initiative on the ballot — they don’t actually have to be “four-star” hotels, despite that all of the rosy projections depend on this being assured.

It’s a bit like telling the people that one has paid big bucks for a four-tier wedding cake when the contract only says that the cake will have “a few” tiers.  Hey — “a few” could be four!

(2) The Ruling

Judge McEachen’s tentative ruling stated the following:

The Demurrers filed by Defendants City of Anaheim et al and by Gardenwalk Hotel I, LLC are SUSTAINED without leave to amend.

As the Court previously stated in its January 30, 2015 ruling, the EAA’s at issue represent a public financial commitment for the development of projects in the City and are thus subject to the validation statutes. As no action was filed within 60 days of the approval of the EAA, claims as to the validity of the EAAs are untimely. (C.C.P. Section 869; Kaatz v. City of Seaside (2006) 143 Cal.App.4th 19, 30; Walters v. County of Plumas (1976) 61 Cal. App. 3d 460,467-468.)

Plaintiff was granted leave to amend to the extent Plaintiff could state a claim that would not concern the validity of the EAAs. However, Plaintiff’s Second Amended Complaint is instead an essentially duplicative attempt to attack the validity of the EAAs. For the reasons stated in the Court’s prior ruling, it is thus time-barred.

In addition, the allegations in the Second Amended Complaint again fail to plead a cognizable claim. An impermissible financial interest does not arise based only on votes favorable to campaign contributors: instead, there must be some financial or pecuniary benefit to the governmental official which could sway his or her judgment. (Breakzone Billiards v. City of Torrance (2000) 81 Cal.App.4th 1205, 1230.) Claims based on the assumption that accepting campaign contributions from persons interested in the EAAs created conflicts of interest for the recipients thus fail as a matter of law. Reference to a newspaper article and email in the Opposition fail to cure this defect, as even if such allegations had been made in the Second Amended Complaint, they would be insufficient to show a cognizable claim, as an alleged unreported meal long after the vote at issue is insufficient to demonstrate a “financial or pecuniary benefit to the governmental official which could sway his or her judgment.”

The Second Amended Complaint’s claims as to Rutan & Tucker LLP also again fail to state a cognizable claim. The Second Amended Complaint now adds allegations that the firm obtained work due to overlapping representation. (Second Amended Complaint paragraph 12(B)(iv).) But that still assumes a financial interest based on fees charged for services performed. As noted in Quantification Settlement Agreement Cases (2011) 201 Cal.App.4th 758,820, counsel do not violate Section 1090 by negotiating agreements with or for a public entity, absent evidence that the attorney or firm “stood to gain or lose financially” based thereon. Allegations that counsel was paid for services rendered are insufficient to state a Section 1090 violation.

The Demurrers are thus sustained. In addition, as the Second Amended Complaint demonstrates that Plaintiff has been unable to amend to state a cognizable claim, and no basis for further amendment which would cure the defects in the pleading has been identified, the Demurrers are sustained without leave to amend.

Plaintiff’s unopposed Request for Judicial Notice as to Ch. 1.09 of the Anaheim Municipal Code is GRANTED under Ev. Code Section452(b).

Gardenwalk’s unopposed Request for Judicial Notice as to Exs. 1 and 2 is GRANTED under Ev. Code Section 452(d) and (b), respectively.

City’s Evidentiary Objections are SUSTAINED (hearsay).

Counsel for City is to give notice of these rulings. Moving parties are to submit proposed orders in accordance with C.R.C. 3.1312.

Great.  So what does that mean?  Was what the City did OK?

No.  You can win a case without getting a clean bit of health.  That happened here.

(3) The Translation

The major ruling in that case was that OCCORD did not file within the necessary statute of limitations.  That’s because a set of statutes (called “validation statutes”) requiring that action be taken within 60 days, which Briggs apparently did not think would apply, were found to apply to the Council’s action.  Note how powerfully that stacks the deck for the city: any watchdog group has to ramp up to full speed almost immediately, under this view, to have any change to challenge a corrupt contract.  The Court gave OCCORD another swing of the bat — but forced them to use a plastic bat.  It’s hard to hit major league pitching (or in this case maybe AAA minor league pitching) with that.  Briggs tried a workaround; it did not work.

I offer a nice slow clap for Rutan & Tucker’s adept lawyering here — but the technical victory does nothing to exonerate the city on the merits.

The next position stated is that, to oversimplify slightly, if it’s not a direct payoff to the City official then it’s not a bribe.  We’ve just seen an election where the quid pro quo involved in Anaheim politics is clear to any observer who wants to open their eyes.  Curt Pringle, and some Disney Princesses are able to arrange huge campaign contributions to Jordan Brandman and Kris Murray in exchange for their unquestioning (and occasionally incoherent) fealty on the City Council.  (They did enough for Gail Eastman to have won too, had Murray’s allies not held back some voters for her — because if Vanderbilt was going to knock out one of the incumbents then Queen Cersei was going to make damn sure that it wasn’t her.)  And the same people helped to retire Lucille Kring’s campaign debt in a startling but not provable-in-court quid pro quo in which she gave Pringle her fealty.  They all profit from these relationships, but it’s largely political profit (which in the wrong hands has a way of leading to personal profit as well) — in both career success and in campaign contributions.

Some judges in a given situation might say “OK, we’ll let you go to discovery and see what you can prove after depositions and such.”  Others won’t.  The likelihood of O’Connell having communicated to the former Council majority that he was trading campaign contributions (or whatever) for votes may not be that low, but the likelihood of their being documentary evidence of it is lower, and the likelihood of getting it without being able to take sworn statements is lower still.  Some day, I do believe, the Pringle Ring will explode and there will be a race for immunity in exchange for giving state’s evidence about how the machinations worked.  We’re not there yet.

Does the ruling exonerate anyone from OCCORD’s allegations?  Not at all.  To me, that matters.  But to other local political bloggers, all that matters is what the Curt says.  COURT!  I meant to say “Court.”

As for the allegations against Rutan & Tucker, I’d need to read them and understand their specifics — and, probably, not have an active case against the firm — to comment.  But the idea here seems to be that simply paying a law firm doesn’t give them an improper financial interest in a matter, which may against lead some judges to allow a closer look under the hood and others to do so.

(4) Anaheim Crows Its Victory

The City of Anaheim issued a statement late Tuesday afternoon:

CITY OF ANAHEIM PREVAILS IN SUIT BROUGHT BY OCCORD, CHALLENGING GARDENWALK ECONOMIC ASSISTANCE AGREEMENTS

Court rules that suit must be dismissed 

ANAHEIM, Calif. (May 26, 2015) Today, the Orange County Superior Court unequivocally rejected the false allegations brought by a special interest group known as OCCORD and its lawyer Cory Briggs, who used litigation as a weapon to stymie economic growth in Anaheim. The City is grateful that the Court found that the claims had no merit and, accordingly, ruled that OCCORD’s suit must be dismissed.

The City Council’s decision in 2013 to approve economic incentives to construct high-end hotels at the GardenWalk in Anaheim was the result of the Council’s wisdom to plan for Anaheim’s future by bringing jobs, adding revenue to the City’s General Fund by providing more high-end hotel accommodations to visitors and, in the process, funding expanded City services that benefit the entire community.  

Anaheim’s leadership in the tourism industry benefits the City and all of its residents. Throughout Orange County, tourism supports more than 150,000 local, permanent jobs and more than $9 billion in local economic activity – both of which continue to increase. The Anaheim Resort contributes a net of more than $67 million dollars annually from tax revenues which are comprised of Transient Occupancy Taxes, Sales and Use Taxes, Property Taxes, and Business License Taxes.

OCCORD filed their lawsuit on May 9, 2014, nearly one year after the City Council’s approval on May 14, 2013 for these agreements, in an attempt to stop a project that was of benefit to the entire Anaheim community. “The public should realize that the disruptive litigation practices of OCCORD, and those like them, have consequences: Lawsuits such as this cost the City economically and, for those doing business in the City, creates uncertainty and delay,” said City Attorney Michael R.W. Houston.

For more information on the City of Anaheim’s GardenWalk Hotel economic assistance, please click here.

What rot.  On to the conclusion

(5) PR Propping Up a Sketchy Council Majority is Unpersuasive

It is unfortunate that public money goes to this sort of PR.  Recall from Section (3) above that what the Judge actually decided was that the suit was filed too late and that it was not possible to show that certain (apparently undisputed) financial arrangements were unlawful rather than just unethical.  Here’s how that sounds in Anaheim-Speak:

rejected the false allegations

PR flunky invites you to infer that there’s no evidence to allegations of wrongdoing.  It would be more fair to say that some wrongdoing may not be prohibited by law.  (Sorry to shock everyone here.)

brought by a special interest group

Hold on.  What’s the “special interest” here?  OCCORD, like CATER, wants substantively clean government — not just “technically permissible” or “beyond easily proven.”  That’s a public interest, and it’s a general interest.

What’s a “special” interest?  How about a well-connected developer getting a city to just give you $158 million that you can keep even if the hotel you built isn’t four-star — or if you don’t personally build the hotel at all, but just sell development rights to some other interest while keeping the publicly ladled gravy.  That’s not a “general interest.”

How about a politician bending over backwards to help someone who — even without a written contract — it can reasonable be presumed is quite likely to give large campaign contributions as a gesture of, oh, “respect and gratitude”?  That’s not a special interest either.

I cringe when I see private PR groups running campaigns and sycophantic blogs turning out this sort of claptrap.  But for the PUBLIC to have to pay for it!  Pretty soon you’ll see them using public funds to praise the Council Majority’s “wisdom”!

used litigation as a weapon to stymie economic growth in Anaheim

Or, alternatively, “used litigation to fight local government corruption.”  Some people have a hard time telling the difference.

grateful that the Court found that the claims had no merit

Well, not exactly.  See above.  They “have no merit” in the sense that a claim that if a corporation at a retreat provides convention-goers with beautiful companions who will have sex with them enthusiastically, often, and without consequence or fee — knowing that if they decided not to do so they would not be hired to “escort” attendees at future conventions — it’s not prostitution because the companion is not trading sex for money so long as she can get paid that day without providing sex.

Trying to get convictions for those engaged in such practices for prostitution and pimping may not succeed — perhaps surprisingly, this is a pretty effective defense — but it doesn’t mean that the charges “have no merit.”  They may fail legally, but have power ethically, morally, and politically — and their exposure may lead to reforms.

was the result of the Council’s wisdom to plan for Anaheim’s future

See?  I told you they would try something like this!

benefit the entire community

That assertion is highly disputed — as are the figures in the paragraph that follows.  (But that is Cynthia’s area of expertise, not mine.)

“The public should realize that the disruptive litigation practices of OCCORD, and those like them, have consequences: Lawsuits such as this cost the City economically and, for those doing business in the City, creates uncertainty and delay,” said City Attorney Michael R.W. Houston.

Yes they do.  Even when they lose, they can bring facts and practices to light that the City and its PR machine would rather keep quiet — as happened in the Convention Center cases.  (And lawyers who are willing and able to make and win some of these far-fetched arguments aren’t cheap.)

But, in the spirit of compromise, it may be fair to call them “disruptive.”  When they are aimed at ethically questionable practices, shouldn’t they be?