On 04/19/2016 A J FISTES CORPORATION filed an Other - Writ Of Mandamus lawsuit against MONTEBELLO UNIFIED SCHOOL DISTRICT. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is JAMES C. CHALFANT. The case status is Disposed - Dismissed.
Disposed - Dismissed
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
JAMES C. CHALFANT
A.J. FISTES CORPORATION
DOES 1 THROUGH 100
MONTEBELLO UNIFIED SCHOOL DITRICT
ALLEGHENY CASUALTY COMPANY
LOPEZ JOSE C
LOPEZ FRANCISCO M
GDL BEST CONTRACTORS INC.
ROES 1 THROUGH 100
CARLIN LAW GROUP APC
LANAK FRANCIS J. ESQ.
AUSTIN MARK ESQ.
KROPFF JAMES B. ESQ.
7/15/2016: DECLARATION OF DAVID E. KENNEY, ESQ. RE MEET AND CONFER, AND DEMURRER
7/15/2016: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO PETITION FOR MANDAMUS AND INJUNCTIVE RELIEF
8/12/2016: PETITIONER PLAINTIFF A.J. FISTES CORPORATION'S OPENING BRIEF IN SUPPORT OF VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDATE AND COMPLAINT
9/22/2016: PROOF OF SERVICE BY MAIL
9/28/2016: Proof of Service
9/28/2016: DECLARATION OF KEVIN R. CARLIN IN SUPPORT OF EX PARTE APPLICATION & POINTS AND AUTHORITIES IN SUPPORT OF REQUEST TO BIFURCATE AND/OR CONTINUE TRIAL OR ALTERNATIVELY FOR AN ORDER SHORTENING TIME FOR A
10/25/2016: PROOF OF SERVICE BY MAIL
10/25/2016: PROOF OF SERVICE SUMMONS
10/25/2016: PROOF OF SERVICE SUMMONS
10/26/2016: PROOF OF SERVICE BY MAIL
11/29/2016: DECLARATION OF KELLY C. SLOAN REGARDING GOOD FAITH ATFEMPT TO MEET AND CONFER PURSUANT TO CCP SECTION 430.41
12/21/2016: SUBSTITUTION OF ATTORNEY
1/13/2017: Minute Order
3/17/2017: MONTEBELLO UNIFIED SCHOOL DISTRICT'S ANSWER TO PLAINTIFF A.J. FISTES CORPORATION'S UNVERIFIED THIRD AMENDED COMPLAINT
4/21/2017: CDL BEST CONTRACTORS INC., FRANCISCO M. LOPEZ; JOSE C. LOPEZ; AND BENJAMIN LOPEZ'S REPLY TO A.J. FISTES CORPORATION'S OPPOSITION TO DEFENDANTS DEMURRER TO A.J. FISTES' THIRD AMENDED COMPLAINT
5/24/2017: Minute Order
8/3/2017: ORDER MONTEBELLO UNIFIED SCHOOL DISTRICT'S EX PARTE APPLICATION TO VACATE OR CONTINUE TRIAL DATE
NOTICE OF FEES DUE FOR CLERK'S TRANSCRIPT ON APPEALRead MoreRead Less
CLARIFIED NOTICE DESIGNATING RECORD ON APPEALRead MoreRead Less
at 09:30 AM in Department 50; Jury TrialRead MoreRead Less
AMENDED-NOTICE OF DEFAULT (UNLIMITED CIVIL APPEALS)Read MoreRead Less
Notice; Filed by ClerkRead MoreRead Less
Proof of Service (not Summons and Complaint); Filed by PetitionerRead MoreRead Less
TRIAL NON-READINESS STATEMENTRead MoreRead Less
PROOF OF SERVICERead MoreRead Less
Miscellaneous-Other; Filed by A.J. Fistes Corporation (Plaintiff)Read MoreRead Less
at 08:30 AM in Department 50; Final Status Conference (Final Status Conference; Off Calendar) -Read MoreRead Less
Opposition Document; Filed by Real Party in InterestRead MoreRead Less
Declaration; Filed by Real Party in InterestRead MoreRead Less
Opposition Document; Filed by Defendant/RespondentRead MoreRead Less
Points and Authorities; Filed by PetitionerRead MoreRead Less
NOTICE OF TRIAL SETFING CONFERENCE & ATIACHED ORDERS THEREONRead MoreRead Less
Notice of Trial Setting Conference and Attached Orders Thereon; Filed by ClerkRead MoreRead Less
Notice of Trial Setting Conference and Attached Orders Thereon; Filed by ClerkRead MoreRead Less
SUMMONS PETITIONRead MoreRead Less
Petition; Filed by nullRead MoreRead Less
VERIFIED PETITION FOR WRIT OF MANDATERead MoreRead Less
Case Number: BS161779 Hearing Date: July 28, 2020 Dept: 50
a.j. fistes corporation,
montebello unified school district, et al.,
BS 161779 (r/w BC 656614)
July 28, 2020
[TENTATIVE] ORDER RE:
DEFENDANTS GDL BEST CONTRACTORS, INC., FRANCISCO M. LOPEZ, JOSE C. LOPEZ AND BENJAMIN LOPEZ’S DEMURRER TO A.J. FISTES CORPORATION’S FOURTH AMENDED COMPLAINT
Petitioner/Plaintiff A.J. Fistes Corporation (“Fistes”) filed the instant case on April 19, 2016 as a petition for writ of mandate against Respondent Montebello Unified School District (“MUSD”) and named GDL Best Contractors, Inc. (“GDL”) as a real party in interest. On August 4, 2017, Fistes voluntarily dismissed MUSD from this action without prejudice.
The operative Fourth Amended Complaint for Declaratory, Injunctive, and Other Equitable Relief Including Restitution Based on Violations of the California Constitution and Laws (“4AC”) was filed on May 19, 2020 and names GDL and its directors and shareholders Francisco M. Lopez, Jose C. Lopez, and Benjamin Lopez (collectively, the “Lopezes”) as defendants (GDL and the Lopezes collectively to be referred to as “Defendants”) and MUSD as a real party in interest. (4AC, ¶¶ 6-7.)
In the 4AC, Fistes asserts three causes of action: (1) recovery of funds paid by MUSD to Defendants under a contract awarded in violation of Public Contract Code section 20111 et seq., (2) recovery of funds paid by MUSD to Defendants under a contract awarded in violation of Public Contract Code section 20111.6 et seq., and (3) declaratory relief. Fistes seeks a declaration that a contract for the remediation of school properties awarded by MUSD to GDL is void due to violations of the Public Contract Code and the Government Code. Fistes also seeks a constructive trust against GDL in favor of MUSD and disgorgement of excess/illegal payments received by GDL relative to the contract.
Defendants now demur to the 4AC on the grounds that there is a defect of parties, that Fistes fails to state facts sufficient to constitute a cause of action, and that the 4AC is uncertain. Fistes opposes.
Requests for Judicial Notice
The Court grants Defendants’ request for judicial notice (Exhibits 1 and 2).
A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff's proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.) A demurrer for uncertainty may lie if the failure to label the parties and claims renders the complaint so confusing defendant cannot tell to what he or she is supposed to respond. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) A pleading is uncertain if it is ambiguous and unintelligible. (Code Civ. Proc., § 430.10, subd. (f).)
Necessary and Indispensable Party
Defendants contend that there is a defect of parties because MUSD, which Fistes already voluntarily dismissed, is a necessary and indispensable party to this lawsuit pursuant to Code of Civil Procedure section 389. A person must be joined as a party to an action if “(1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.” (Code Civ. Proc., § 389, subd. (a).) But, if a necessary and indispensable “cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable.” (Code Civ. Proc., § 389, subd. (b).) “The factors to be considered by the court include: (1) to what extent a judgment rendered in the person's absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person's absence will be adequate; (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed for nonjoinder.” (Code Civ. Proc., § 389, subd. (b).)
“Whether a party is necessary and/or indispensable is a matter of trial court discretion in which the court weighs ‘factors of practical realities and other considerations.’ [Citations.]” (Morrical v. Rogers (2013) 220 Cal.App.4th 438, 461.) “[P]otential prejudice to that unjoined person is of critical importance.” (Tracy Press, Inc. v. Superior Court (2008) 164 Cal.App.4th 1290, 1298.) Therefore, the “controlling test for determining whether a person is an indispensable party is” whether the person’s “rights must necessarily be affected by the judgment.” (Ibid.; see also County of Imperial v. Superior Court (2007) 152 Cal.App.4th 13, 38 [“The test for determining the ability to protect an absent party’s interest is whether existing and absent parties’ interests are sufficiently aligned that the absent party’s rights necessarily will not be affected or impaired by the judgment or proceeding.”].)
Defendants argue that MUSD is a necessary and indispensable party because (1) it was originally named as a party by Fistes when the original complaint was filed, (2) the standing asserted by Fistes authorizes a taxpayer action against officers, agents, or other persons acting on behalf of the local agency and Defendants are not officers, agents, or other persons acting on behalf of MUSD, (3) the 4AC includes allegations of MUSD’s violations of the law, and (4) the relief sought by Fistes includes relief as to MUSD.
Fistes counters that MUSD is neither necessary nor indispensable. First, Fistes argues complete relief can be afforded among the parties even absent MUSD. Fistes asserts that the Court of Appeal has already held that Fistes has standing to bring “suit against a private entity to disgorge public funds paid by a local entity on an allegedly illegal public contract.” (A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 689; see also Miller v. McKinnon (1942) 20 Cal.2d 83, 96 [“As heretofore pointed out, however, a cause of action exists to recover from the person receiving the money illegally paid, independent of any statute, and it is also clear that the action may be prosecuted by a taxpayer in his name on behalf of the public agency. . . . . It was not therefore necessary that such action be prosecuted in the name of the county because it is not affected by the statute.”].) The Court of Appeal also noted that “[a]lthough section 526a confers standing on a plaintiff to sue a local agency, officer, agent, or other person acting on the agency’s behalf, the courts have relied on section 526a to confer standing to sue both the agency and private parties.” (Id. at p. 698, fn. 17; see also San Bernardino County v. Superior Court (2015) 239 Cal.App.4th 679, 686 [“Although the plain text of section 526a authorizes suits only against ‘any officer . . . or any agent, or other person, acting in [a government entity’s] behalf’ [Citation], case law has recognized that a ‘cause of action exists to recover from the person receiving the money illegally paid, independent of any statute, and . . . the action may be prosecuted by a taxpayer in his name on behalf of the public agency.’”].) In any event, the question of whether Fistes has standing to bring this lawsuit is a separate one from whether the public entity (MUSD) is an indispensable and necessary party. Indeed, as noted by Defendants, the Court of Appeal in A.J. Fistes explicitly noted that the parties did not address, and so the Court of Appeal did not reach, the issue of whether MUSD is a necessary or indispensable party or whether the case could proceed in MUSD’s absence. (A.J. Fistes Corp. v. GDL Best Contractors, Inc., supra, at p. 698, fn. 17.)
To that end, Fistes asserts that MUSD does not have an interest such that the disposition of the action in their absence may, as a practical matter, impair or impede their ability to protect that interest. Likewise, Fistes argues that Defendants are not subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of their claimed interest. Fistes contends that Defendants, and not MUSD, are potentially financially liable for the wrongdoing asserted in the 4AC because Fistes is not seeking any damages from MUSD. Fistes further argues that because it is seeking only a determination that the contract entered into between MUSD and Defendants is void, MUSD’s interests, rights, or duties will not be affected, or at the very least, Defendants have the same interest as MUSD in preventing the contract from being declared void, so MUSD’s interests will be equally protected by Defendants in this lawsuit. (See Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 929 [“A void contract is without legal effect. [Citation.] ‘It binds no one and is a mere nullity.’ [Citation.] ‘Such a contract has no existence whatever. It has no legal entity for any purpose and neither action nor inaction of a party to it can validate it….’”].)
Defendants counter that Miller v. McKinnon, supra, is no longer good law because it was superseded by Public Contract Code section 5110. The portion of Miller that was superseded by statute concerns whether a contractor may be paid for work performed under a void public contract. (Hensel Phelps Construction Co. v. Department of Corrections & Rehabilitation (2020) 45 Cal.App.5th 679, 692-694 (Hensel Phelps).) Under Miller, “no recovery in quasi contract can be had for work performed under” a void contract, and no quantum meruit recovery was possible. (Miller v. McKinnon, supra, 20 Cal.2d at p. 88.) But Public Contract Code section 5110 now entitles a contractor who “proceeded with construction . . . based upon a good faith belief that the contract was valid” to recover “the reasonable cost, specifically excluding profit, of the labor, equipment, materials, and services furnished by the contractor prior to the date of the determination that the contract is invalid” “due to a defect or defects in the competitive bidding process caused solely by the public entity.” (Pub. Contract Code, § 5110, subd. (a).) Defendants argue that because of the existence of section 5110, MUSD has some potential financial liability for its alleged conduct, which thus requires MUSD to be a party to this action. But the Court is not convinced that MUSD must be a party to this lawsuit in order for Defendants to recover under section 5110. The relief sought by Fistes is a declaration that the underlying contract is void (which does not affect MUSD’s rights) and for disgorgement of the funds paid to Defendants by MUSD. Whether Defendants are entitled to retain a portion of those funds does not affect whether “complete relief” can be accorded among Fistes and Defendants. Moreover, the Court notes that the procedural posture of Hensel Phelps supports this conclusion. There, a lawsuit was filed to challenge the award of a public works contract by the California Department of Corrections and Rehabilitation to the low bidder. (Hensel Phelps, supra, 45 Cal.App.5th at pp. 682-683.) When the first lawsuit was successful and the contract was declared invalid, the low bidder (who had performed work on the contract) filed a separate lawsuit against the Department pursuant to Public Contract Code section 5110. (Id. at p. 683.) Although Hensel Phelps did not involve any standing issues, nothing in Hensel Phelps suggests that a claim against a public entity under section 5110 must be adjudicated in the underlying action seeking to invalidate the public contract. For this reason also, the Court is not persuaded that there is a likelihood of Defendants incurring inconsistent obligations.
Defendants also argue that Fistes has cited no law in support of the proposition that a tax payer action may be brought against a private company without also naming the public entity. But Miller offers that very support. As the Court of Appeal in A.J. Fistes noted, in Miller, the California Supreme Court “concluded the taxpayer had standing to sue county officers and a private party, and to assert the first cause of action against only the private partnership.” (A.J. Fistes Corp. v. GDL Best Contractors, Inc., supra, 38 Cal.App.5th at p. 698, fn. 17.) The Supreme Court in Miller characterized the plaintiff’s first cause of action as essentially “one by a taxpayer in his own name on behalf of the county to recover moneys illegally expended, the illegality consisting of the failure to advertise for bids on the work to be performed on behalf of the county.” (Miller v. McKinnon, supra, 20 Cal.2d at p. 87.) This is exactly the same claim Fistes is making in the instant action.
Lastly, Defendants contend that because of their potential Public Contract Code section 5110 claim against MUSD, their interests do not align with MUSD such that they can be expected to defend the allegations in the 4AC as against MUSD. But Defendants do not address the preliminary issue—that a void contract is void as to all parties, so there is no concern that the Court will somehow find that the contract is void as to Defendants but not as to MUSD.
Based on the foregoing, the Court does not find that MUSD is a necessary and indispensable party to this lawsuit. Therefore, the demurrer on the basis of defect of parties is overruled.
Defendants contend that the 4AC is uncertain. In light of the Court of Appeal’s ruling in A.J. Fistes that the Third Amended Complaint was not uncertain, the Court similarly finds that the 4AC is also not uncertain. (See A.J. Fistes Corp. v. GDL Best Contractors, Inc., supra, 38 Cal.App.5th at p. 695.) Therefore, the special demurrer is overruled.
Defendants contend that the 4AC fails as to the individual defendants, the Lopezes. Taken as true, these allegations are sufficient to show “a unity of interest and ownership” between GDL and the individual owners and that if the acts in question are treated as those of the corporation alone, an “inequitable result” would occur. (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.)
“To recover on an alter ego theory, a plaintiff need not use the words ‘alter ego,’ but must allege sufficient facts to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor.” (Leek v. Cooper (2011) 194 Cal.App.4th 399, 415 [complaint alleging individual defendant was owner of all stock of defendant corporation and personally made all its business decisions was not sufficient for alter ego liability]; cf. Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235 [plaintiff sufficiently alleged unity of interest by alleging corporate entity was inadequately capitalized, failed to “abide by the formalities of corporate existence,” and was dominated, controlled, and used by defendant as a “mere shell and conduit”].) Factors to consider in applying the doctrine include the commingling of funds and other assets, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, identical directors and officers, and use of one as a mere shell or conduit for the affairs of the other. (Sonora Diamond Corp. v. Superior Court, supra, 83 Cal.App.4th at pp. 538-539.)
Fistes alleges that the Lopezes commingled funds of GDL with their own personal funds, diverted funds obtained from MUSD to uses unrelated to GDL, treated the assets of GDL as their own by obtaining increased salaries, bonuses, cash advances and tangible assets from GDL without sufficient consideration, and dominated and controlled GDL for their own personal enrichment. (4AC, ¶ 14.) Fistes further alleges that the Lopezes used GDL as a mere shell and inadequately capitalized GDL so that GDL is effectively insolvent and will not be able to repay those illegal payments back to MUSD, and therefore, the continued adherence to the fiction of the separate existence of the corporation would promote injustice. (4AC, ¶ 15.)
Based on these allegations and the authorities set forth above, the Court finds that these allegations are sufficient to invoke alter ego liability. Therefore, the demurrer as to the Lopezes is overruled.
The final grounds for demurrer asserted by Defendants pertains to the declaratory relief cause of action.
“The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject.” (Otay Land Co. v. Royal Indemnity Co. (2008) 169 Cal.App.4th 556, 562.) In order to state a proper claim for declaratory relief, the plaintiff must assert “some recognized or cognizable legal theories” that are “related to subjects and requests for relief that are properly before the court.” (Id. at p. 563.) “Declaratory relief operates prospectively, serving to set controversies at rest before obligations are repudiated, rights are invaded or wrongs are committed.” (Doan v. State Farm General Ins. Co. (2011) 195 Cal.App.4th 1082, 1096.) “Hence, where there is an accrued cause of action for an actual breach of contract or other wrongful act, declaratory relief may be denied.” (Ossesous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 366 [italics in original].)
In support of the third cause of action for declaratory relief, Fistes alleges that there is a dispute between itself and Defendants as to whether the allegations set forth in the 4AC are true and thus requires judicial determination of the issue. Defendants argue that Fistes has not alleged that there is an actual controversy over a proper subject because the “subject” in this lawsuit is a contract between MUSD and Defendants, not Fistes. But the Court construes this argument as one concerning the standing of Fistes, which the Court of Appeal already acknowledged. (See A.J. Fistes Corp. v. GDL Best Contractors, Inc., supra, 38 Cal.App.5th at p. 681 [describing the Fistes complaint as one seeking a “declaration” regarding the validity of the MUSD contract].) Therefore, the Court finds that Fistes has stated facts sufficient to constitute a cause of action for declaratory relief.
For the foregoing reasons, Defendants’ demurrer to the 4AC is overruled in its entirety. The Court orders Defendants to file and serve their answer within 10 days of the date of this order.
Fistes is ordered to provide notice of this ruling.
DATED: July 28, 2020 ________________________________
Hon. Teresa A. Beaudet
Judge, Los Angeles Superior Court
Case Number: BS161779 Hearing Date: March 06, 2020 Dept: 50
a.j. fistes corporation,
montebello unified school district, et al.,
GDL BEST CONTRACTORS, INC., et al.,
Real Parties in Interest.
BS 161779 [r/w BC656614]
March 6, 2020
[TENTATIVE] ORDER RE:
PLAINTIFF A.J. FISTES CORPORATION’S MOTION TO CONSOLIDATE ACTIONS
Plaintiff A.J. Fistes Corporation (“Fistes”) seeks to consolidate the instant case with California Taxpayers Action Network v. GDL Best Contractors, Inc., Case No. BC656614 (the “CTAN Action”). The instant matter and the CTAN Action were related pursuant to this Court’s order filed February 6, 2020.
Fistes now moves to consolidate on the grounds that this action and the CTAN Action concern common question of law and fact and that litigating the actions separately would create inefficiencies and the potential for inconsistent judgments. Defendant GDL Best Contractors, Inc. (“GDL”) and Real Party in Interest Montebello Unified School District (“MUSD”) oppose.
Code of Civil Procedure section 1048 grants discretion to trial courts to consolidate actions involving common questions of law or fact. “Consolidation is not a matter of right; it rests solely within the sound discretion of the trial judge . . . .” ((Fisher v. Nash Bldg. Co. (1952) 113 Cal.App.2d 397, 402.) There are two types of consolidation under section 1048: “a consolidation for purposes of trial only, where the two actions remain otherwise separate; and a complete consolidation or consolidation for all purposes, where the two actions are merged into a single proceeding under one case number and result in only one verdict or set of findings and one judgment.” ((Hamilton v. Asbestos Corp. (2000) 22 Cal.4th 1127, 1147.)
Fistes seeks to consolidate for all purposes. Fistes contends that both cases are exactly the same, that both arise from the same underlying facts, and that both plaintiffs seek the same relief.
The instant case was filed on April 19, 2016. The operative Third Amended Complaint for Declaratory, Injunctive, and Other Equitable Relief Including Restitution Based on Violations of the California Constitution and Laws (“Fistes TAC”) was filed on January 27, 2017, and names GDL and MUSD as defendants. By the Fistes TAC, Fistes seeks a declaration that a contract for the remediation of school properties awarded by MUSD to GDL was void due to violations of the Public Contract Code and the Government Code. Fistes also seeks a constructive trust against GDL in favor of MUSD.
The CTAN Action was filed on April 5, 2017 by Plaintiff California Taxpayers Action Network (“CTAN”). The operative First Amended Complaint (“CTAN FAC”) was filed on November 8, 2017. GDL, its principals Francisco M. Lopez, Jose C. Lopez, and Benjamin Lopez (collectively, the “GDL Defendants”), and MUSD are named as defendants. CTAN challenges the same contract awarded by MUSD to GDL and seeks a judgment that the contract for the project is void and/or invalid as well as a peremptory writ of mandate directing GDL Defendants to rescind the contract for the project. CTAN also seeks a judgment declaring a constructive trust in an amount equal to the value of all sums of public monies paid in connection with the contract, a judgment for restitution of all public monies paid in connection with the contract, and injunctive relief prohibiting the GDL Defendants and MUSD from disbursing, paying or otherwise transferring money in connection with the contract.
GDL argues that consolidation is improper because the two cases are at different stages in litigation. GDL contends that while the CTAN Action is at issue (and trial currently set for August 26, 2020), the instant action is not. In the instant case, after this Court dismissed the Fistes TAC without leave to amend, the Court of Appeal issued an order reversing the dismissal and stating that the trial court should grant Fistes leave to amend. ((See A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 698.) The remittitur was issued on November 19, 2019. As of yet, Fistes has not filed an amended complaint, but Fistes points out that there is no order granting Fistes leave to do so. Fistes asserts that it intends to file an amended complaint, once leave is granted, that seeks “essentially the same relief on essentially the same facts” as the CTAN Action. (Reply, p. 2: 13-16.) Nevertheless, GDL contends that if and when an amended complaint is filed in the instant action, GDL intends to take the position that Fistes cannot maintain the instant action. GDL argues that it would be prejudicial to consolidate the cases before the GDL Defendants are given the opportunity to know what claims will be at issue and to challenge those claims through discovery.
The Court is not convinced that the fact that the two cases are currently at different stages of litigation weighs against consolidation. For one, there is no reason why the trial date set in the CTAN Action would govern upon consolidation. Moreover, if any challenges to the pleadings in the instant action are successful, then that would likely vitiate GDL’s concerns about delay. The Court has the discretion, and would likely exercise such discretion, to set a trial schedule that takes into account the state of the pleadings and the state of discovery.
GDL also argues that this motion is merely an attempt to do an end-run around Fistes’s dismissal of MUSD from the instant case. GDL contends that MUSD is an indispensable and necessary party in the instant case, but that Fistes voluntarily dismissed MUSD from the instant case on August 4, 2017. MUSD is a party to the CTAN Action, and so, according to GDL, Fistes seeks to consolidate the two cases so that Fistes can avoid the negative repercussions of its dismissal. MUSD also opposes and argues that, as a party to the contract being challenged and as a party to whom Fistes seeks to require the disgorgement of funds, MUSD is a necessary and indispensable party in the instant action. Fistes counters that it is not seeking any damages or relief from MUSD. Fistes asserts that it is only attempting to obtain a judgment against GDL directing it to pay back to MUSD all monies received under illegal contracts. Nevertheless, GDL argues that consolidation would cause extensive confusion because of MUSD’s status as a party solely in the CTAN Action. GDL contends that the issue of differing standing requirements will also confuse the jury. Fistes counters in reply that standing is an issue of law that will not be addressed to the jury.
Based on the foregoing, the Court finds that an order to consolidate the two cases right now would be premature. There is insufficient information to determine whether and to what extent consolidation would prejudice the GDL Defendants and/or MUSD. However, the Court notes that there is no dispute that the plaintiffs in both cases will likely be seeking the same relief on the same legal grounds, and so if and when this becomes clear, the Court will reconsider the appropriateness of consolidation.
For the foregoing reasons, the Court denies the motion to consolidate brought by Fistes without prejudice. With regard to the issue of leave to amend, the Court hereby grants Fistes such leave as ordered by the Court of Appeal; the amended complaint must be filed and served on or before March 27, 2020. The Court sets a Case Management Conference on May 11, 2020 at 8:30 a.m. in Dept. 50.
GDL is ordered to give notice of this ruling.
DATED: March 6, 2020
Hon. Teresa A. Beaudet
Judge, Los Angeles Superior Court
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