Opinion
C080353
03-12-2021
ECO FIRE SOLUTIONS, LLC, Plaintiff and Appellant, v. DEPARTMENT OF GENERAL SERVICES et al., Defendants and Respondents; ICL PERFORMANCE PRODUCTS, LP, Real Party in Interest and Respondent
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34-2012-80001290-CU-WM-GDS)
In an effort to combat forest fires, the Department of Forestry and Fire Protection (Cal Fire) utilizes air tankers to drop fire chemicals on the fire. These fire chemicals are composed mainly of water, but also contain chemicals that help control where the drops land and increase the water's adherence to the fuel. Here we are concerned with water-enhancing fire chemicals supplied by several vendors including appellant Eco Fire Solutions, LLC (Eco Fire) and long-term fire retardants supplied by respondent ICL Performance Products, LP (ICL).
Cal Fire determined long-term retardants possess advantages in fighting wildfires and, with the agreement of respondent Department of General Services (DGS), purchased them from ICL without competitive bidding. Eco Fire filed a variety of suits against ICL, Cal Fire, the State of California, and DGS challenging the payments to ICL as unlawful on the grounds they were not competitively bid. Ultimately, the trial court ruled against Eco Fire in various orders and judgments. Eco Fire appeals, seeking review of four orders: a 2013 order dismissing Eco Fire's qui tam action under the False Claims Act; a 2014 order denying Eco Fire's motion for summary adjudication; a 2015 order granting ICL's motion for summary judgment; and a 2015 order denying Eco Fire's motion for leave to file a third amended complaint. We shall affirm the judgments.
FACTUAL AND PROCEDURAL BACKGROUND
The Parties
Eco Fire and ICL are business competitors. Both manufacture firefighting chemicals known as water enhancers. Water enhancers increase the viscosity of water, improving the accuracy of an aerial drop and the water's adhesion to the landscape on which it falls. Water enhancers contain no chemicals that retard the fire; water provides the entire fire suppressing effect.
ICL also makes a firefighting chemical known as long-term fire retardant. A long-term fire retardant mixture increases water's effectiveness in suppressing fire. It also retards combustion of vegetation that is not burning. Since 2007 ICL has been the sole source of long-term fire retardant.
Cal Fire is the state agency responsible for protecting forests, ranges, and brush lands from fire. Cal Fire's air tankers drop a mixture of water and firefighting chemicals either directly on the fire or in the vicinity of the fire. DGS is the state agency that provides procurement services for Cal Fire.
Evaluation of Long-term Fire Retardants
Cal Fire determined long-term fire retardants were more effective than water enhancers in fighting fires. Long-term fire retardants prove useful in both direct attack, applied directly to the fire, and indirect attack, applied near the fire's edge or in the fire's path. In contrast, water enhancers can only be used in a direct attack. Given a fire's unpredictability, long-term fire retardant's versatility allows fire fighters to utilize it hours or days before the fire's path is determined.
An indirect attack cordons off a fire and allows fire fighters to "gain the upper hand before conditions change and allow the fire to spread rapidly." Long-term fire retardants allow fire fighters to position containment lines to restrict the fire's progress.
Water enhancers are not approved for use in air tankers by the United States Forest Service (Forest Service). Accordingly, use of water enhancers would prevent Cal Fire from operating in conjunction with the Forest Service. Nor are water enhancers more cost effective than long-term fire retardants.
Cal Fire Contracts with Long-term Fire Retardant
Prior to the period at issue in the present case, Cal Fire fulfilled its long-term fire retardant needs through contracts with the Forest Service and private vendors.
Public Contracting Law
As a general rule, public contracts must be awarded through a competitive bidding process to the lowest responsible bidder meeting the required specifications. (Pub. Contract Code, § 10300 et seq.) Competitive bidding serves a variety of purposes: preventing misuse of public funds; eliminating favoritism, fraud and corruption in the awarding of public contracts; and providing qualified bidders a fair opportunity to enter the bidding process, which stimulates competition and sound fiscal practices. (Pub. Contract Code, § 100; Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 314.)
There are two limited exceptions to the competitive bidding requirement: sole source and emergency. When a necessary product is only available from one manufacturer, the sole source exception permits contracting without competitive bidding. (Pub. Contract Code, § 10301.) So also, in an emergency an agency may purchase goods without competitive bidding. (Pub. Contract Code, § 10340, subd. (b)(1).) An emergency is defined as a "sudden, unexpected occurrence" posing a clear threat to life, health, property, or essential public services. (Pub. Contract Code, § 1102.)
2004-2005 Fire Seasons
Cal Fire and the Forest Service phased out the use of any long-term fire retardants that contained sodium ferrocyanide. ICL's long-term fire retardant did not contain the chemical, although its competitor's product did. Subsequently ICL became the sole provider of long-term fire retardants beginning in the 2004 fire season and continuing through the 2005 fire season.
2006-2007 Fire Seasons
Following the 2005 fire season, ICL's competitor filed suit to block the sale of long-term fire retardants to Cal Fire. In response, DGS called for bids in 2005 to award a requirements contract for fire chemicals at air attack bases throughout the state. ICL and Eco Fire submitted bids for water-enhancement products. After ICL was awarded the contract, Eco Fire protested but lost. ICL's contract became effective in June 2006 and was extended twice through March 2009.
2008-2009 Fire Seasons
In 2008 Cal Fire decided to resume using long-term fire retardants. Cal Fire submitted a "Special Category Non-Competitive Bid" request to DGS seeking authority to buy $20,000,000 of long-term fire retardants for the 2008 and 2009 fire seasons from ICL without competitive bidding.
The request stated ICL was the sole source vendor and manufacturer of long-term fire retardants and long-term fire retardants meets specific firefighting needs unavailable with water enhancers. DGS approved the request.
2010-2012 Fire Seasons
Cal Fire again sought approval from DGS to buy long-term fire retardants from ICL without a competitive bid for the 2010, 2011, and 2012 fire seasons. Cal Fire submitted a new no-bid request seeking approval to buy $11,800,000 of long-term fire retardant from ICL for each fire season, for a total of $35,400,000 without competitive bid. Again, the request was based on ICL as the "sole source vendor," "only manufacturer," and "sole supplier" of long-term fire retardant, the only product that meets Cal Fire's firefighting needs because it is more effective than water enhancers.
The amount of long-term fire retardant needed for each season was difficult for Cal Fire to estimate and would depend on the circumstances of each fire season. DGS approved Cal Fire's request, but for funding purposes gave Cal Fire a blanket "Form 42" approval instead of a no-bid funding approval. Form 42 approval provides DGS with the authority to exceed its no-competitive bid purchasing authority by issuing amounts for purchases of long-term fire retardant as the fire season progressed. The funding designation does not alter the underlying justification for the approval.
Subsequent Proceedings
In 2010 Eco Fire learned Cal Fire had been purchasing long-term fire retardant without competitive bidding. Specifically, Eco Fire learned Cal Fire had been purchasing long-term fire retardant under the 2006 contract instead of water enhancer, even though the contract was for water enhancer. Eco Fire questioned both Cal Fire and DGS about the lawfulness of these purchases.
DGS investigated the complaint and concluded that although Cal Fire may have incorrectly documented the reasons for the purchases, the purchases were lawful and did not run afoul of laws for competitive purchasing. Nor did DGS evaluate the performance of the firefighting agent used by Cal Fire, since Cal Fire "has the experience and expertise to determine which products meet their fire suppression needs."
In 2011 Eco Fire filed a complaint against ICL, Cal Fire, and DGS challenging Cal Fire's noncompetitive purchases of long-term fire retardant as violating Business and Professions Code section 17200 et. seq. Eco Fire twice amended the complaint, but voluntarily dismissed the case after the defendants demurred.
We granted ICL's request for judicial notice filed June 17, 2016.
Current Litigation
Complaint and First Amended Complaint
Eco Fire filed its complaint in October 2012. Subsequently, Eco Fire filed a first amended complaint alleging four causes of action: (1) a qui tam action under the California False Claims Act (Gov. Code, § 12651 et. seq.) against ICL and Dan Reese, a Cal Fire employee, alleging ICL knowingly submitted false invoices for long-term fire retardant to Cal Fire; (2) a petition for writ of mandate seeking to compel Cal Fire to recover funds unlawfully paid to ICL; (3) a petition for writ of mandate prohibiting Cal Fire from using, and DGS from approving, contracts to purchase long-term fire retardant without competitive bids; and (4) declaratory relief.
The False Claims Act requires that qui tam actions filed by private parties be filed under seal, and prohibits service on any defendant until the state through the Attorney General's Office can investigate and determine whether to intervene. (Gov. Code, § 12652, subd. (c)(2)-(4).) If the Attorney General declines to intervene, the state remains the real party in interest and the qui tam plaintiff conducts the action. (Gov. Code, § 12652, subd. (c)(6)(B).) The Attorney General declined to intervene in the matter, and Eco Fire proceeded as the qui tam plaintiff on behalf of the State of California as real party in interest.
In May 2013 the Attorney General moved to dismiss the qui tam action for good cause under Government Code section 12652, subdivision (e)(2)(A). ICL demurred to the only cause of action asserted against it—the qui tam claim. Cal Fire, DGS, and Reese demurred and moved to strike.
The trial court issued a tentative ruling: (1) granting the state's motion to dismiss and sustaining ICL's demurrer; (2) sustaining the demurrer to the second cause of action for mandate relief; (3) denying the demurrers to the third and fourth causes of action; and (4) denying the motion to strike. After oral argument, the trial court issued a minute order adopting the tentative ruling except for the demurer to the cause of action for writ of mandate. Subsequently, the court sustained the demurrer, finding Eco Fire failed to allege Cal Fire had a mandatory ministerial duty to recover sums paid to ICL.
Second Amended Complaint
Eco Fire filed a second amended complaint sans the qui tam cause of action. Instead, Eco Fire alleged three causes of action: (1) declaratory relief against Cal Fire, DGS, and ICL; (2) injunctive relief against ICL; and (3) mandate relief against ICL. Eco Fire contended that Cal Fire's purchases of long-term fire retardant without a competitive bid were unlawful.
Cal Fire and DGS moved to strike the declaratory relief cause of action. ICL demurred to all causes of action, arguing Eco Fire lacked standing, Cal Fire purchased long-term fire retardant under the sole source exception to the competitive bidding laws, and a writ of mandate was improper because ICL had no mandatory duty to return funds to Cal Fire.
The trial court found Eco Fire had standing to assert a common law taxpayer claim under Miller v. McKinnon (1942) 20 Cal.2d 83 (Miller) and had pled facts sufficient to survive a demurrer. As for the sole source exception, the trial court determined it was a disputed factual issue. It sustained ICL's demurrer to the cause of action for mandate, concluding Eco Fire failed to allege any mandatory, ministerial duty on the part of ICL to return disputed funds.
Subsequently, the trial court denied Eco Fire's petition for writ of mandate and dismissed the related fourth cause of action for declaratory relief. The court agreed that Cal Fire "has a mandatory, ministerial duty to comply with competitive bidding laws." However, the court held that Cal Fire's conclusion that long-term fire retardant "is the one product that can be used in all situations" and therefore meets Cal Fire's needs was "neither arbitrary nor capricious."
Eco Fire moved for summary adjudication on its first and second causes of action, arguing Cal Fire and DGS approved the purchase of long-term fire retardant under the emergency exception, not the sole source exception, to the competitive bidding law. The court denied the motion, finding identification of the exception presented a disputed issue of material fact.
ICL moved for summary judgment and/or summary adjudication on Eco Fire's first and second causes of action, arguing Eco Fire was not entitled to declaratory relief for past acts and injunctive relief was not subject to judicial redress. Before the motion could be heard, Eco Fire filed a motion to file a third amended complaint. Cal Fire and DGS moved for judgment on the pleadings, alleging Eco Fire's first cause of action for declaratory relief failed to state a cause of action against the state.
The court issued an order granting ICL's motion for summary judgment or adjudication, granting Cal Fire and DGS's motion for judgment on the pleadings, and denying Eco Fire's motion for leave to file a third amended complaint. Eco Fire's cause of action for declaratory relief was inappropriate because it sought relief that was not available in a declaratory relief action. The court stated: " 'Declaratory relief looks to the future, not to the past, and an action for declaratory relief thus may not be used either to find facts that existed in the past or to provide redress for past wrongs.' "
On the second cause of action, the trial court found Eco Fire failed to show the state had a mandatory duty to act, but failed to do so. Eco Fire could not allege Cal Fire, for whom it purported to act as a taxpayer, has a mandatory duty to recover money paid to ICL.
In addition, the court denied Eco Fire's motion for leave to file a third amended complaint because the case had been pending since late 2012, had been extensively litigated, and the ruling on the motion for summary judgment and motion on the pleadings effectively disposed of the case. The court determined allowing Eco Fire to "resurrect" its case at the last minute after years of litigation "would be patently unfair to the parties." Accordingly, the court held that ICL and the state were entitled to judgment in their favor and dismissed the case.
Following entry of judgment, Eco Fire filed a notice of appeal.
DISCUSSION
I
ICL's Motion for Summary Judgment or Adjudication
The trial court granted ICL's motion for summary judgment or adjudication on Eco Fire's second cause of action for injunctive relief. Eco Fire sought to compel ICL to return funds paid on void public contracts. The court found the claim not justiciable. Eco Fire disagrees. Background— Mitchell v. McKinnon
Eco Fire's cause of action for injunctive relief against ICL relied upon the Supreme Court's decision in Miller, supra, 20 Cal.2d 83. The trial court distinguished Miller and found the request for injunctive relief not justiciable.
In Miller, a private contractor performed approximately $42,000 of construction work for a county. The county approved a contract and paid for the work without soliciting bids, despite a statute requiring competitive bidding. A county taxpayer filed suit against the county and the contractor to recover the $42,000. The trial court sustained the contractor's demurrer; the Supreme Court reversed. (Miller, supra, 20 Cal.2d at pp. 87-88, 101.)
The Miller court found, when a statute requires competitive bidding, "a contract made without compliance is void and unenforceable as being in excess of the agency's power." (Miller, supra, 20 Cal.2d at pp. 87-88.) In addition, "even though the person with whom the contract was made has supplied labor and materials in the performance of the contract and the public agency has received the benefits thereof, he has no right of action to recover in quantum meruit the reasonable value thereof." (Id. at p. 88.) Therefore, "[p]ersons dealing with the public agency are presumed to know the law with respect to the requirement of competitive bidding and act at their own peril. [Citation.] With the principles being as above stated, it inescapably follows that a right of action exists to recover moneys paid to a contractor for work and materials furnished the public agency where they were furnished in contravention of a statute requiring competitive bidding." (Id. at p. 89.) The court concluded that this right of action exists to recover from the person receiving the money illegally paid and may be brought by a taxpayer on behalf of the public agency. (Id. at p. 96.)
The trial court found the rule announced in Miller binding on the court but found the facts before it distinguishable from the facts underlying Miller and granted ICL's motion for summary judgment or adjudication on the cause of action for injunctive relief.
The court acknowledged it had previously found Eco Fire's allegations sufficient to withstand ICL's demurrer. The court stated: "Now that we are beyond the demurrer stage, however, Eco Fire's allegations are not simply presumed to be true. Instead, consideration of ICL's argument is informed by a much more robust understanding of the facts. Those facts distinguish this case from Miller in ways the court finds legally significant. Although the court may be bound by Miller, it is not required to extend it beyond its facts."
Discussion
A motion for summary judgment must be granted if the submitted papers show there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 844.) The moving party bears the burden of making a "prima facie showing of the nonexistence of any genuine issue of material fact." (Id. at p. 845.) "A prima facie showing is one that is sufficient to support the position of the party in question." (Id. at p. 851.) Once the moving party has met its burden, the burden shifts to the opposing party to show the existence of a triable issue of material fact. (Code of Civ. Proc., § 437c, subd. (p)(2).)
We review de novo the record and the determination of the trial court. First, we identify the issues raised by the pleadings, since it is these allegations to which the motion must respond. Second, we determine whether the moving party's showing has established facts negating the opponent's claims and justifying a judgment in its favor. When a summary judgment motion prima facie justifies a judgment, the final step is to determine whether the opposition demonstrates the existence of a triable issue of fact. (Barclay v. Jesse M. Lange Distributor, Inc. (2005) 129 Cal.App.4th 281, 290.)
Eco Fire offers three arguments in opposition to summary judgment. First, Eco Fire argues the court improperly relied on a "fact" that was not established. That fact "was a prior ruling that 'allegedly found that [Cal Fire] appropriately determined that [long-term fire retardant] is the only product that will meet its needs, thus justifying a sole source contract.' " This gloss on the trial court's earlier ruling misinterprets the trial court's prior legal ruling. The trial court, in denying Eco Fire's petition for writ of mandate, found Cal Fire appropriately determined that long-term fire retardant is the only product that met its needs, "thus justifying a sole source contract." Unlike the factual scenario in Miller, an exception to the competitive bidding statute was determined by the government agency charged with the responsibility of making that judgment. Unlike the facts in Miller, this was not a case where the materials were furnished "in contravention of a statute requiring competitive bidding." (Miller, supra, 20 Cal.2d at p. 89.) In addition, Miller ruled on a demurrer, and the case proceeded beyond the pleading stage because the court found the allegations in the complaint were sufficient to bring the work performed within the terms of the competitive bidding statute. (Id. at pp. 89, 93.) In this case, which was beyond the pleading stage, the court found facts sufficient to demonstrate a sole source contract justified and competitive bidding not required.
The court considered Eco Fire's strongest evidence that Cal Fire and DGS have always, erroneously, thought the emergency exception applicable. The court found the evidence "equivocal." Unlike in Miller, where it was assumed for the purposes of a demurrer that competitive bidding was required, Eco Fire's best argument was "that although a proper exception to competitive bidding existed, the State erroneously relied on the wrong exception and ICL should be forced to pay for that mistake."
The court also distinguished Miller by noting the Supreme Court's ruling was based on a statute that expressly set forth an imperative duty of the district attorney to institute suit against any person who was paid by the county without legal authority to recover the funds paid out. (Miller, supra, 20 Cal.2d at p. 95.) Here, the court had previously determined the state had no mandatory duty to recover monies paid to ICL for long-term fire retardant; "That is why the court sustained the State's demurrer to Eco Fire's claim that it was entitled to a writ of mandate directing Cal Fire to recoup payments made to ICL."
The final difference between Miller and the present case is that here "Cal Fire sought permission from DGS to purchase long-term retardant from ICL without competitive bidding, and DGS gave its approval . . . DGS is the state agency charged with overseeing compliance with public contracting laws." It may be true, as the Miller court noted, that "Persons dealing with the public agency are presumed to know the law with respect to the requirement of competitive bidding." (Miller, supra, 20 Cal.2d at p. 89.) However, the trial court declined to find that "persons dealing with a public agency are presumed to know the law better than DGS. This case is thus distinguishable from Miller. The court concludes these distinctions have a legal difference and explain the different result reached here."
The trial court did not, as Eco Fire asserts, disregard Miller "to conclude that a taxpayer cannot pursue recovery of public funds unlawfully paid where the government chooses not to recover those funds." Nor does the court's conclusion disregard constitutional prohibitions on payments under void contracts or preclude taxpayers from correcting unlawful payments by public officials. However, not every disagreement regarding the application of an exception to government bidding procedures supports a claim of illegality and a taxpayer's action for injunctive relief against the supplier of products. The trial court painstakingly pointed out the differences between Miller and the present case, and determined Eco Fire could not obtain injunctive relief.
We find the trial court's reasoning both sound and supported by law. The trial court noted that an injunction is an equitable remedy and found "[i]f ever there was a case where the equities argued against issuing the particular injunction sought, this case is it." The court reviewed the facts before it: "With DGS's approval, Cal Fire has purchased long-term fire retardant from ICL for years without competitive bidding. There is no hint ICL provided Cal Fire with any long-term retardant that Cal Fire did not actually order, and there is no hint that Cal Fire has paid ICL for any long-term retardant it did not actually receive. In other words, with DGS's blessing, Cal Fire ordered long-term retardant from ICL, ICL fulfilled those orders, and Cal Fire paid for what it had purchased. Cal Fire cannot simply return the long-term fire retardant to ICL because Cal Fire has used it to fight fires. Issuing the injunction that Eco Fire seeks would be tantamount to requiring ICL to provide the State with millions of dollars' worth of long-term retardant for free. The court finds this would be fundamentally unfair to ICL, and a misuse of the court's discretion to grant equitable relief."
We cannot find the trial court erred in denying Eco Fire's claim for injunctive relief. The court harkened back to the lengthy, detailed litigation including extensive discovery. Summarizing the case, the court concluded: "Even after all this time, the evidence it [Eco Fire] has presented to the court shows that, at best, the State botched the procurement process by relying on the emergency exemption rather than the sole source exemption to competitive bidding. Perhaps more importantly, Eco Fire has presented no evidence that ICL had anything to do with the procurement process. In fairness and equity, ICL should not have to pay for the State's mistakes. Even if the court were to find that this case was justiciable, it would thus decline the request to issue the equitable remedy that Eco Fire seeks. [Fn. Omitted.]"
II
Eco Fire's Motion for Summary Adjudication
Eco Fire moved for summary adjudication on its causes of action for declaratory and injunctive relief. The court denied the motion, finding a triable issue of fact as to whether DGS approved purchases of long-term fire retardant under the emergency exception to competitive bidding. Eco Fire argues the documentation clearly and exclusively cites authority for the emergency exception and the extrinsic evidence confirms this. Therefore, the court erred in denying the motion.
Background
In its motion for summary adjudication, Eco Fire sought to establish as an undisputed fact that DGS approved the past purchases of long-term fire retardant under the emergency exception to the competitive bidding process, not the sole source exception. Such a finding would support Eco Fire's request for declaratory relief.
The court considered the evidence presented by Eco Fire: two forms used to document DGS's purchases of long-term fire retardant from ICL. In the first, "Special Category NCB Request" No. 185 (SCR #185), Eco Fire argued language in the request showed DGS approved the request under the emergency exception rather than the sole source exception. However, the court found the cited language "less conclusive than Eco Fire asserts."
The request states Cal Fire sought approval for long-term fire retardant required due to emergency response to mitigate wildland fires. The request also states an exemption from competitive bidding is necessary because ICL "is the sole source vendor for Long Term Fire Retardant" and ICL is the "only manufacturer" and "sole supplier" of long-term fire retardant. Cal Fire further explained: "Long term fire retardant is crucial for the protection of life and property from wildfires . . . The advantage of fire retardant over water is that it can be applied in advance of the wildfire and chemically retards the spread of the fire whether it is wet or dry . . . If we are unable to purchase long term retardant we will drop water or less effective water enhancers on wildland fires instead of long term retardant. This option is much less effective . . . Plain water and water enhancers evaporate faster than the long term retardant chemical mixtures. The long term retardant continues to work until they are removed by rain or erosion."
The court found the language in the request supported both the emergency and single source exceptions and was therefore inherently ambiguous. As a result, the court found a material issue of fact as to the request.
In the second request, "Form 42," a request made by Cal Fire and approved by DGS on an annual basis, the court found the same ambiguities as those in SCR #185. These ambiguities made it impossible for the court to find, as a matter of law, that the state relied on the emergency exception rather than the sole source exception. In addition, the court considered other documents cited by Eco Fire and found them wanting. The court denied summary adjudication on the causes of action for declaratory relief against Cal Fire, DGS, and ICL and injunctive relief against ICL.
Discussion
Eco Fire contends the operative documents "clearly and exclusively cite authority for the emergency exception from competitive bidding, and that language is not susceptible to an interpretation that [noncompetitive bid] approval was based on only [long-term fire retardant] meeting [Cal Fire's] needs, the court erred in finding an ambiguity." We disagree.
The trial court carefully considered the documents submitted by Eco Fire in support of its motion for summary judgment. As the trial court found, the documents referenced both the emergency and sole source exception. This ambiguity created a triable issue of fact as to which exception Cal Fire relied on in past purchases of long-term fire retardant. The trial court did not err in denying Eco Fire's motion.
III
Declaratory Relief Cause of Action
Prior to the state moving for judgment on the pleadings, Eco Fire moved for summary judgment on the first cause of action for declaratory relief. The court denied the motion. According to Eco Fire, the requested declaratory relief has a prospective application in defining the rights and obligations of the state and ICL with respect to public funds in ICL's possession. Eco Fire also contends it is the only relief it can obtain for the state's unlawful conduct. Therefore, the court erred in denying the motion.
Background
As summarized by the trial court, Eco Fire sought the following judicial declarations:
"1. That, in the past, DGS approved all of Cal Fire's non-competitive purchases of long-term retardant under the emergency exception, not under the sole source exception. [¶] 2. That Cal Fire's need for fire chemicals is not unexpected or an emergency. [¶] 3. That past payments made to ICL for purchases of long-term retardant were made without authority of law, and constituted an illegal expenditure and/or waste of public funds. [¶] 4. That DGS has no authority to retroactively approve the non-competitive purchase of long-term retardant."
Discussion
Declaratory relief is available to a party "who desires a declaration of his or her rights or duties with respect to another." (Code Civ. Proc., § 1060.) "Declaratory relief operates prospectively, serving to set controversies at rest before obligations are repudiated, rights are invaded or wrongs are committed. Thus the remedy is to be used to advance preventative justice, to declare rather than execute rights. [Citation.]" (Kirkwood v. California State Automobile Assn. Inter-Ins. Bureau (2011) 193 Cal.App.4th 49, 59.) In essence, declaratory relief operates to declare future rights, not to address past wrongs. (Canova v. Trustees of Imperial Irrigation Dist. Employee Pension Plan (2007) 150 Cal.App.4th 1487, 1497.)
A party seeking declaratory relief must show a very significant possibility of future harm. (Coral Construction, Inc. v. City and County of San Francisco (2004) 116 Cal.App.4th 6, 17.) The court's power to grant declaratory relief is discretionary. It may decline to grant such relief "in any case where its declaration or determination is not necessary or proper at the time under all the circumstances." (Code Civ. Proc., § 1061.)
We consider each of Eco Fire's requests as outlined by the trial court. As to the first, the court concluded Eco Fire was requesting the court to make a factual finding about "what actually happened in the past," and deemed this not an appropriate basis for declaratory relief. We agree. A declaration that DGS approved all of Cal Fire's past approvals under the emergency exception, not the sole source exception and constituted an illegal expenditure rests entirely on past actions.
The second declaration, that Cal Fire's need for fire chemicals is not unexpected or an emergency, is not necessarily backward looking. However, the court found, to the extent it looked to the past, the court had already held that it would not prohibit Cal Fire from using the emergency exception to purchase firefighting chemicals in the future because there is no evidence it intended to do so and because an order to " 'obey the law' " was inappropriate. This same reasoning applied to any request for a declaration that Cal Fire and DGS cannot use the emergency exception in the future. We find the trial court's reasoning persuasive.
In addition, the court found the second requested declaration far too broad. Eco Fire argued the emergency exception cannot perpetually justify the noncompetitive purchase of firefighting chemicals because although a particular fire might be unexpected, a firefighting agency's ongoing need for firefighting chemicals is not. The court stated it was not "convinced the State has been relying on the emergency exception year after year. Moreover, it seems clear to the court that there might be some instances where the emergency exception could justify non-competitive purchases." The court presented the scenario where Cal Fire estimated the amount of chemicals to be purchased under the emergency exception, an estimate that proved too low in the light of the subsequent fire season. If Cal Fire was in danger of running out of chemicals while fires continued to burn, the court believed Cal Fire would be justified in purchasing additional chemicals under the emergency exception.
The court stated it could not declare that Cal Fire's need for chemicals can never be unexpected or that the emergency exception would never justify a lack of competitive bidding. The court correctly concluded: "[B]ecause it would be impossible to delineate in advance every situation in which the emergency exception would or would not be applicable, the court finds this is a case where declaratory relief is 'not necessary or proper . . . under all the circumstances.' (Code Civ. Proc., § 1061.)"
The third requested declaration concerned the legality of Cal Fire's past purchases of long-term fire retardant from ICL. Although the declaration covered past purchases, Eco Fire argued declaratory relief would have a prospective relief effect because it could force the state to reevaluate its position that past purchases were lawful and might convince the state to exercise its right to recover funds from ICL. Such a declaration might also establish ICL's duty to repay such funds in the future.
The court gave two convincing rationales for rejecting Eco Fire's arguments. First, the gravamen of Eco Fire's request is to remedy wrongs purportedly committed in the past "even if that remedy comes via actions taken in the future." Second, Eco Fire's argument that the state might do certain things in the future was pure speculation and the "court will not issue a judicial declaration that may end up having no practical effect (other than to spawn new litigation)." The court acted well within its discretion to reject declaratory relief on the legality of past purchases.
The final, fourth declaration, that DGS had no authority to retroactively approve the noncompetitive purchase of long-term fire retardant, elicited the trial court's most detailed response. The court noted this was arguably a proper subject for declaratory relief because it involves the scope of DGS's authority. The court concluded otherwise for two discrete reasons.
First, in denying Eco Fire's petition for writ of mandate, the court found Cal Fire's determination that long-term fire retardant is the only product that will meet its needs is reasonable. The court asked: "If long-term retardant is the only product that will meet Cal Fire's needs, why can't DGS retroactively agree (assuming is does agree) and thus retroactively approve a sole source contract?"
Second, the court found it "far from clear" that the state has erroneously relied on the emergency exception rather than the sole source exception. Considering Eco Fire's proffered evidence, the court concluded that even if it took some time for the state to determine the proper exception, this does not vitiate the fact that the core justification for a sole source contract was present in most, if not all, Cal Fire requests and DGS's approvals. Again, the evidence before the court supports the court's decision not to grant declaratory relief: evidence Eco Fire relied upon cited both the emergency exception and the sole source exception for noncompetitive bidding.
Finally, the court rejected Eco Fire's claim that Public Contract Code section 10295 prohibits DGS from retroactively approving the contracts. Public Contract Code section 10295 provides that all contracts entered into by a state agency are void unless and until approved by DGS. The court reasoned: "Here, DGS has approved the relevant contracts - albeit possibly under the wrong exception to competitive bidding requirements. The court is not convinced section 10295 would prohibit DGS from retroactively clarifying, or even changing, the basis of its approval." For all of the reasons discussed by the court we find no abuse of discretion in denying Eco Fire declaratory relief and granting ICL's motion for summary judgment or adjudication on the declaratory relief cause of action.
IV
Leave to File Third Amended Complaint
The trial court denied Eco Fire's motion to file a third amended complaint to include allegations regarding events that occurred since the filing of the second amended complaint. Eco Fire contends the court erred.
Background
In denying the motion, the court noted: "This case has been pending since late 2012. It has been extensively litigated. The court has already denied Eco Fire's petition for writ of mandate. The court's ruling on the present motion for summary judgment and motion for judgment on the pleadings effectively disposes of this entire case. With this ruling, ICL and the State are entitled to have judgment entered in their favor and the case dismissed. The court finds that allowing Eco Fire to resurrect this case now would be patently unfair to the parties. [Citation.]"
Discussion
We review the denial of a motion to file an amended complaint for an abuse of discretion. (Emerald Bay Community Assn. v. Golden Eagle Ins. Corp. (2005) 130 Cal.App.4th 1078, 1097.) A court abuses its discretion when its determination exceeds the bounds of reason after considering all the circumstances. (Denham v. Superior Court (1970) 2 Cal.3d 557, 566.)
Here, the court, after noting the history, length, and course of the litigation, found it would be unfair to the parties to allow Eco Fire to resurrect the case at such a late date. Given our determination that the trial court correctly disposed of the Eco Fire's claims, we find no abuse of discretion in denying Eco Fire permission to amend the complaint.
V
False Claims Cause of Action
Eco's original first cause of action was for violation of the False Claims Act (Gov. Code, § 12651 et. seq.). The Attorney General moved to dismiss the cause of action, arguing good cause existed for dismissal since the state got what it wanted and there were no false claims. The trial court dismissed the cause of action. On appeal, Eco argues the finding of good cause is inconsistent with the law and the court abused its discretion in dismissing the cause of action. ICL has moved to dismiss the appeal of the qui tam cause of action as untimely.
Background
The False Claims Act creates incentives to encourage whistleblowers to help expose fraudulent claims made against the government. It also includes provisions to curb opportunistic qui tam actions. (Laraway v. Sutro & Co. (2002) 96 Cal.App.4th 266, 274 (Laraway).)
The Attorney General may move to dismiss a cause of action upon a finding of good cause over the objections of the plaintiff. (Gov. Code, § 12652, subd. (e)(2)(A).) Good cause depends on the particular circumstances of each case and any matter bearing on the issue can be considered. Relevant matters include the relative merits of the action, the plaintiff's interest, the purposes underlying the False Claims Act, and the potential waste of government resources. (American Contract Services v. Allied Mold & Die, Inc. (2001) 94 Cal.App.4th 854, 862 (American); Laraway, supra, 96 Cal.App.4th at p. 276.) Good cause exists where the dismissal is rationally related to a legitimate government purpose and not arbitrary, capricious, made in bad faith, based on improper purpose, illegal motives or inadequate investigation, or pretextual. (Laraway, supra, at pp. 275-276.) Eco Fire bears the burden of showing the trial court abused its discretion in granting the motion to dismiss for good cause. (Blank v. Kirwan (1985) 39 Cal.3d 311, 331.)
The Attorney General and the trial court found, for the purposes of Eco Fire's complaint under the False Claims Act, that it was irrelevant which competitive bidding exception Cal Fire utilized to buy long-term fire retardant. In its decision, the trial court assumed, for the purposes of argument, that neither exception applied, requiring Cal Fire to purchase long-term fire retardant through competitive bidding. Even under these circumstances: "It was still [Cal Fire] - not ICL - that decided to purchase long-term retardant without competitive bidding. It was [Cal Fire] - not ICL - that obtained approval from DGS to do so. Missing is any suggestion that ICL played any role in this process. [¶] ICL was entitled to rely on [Cal Fire's] representations, and to assume that if [Cal Fire] ordered long-term retardant, it was authorized to do so." Even if the state had failed to comply with public contracting law, the state was justified in refusing to seek to punish ICL for the state's error.
Discussion
Motion to Dismiss
Preliminarily, ICL moves to dismiss Eco Fire's appeal as to the qui tam cause of action as untimely. To support this motion, which the state joins, ICL provides a brief chronology of the qui tam claim.
Eco Fire filed the underlying action on October 12, 2012, with the qui tam claim as the first cause of action. Eco Fire proceeded with the action as a relator, with the state as the real party in interest plaintiff. The state moved to dismiss the claim and on September 20, 2013, the court issued a minute order granting the motion to dismiss. October 18, 2013, the trial court signed the order dismissing the qui tam action with the state as real party in interest and ICL as qui tam defendant.
Eco Fire filed a second amended complaint on November 8, 2013, which did not include the qui tam claim. Instead, Eco Fire sought injunctive and declaratory relief on a taxpayer claim against ICL, Cal Fire, and DGS. In August 2015 Eco Fire's claim was dismissed on summary judgment.
Eco Fire filed a notice of appeal on September 24, 2015, which in part challenged the dismissal of the qui tam action. However, ICL argues the September 20, 2013 minute order and the October 18, 2013 order "reveal the intent of the court to make its dismissal of Eco Fire's qui tam action final." Therefore, Eco Fire's appeal is untimely as to the qui tam cause of action: "Termination of all Eco Fire's rights to act as a relator in a qui tam action presented Eco Fire with a final, appealable judgment in that capacity." The state echoes this argument and contends Eco Fire's deadline to file a notice of appeal of the qui tam action was April 16, 2014, 180 days after the filing of the October 18, 2013 order. (Cal. Rules of Court, rule 8.104(a)(1)(C).)
However, under the one final judgment rule, a judgment that disposes of fewer than all of the causes of action framed by the pleadings is necessarily interlocutory and not final as to any parties between whom another cause of action remains pending. (First Security Bank of Cal. v. Paquet (2002) 98 Cal.App.4th 468, 473.) ICL argues an exception to the one final judgment rule applies, because dismissal of the qui tam cause of action left nothing to be decided with respect to the state or ICL acting on behalf of the state.
Dan Reese, an employee of Cal Fire, was included as a defendant in the qui tam cause of action. Eco Fire agrees Reese did not remain a party following the dismissal of that cause of action and "does not appeal the dismissal of the [False Claims Act] cause of action against Reese."
ICL argues the 2013 dismissal "terminated the State's participation in the action as a real party in interest plaintiff. It should make no difference that Cal Fire and DGS—constitutional executive branch agencies that can sue and be sued—remained in the action as defendants. This is much like a parent corporation being dismissed from an action while subsidiaries remain parties." This overlooks the fact that the state remained in the action following the dismissal of the qui tam cause of action. The state was a defendant in the declaratory relief cause of action at issue in this appeal and the one judgment rule applies. We deny ICL's motion to dismiss.
Dismissal of Qui Tam Cause of Action
On the merits, Eco Fire argues ICL acted knowingly in submitting its invoices on void public contracts. Therefore, good cause did not exist to dismiss Eco Fire's qui tam claim.
According to Eco Fire, the court abused its discretion in finding good cause because it was "undisputed that ICL supplied long-term retardant both under a contract for gel and on contracts that it knew were not competitively bid." The court considered and rejected this argument, finding Cal Fire received the product it ordered, Cal Fire, not ICL, decided to buy the long-term fire retardant without competitive bidding and received approval from DGS. We agree with the court's determination that there is no evidence ICL participated in this process and that ICL was entitled to rely on Cal Fire's authority to order the long-term fire retardant without competitive bidding. The court cited American, supra, 94 Cal.App.4th 854 and Laraway, supra, 96 Cal.App.4th 266, citations we find persuasive.
In American, the state invited bids for 500,000 cups and American Contract Services (American) and Allied Mold & Die, Inc. (Allied) both submitted bids. Although Allied's bid was lower, it failed to meet specifications as to color or disabled veteran business participation. American's bid was higher but complied with all specifications; it also indicated it would obtain the cups from Allied. The state cancelled the bidding process and contracted with Allied as the "sole source" of a conforming product. The state paid for the cups supplied by Allied. American brought a qui tam action against Allied. The Attorney General moved to dismiss. The trial court granted the motion. (American, supra, 94 Cal.App.4th at pp. 856-858.)
On appeal, we held we did not need to decide whether the state had authority to enter into a sole source contract because American's claim failed regardless: "In the present matter, there is no allegation of fraud or collusion between Allied and the government officials involved in the procurement. The government alone decided to abort the bidding process and invoke the sole sourcing to purchase the cups from Allied. Even if this was an improper contracting practice, Allied did nothing more than acquiesce in the government's contracting proposal. Allied supplied the cups, as requested, and submitted an invoice for payment. The government paid the invoices with full knowledge of the circumstances." (American, supra, 94 Cal.App.4th at p. 865.)
Eco Fire attempts to distinguish American by arguing ICL did not "simply acquiesce to a contracting proposal" but "knew of the State's confusion" and "failed to clarify the State's misunderstandings." However, Eco Fire fails to provide evidence of such alleged complicity. As in American, there is no evidence of fraud on the part of ICL in procuring the sole-source contract. Cal Fire alone sought approval for the purchase; ICL merely responded to Cal Fire's proposal and supplied the long-term fire retardant, submitting accurate invoices for payment. Eco Fire's complaint is that Cal Fire's failure to properly comply with competitive bidding caused it harm. However, "The False Claims Act is not a proper vehicle for vindicating that harm." (American, supra, 94 Cal.App.4th at p. 866.)
In Laraway, a qui tam plaintiff alleged a government contractor and several employees submitted knowingly false claims for travel expenses. The defendants incurred all of the expenses and the trips benefited the agency. The plaintiff argued the claims were false because the travel had not been pre-approved as required by statute. The agency knew about the travel, approved it after the fact, and received full value for its money. On appeal, the court found good cause to dismiss the claim, since the agency suffered no damages from the lack of pre-approval. In addition, not paying legitimate travel expenses would constitute bad faith on the part of the agency and the agency was justified in "refus[ing] to seek a windfall" from a contractor who had incurred legitimate expenses. (Laraway, supra, 96 Cal.App.4th at pp. 276-277.)
We agree with the trial court's comparison of the present case to Laraway. Cal Fire ordered long-term fire retardant from ICL, received it, and used it. DGS authorized the purchase without competitive bidding. If Eco Fire prevailed, ICL would be liable for treble damages, attorney fees, and penalties of between $5,000 and $10,000 per invoice. The trial court did not abuse its discretion in finding good cause to dismiss the qui tam cause of action.
DISPOSITION
The judgments are affirmed and the motion to dismiss is denied. Respondents shall recover costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
/s/_________
RAYE, P. J. We concur: /s/_________
BLEASE, J. /s/_________
MURRAY, J.