Opinion
NOT TO BE PUBLISHED
San Francisco City & County Super. Ct. No. CGC-05-447971
Margulies, J.
Defendant Pier 39 Limited Partnership (Pier 39) obtained a dismissal of this action on demurrer. Pier 39 soon after sought attorney fees under both the False Claims Act (FCA) (Gov. Code, § 12650 et seq.) and the general sanctions provisions of Code of Civil Procedure section 128.7, contending plaintiff Joe Abuzaid’s claims were frivolous and brought for an improper purpose. The trial court denied both motions. We find no abuse of discretion and affirm.
I. BACKGROUND
In December 2005, Abuzaid filed an action against Pier 39 under the FCA. The procedural history of the action is recounted in our nonpublished decision affirming dismissal of Abuzaid’s action on demurrer, Abuzaid v. Pier 39 Limited Partnership (June 29, 2009, A122629) (Abuzaid I).
In brief, Abuzaid’s complaint alleged Pier 39 had engaged in a number of shady business practices to evade its obligations under a lease with the City and County of San Francisco (City). By the time the action was filed, the general nature of these business practices had been publicly exposed through lawsuits and news articles, and Abuzaid’s complaint alleged the same general type of misconduct already in the public record. The trial court did not dismiss Abuzaid’s complaint in response to Pier 39’s initial demurrer, granting Abuzaid leave to amend to add more specific factual allegations, but the second demurrer was granted without leave to amend. Following that dismissal, Abuzaid filed an unsuccessful motion for reconsideration.
In affirming the trial court’s dismissal, we noted the determinative statute was Government Code section 12652, subdivision (d)(3), known as the “public disclosure bar, ” which precludes FCA claims based on facts already publicly known unless the plaintiff was the source of the public disclosure. As we explained, California case law contains two different models for interpreting the public disclosure bar. Abuzaid relied on one, City of Hawthorne ex rel. Wohlner v. H&C Disposal Co. (2003) 109 Cal.App.4th 1668, 1677 (Wohlner). Pier 39 argued for application of the other, State of California v. Pacific Bell Telephone Co. (2006) 142 Cal.App.4th 741 (Grayson). For reasons detailed in Abuzaid I, we concluded the approach contained in Grayson was a better fit and applied it to affirm the trial court’s decision.
Soon after the denial of Abuzaid’s motion for reconsideration, and prior to our decision in Abuzaid I, Pier 39 filed two separate motions in the trial court for awards of attorney fees. The first relied on Government Code section 12652, subdivision (g)(9), which allows such an award in an FCA action if the court finds an unsuccessful plaintiff’s claim was frivolous or harassing. This motion disclaimed any intent to obtain attorney fees in connection with Pier 39’s initial demurrer. Instead, Pier 39 sought fees it incurred after Abuzaid filed his first amended complaint, arguing “Mr. Abuzaid’s refusal-or, likely, inability-to provide factual support for his claims following clear directive from this Court following Pier 39 LP’s first successful demurrer, indisputably establish[es] that Mr. Abuzaid’s action against Pier 39 LP was entirely frivolous.” The second motion, filed under Code of Civil Procedure section 128.7, sought attorney fees incurred for the defense of Abuzaid’s motion for reconsideration, arguing the motion did not comply with Code of Civil Procedure section 1008, subdivision (a) and was filed for an improper purpose.
The trial court denied both motions. In explaining its tentative decision on the first motion, the court commented, “I don’t believe that the motion... was clearly frivolous, clearly vexatious or brought solely for the purposes of harassment. To the contrary. I think the plaintiff believed everything he alleged.... I think the action was brought solely for the purpose of obtaining the relief requested.” In reaffirming the tentative ruling following a brief argument, during which Pier 39’s counsel discussed the application of an objective standard, the court stated, “[W]hat’s going on here is the plaintiff believes or believed that those claims were valid, those claims in an entirely different format were within the remaining case here, and on an objective standard, I can’t say that the purpose of this was within the terms of the standards in the statute. [¶] So the ruling stands.”
Explaining its tentative ruling to deny the second motion, the court said, “I don’t think that that motion to reconsider could be viewed as being brought for an improper purpose such as to delay or harass Pier 39. It was brought for the stated purpose: To get me to reconsider what I had once decided.... [¶]... I found that the plaintiff was wrong as a matter of law, but that’s different than the plaintiff having an improper purpose.” Responding to the argument Abuzaid had made the motion only to augment the appellate record, the court said, “[I]f this was an attempt to augment the record, it’s a poor strategy so I don’t believe that’s what it was.”
II. DISCUSSION
Pier 39 contends the trial court abused its discretion in denying the motions for attorney fees.
A. Attorney Fees Under the FCA
Government Code section 12652, subdivision (g)(9) permits a prevailing defendant in an FCA suit to seek attorney fees and costs if “the claim was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.” The provision has not been applied in a reported decision in California, but there are federal cases construing a parallel federal statute containing identical language, section 3730(d)(4) of title 31 of the United States Code. Because our state FCA was patterned after the federal statute, cases construing the federal FCA provide “appropriate” precedent. (State of California v. Altus Finance (2005) 36 Cal.4th 1284, 1299.)
Government Code section 12652, subdivision (g)(9) reads in full: “If the state, a political subdivision, or the qui tam plaintiff proceeds with the action, the court may award to the defendant its reasonable attorney’s fees and expenses against the party that proceeded with the action if the defendant prevails in the action and the court finds that the claim was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.”
Any one of the three conditions contained in the statute-frivolousness, vexatiousness, or harassment-is alone sufficient to justify an award of attorney fees under Government Code section 12652, and these conditions are measured by an objective standard. (Mikes v. Straus (2d Cir. 2001) 274 F.3d 687, 705.) Emphasizing the language of the statute, however, one federal decision noted that “fees are only to be awarded [under the FCA] where the underlying action was clearly frivolous or clearly vexatious or primarily harassing in nature-and even then, an award is not mandatory.” (U.S. ex rel. Mikes v. Straus (S.D.N.Y. 2000) 98 F.Supp.2d 517, 526, affd. (2d Cir. 2001) 274 F.3d 687.) A claim is frivolous “when, viewed objectively, it may be said to have no reasonable chance of success, and present no valid argument to modify present law.” (274 F.3d at p. 705.) We review the trial court’s decision for abuse of discretion. (Id. at p. 704.)
Based on the trial court’s comments at the opening of the attorney fees hearing, Pier 39 contends the court improperly applied a subjective standard in evaluating Abuzaid’s claims. Regardless of the court’s initial explanation for its decision, counsel for Pier 39 subsequently argued the correct objective standard, and the trial court demonstrated its awareness that an objective standard should be applied when reaffirming its tentative ruling at the close of the hearing. Accordingly, we find no basis for concluding the trial court applied an improper legal standard.
We find no abuse of discretion in the trial court’s conclusion Abuzaid’s claims were not frivolous or otherwise within the FCA attorney fees statute. In reviewing the legal viability of Abuzaid’s claims, we take his factual allegations to be true, given the dismissal of his action on demurrer. But for the public disclosure bar, those allegations stated a claim under the FCA. As noted in Abuzaid I, supra, A122629, Abuzaid alleged Pier 39 (1) diverted income and did not report income to the City; (2) required subtenants to pay a percentage of gross sales to an entity created to manage corporate sponsorship activities, thereby diverting rental income; (3) did not report corporate sponsorship income to the City; (4) did not truthfully report the ownership interests of its officers, employees, and affiliated entities in at least 15 specifically identified businesses at the Pier and granted these businesses lower rents, thereby evading the requirement of paying economic rent on the income of those businesses and artificially lowering the rent that was reported; and (5) granted lower rent to favored subtenants who agreed to divert a portion of their sales to Pier 39 or its officers or employees. The trial court could readily have concluded these activities constituted the type of “false or fraudulent claim” prohibited by the FCA, and they were pleaded with sufficient particularity to satisfy the statute. (Gov. Code, § 12651, subd. (a)(1).)
While we concluded in Abuzaid I these allegations were precluded by the public disclosure bar, that ruling was not a foregone conclusion. As mentioned above, two reported decisions have taken different positions with respect to the bar. Grayson, which we followed, applied the bar both to claims that had already been disclosed and to claims “ ‘ “substantially similar” to those already in the public domain so that the publicly available information is already sufficient to place the government on notice of the alleged fraud.’ ” (Grayson, supra, 142 Cal.App.4th at p. 748.) Not all of Abuzaid’s claims were identical to those in the public domain, but, we held, all were similar enough that the City was on notice of them.
Wohlner, in contrast, held that FCA claims were barred under the public disclosure bar only if the action alleged the same conduct that was described in the public disclosures. (Wohlner, supra, 109 Cal.App.4th at p. 1684.) Because not all of Abuzaid’s specific allegations were shown to have been contained in public disclosures, the claims were viable under Wohlner. Had we followed Wohlner rather than Grayson, at least some of his allegations would have survived. Because Wohlner was a precedent of equal stature with Grayson at the time Abuzaid filed his lawsuit, his claims were not “plainly frivolous.” In light of this viability, the trial court did not abuse its discretion in denying Pier 39’s claims.
In the type of questionable advocacy that has plagued this litigation (Abuzaid I, supra, A122629, fn. 4), Pier 39’s appellant’s opening brief does not even cite Wohlner, let alone discuss this obvious argument against the award of fees, which was raised below by Abuzaid in opposing the fees motion and discussed extensively in Abuzaid I. Pier 39’s argument in its reply brief that Wohlner was not raised by Abuzaid until his motion for reconsideration is, of course, irrelevant to whether Abuzaid’s claims had merit under Wohlner.
Pier 39 argues the claims should be found invalid because Abuzaid did not comply with the trial court’s instructions to add more specific allegations when amending the complaint. Our focus in a motion under Government Code section 12652, subdivision (g)(9), however, is on the plaintiff’s “claim, ” not the plaintiff’s conduct, and the issue is whether that claim “is utterly lacking in legal merit and evidentiary support.” (U.S. ex rel. J. Cooper v. Bernard Hodes (D.D.C. 2006) 422 F.Supp.2d 225, 237–238.) Regardless of whether Abuzaid complied with the trial court’s instructions, his ultimate claim was, for the reasons stated, not frivolous.
Because we find the motion properly denied, we need not consider the argument of respondent Douglas Applegate that attorney fees cannot be awarded against an attorney under the FCA.
B. Code of Civil Procedure Section 128.7 Sanctions
“Code of Civil Procedure section 128.7 provides that the filing of a pleading certifies that, to the attorney or unrepresented party’s ‘knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, ’ the pleading is not being presented ‘primarily for an improper purpose, ’ the claims, defenses and other legal contentions therein are ‘warranted, ’ and the allegations and other factual contentions ‘have evidentiary support.’ [Citation.] If these standards are violated, the court can impose an appropriate sanction sufficient to deter future misconduct, including a monetary sanction.” (Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 575.) “The purpose of section 128.7 is to deter frivolous filings.” (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 826.) We review a trial court’s decision under section 128.7 for abuse of discretion. (Kojababian v. Genuine Home Loans, Inc. (2009) 174 Cal.App.4th 408, 422.)
Pier 39 argues Abuzaid’s motion for reconsideration was frivolous because, by relying on information that had been known to Abuzaid since the filing of the complaint, it did not satisfy the statutory requirements for such a motion under Code of Civil Procedure section 1008 and was offered for an improper purpose because Abuzaid’s main purpose in filing the motion was to insert the materials contained in the motion into the appellate record. While we agree the motion for reconsideration had little chance of success because its primary support was a document that had been submitted to the City long before, a motion is not necessarily frivolous under section 128.7 merely because it is likely to fail. In his motion for reconsideration, Abuzaid explained the failure to present the document earlier, and we find no abuse of discretion in the trial court’s conclusion Abuzaid hoped this explanation would be accepted as adequate to excuse the dated nature of the information. We further find no abuse of discretion in the trial court’s conclusion the motion was made primarily to obtain reconsideration on the basis of this material, rather than as a Trojan horse to insert the material into the appellate record. As the trial court noted, that tactic was unlikely to succeed unless the motion itself was a success. Contrary to Pier 39’s claim, the court’s reasoning represented the application of an objective, not a subjective, standard.
III. DISPOSITION
The order of the trial court denying Pier 39’s motions is affirmed.
We concur: Marchiano, P.J., Banke, J.