Judge Mary H. Strobel, Case 22STCP00642 2022-08-23 Tentative Ruling

Respondent City of El Monte (“Respondent” or “City”) generally demurs to the petition for writ of mandate of Petitioner Freddie Mac’s, Inc. (“Petitioner”) on the grounds that the “entire Petition is moot” and for failure to state a cause of action. (Notice of Demurrer at pages 2-3.)

Respondent’s Request for Judicial Notice (“RJN”) Exhibits A, B – Granted. (Evid. Code § 452(c), (h).)

“The City contracts with towing companies for Towing and Storage Services (‘Agreements’). Petitioner has been an incumbent contracted Towing and Storage Company subject to such an Agreement for approximately 52 years up through the date of filing of this Petition.” (Pet. ¶ 7.) “The City has divided its Towing and Storage Services into a rotation with two towing companies over the past several years, in connection with vehicle tows ordered by the police department and code enforcement.” (Ibid.)

On July 12, 2021, City opened up a contract bidding process “to award contract agreements for Towing and Storage Services.” (Id. ¶¶ 9-10.)

“Four towing companies submitted Bids by the August 26, 2021 deadline: a. Petitioner, Freddie Mac's Inc. b. Haddick's Towing, Inc. c. Pepe's Towing d. Royal Coaches.” (Id. ¶ 13.)

“On or about January 14, 2022, the City Staff purported to amend the RFP requirements, by requiring, for the first time, a verified statement as to whether any of the proposers had any ‘pending criminal charges’. This amendment was designed to strictly deal with a new, pending criminal charges, first filed in or about late November, 2021, against Mark Hassan, who has an ownership interest in the Petitioner.” (Id. ¶ 14.)

“On or about February 11, 2022, the City Staff published a Staff Report, advising the Mayor and City Council of the results of the RFP based upon scoring of an Advisory Committee made up of four City Employees. The Report noted that the Bid of Pepe’s Towing was non-responsive and essentially disqualified because its location was more than the five mile limit required in the RFP. As to the remaining three bidders, including Petitioner, the Staff Report noted that due to the pending criminal matter in Orange County by one of Petitioner's key principals, ‘negating all 30 points’ allowed for ‘experience’ causing the score of Petitioner to drop below 70 points, whereas the other two applicants both scored over 90 points, out of a total of 100 points.” (Id. ¶ 15.)

Petitioner alleges that the criminal charges against Mark Hassan were “initiated by a police officer who had been charged, himself, by the same Orange County District Attorney, with 27 Felony Counts of Fraud, a few weeks before the criminal charges were filed against Mr. Hassan.” (Id. ¶ 15.)

“[O]n February 15, 2022, the City and City Council had a remote procedure for attending and communicating at the City Council Meeting, whereby a person would call a specific conference call number, and advise a City employee of which matter he/she wished to speak on to later participate as to that Agenda Item by conference call. The Staff Report and Action on the RFP was Item No. 14.7 on the Agenda. Mr. Evans, as counsel for Petitioner, called in on the conference call number on the evening of February 15, 2022, spoke with a City Employee, and identified that he was counsel for Petitioner to speak on behalf of Petitioner on Item 14.7. Mr. Evans was then told to wait for a telephone call on the conference line for that matter on February 15, 2022. At approximately 7:45 p.m., on February 15, 2022, Mr. Evans received the call, was told he had only 3 minutes to speak, and was not told that his presentation was solely at ‘public comment,’ and not for Item 14.7. Mr. Evans spoke on the conference call on February 15, 2022, believing that he was speaking on Item 14.7, when, in fact, he was speaking at public comment section unrelated to 14.7. Had Mr. Evans been allowed to speak on Item 14.7. for an Applicant on the RFP, he would not have been limited to the 3 minute Public Comment Limitation at the hearing on February 15, 2022.” (Id. ¶ 19.)

“On February 15, 2022, on a 3-2 vote, the City Council approved the Staff Recommendation, awarding new contracts for Haddick's Towing, Inc. and Royal Coaches, and failing to award any contract to Petitioner.” (Id. ¶ 20.)

The Petition contains a single cause of action for writ of mandamus, challenging City’s decision to award new contracts to Haddick's Towing, Inc. and Royal Coaches, but not to Petitioner, on several grounds. Specifically, Petitioner contends that:

· “There was no rational basis related to any legitimate governmental objective for the new requirement, added five months after all proposals had been submitted, of disclosure of pending criminal charges.” (Id. ¶ 21.)

· “There was no rational basis related to any legitimate governmental objective to effectively disqualify Petitioner strictly based upon unproven allegations in a Criminal Proceeding filed several months after the proposals had been submitted by refusing to allow any points to Petitioner for experience.” (Id. ¶ 21.)

· “Disqualifying Petitioner by failing to award any of the 30 points allocated for experience, when Petitioner had been an incumbent serving the City of El Monte for towing and storage for 52 years, without incident, which experience would justify an award of all 30 points, was a gross abuse of discretion by the City and Respondents, and unlawful discrimination without any rational basis.” (Id. ¶ 22.)

· “Failing and refusing to allow Petitioner to be heard on Item No. 14.7 at the City Council Meeting on February 15, 2022, and failing to disclose the material information comprising the actual scoring of each proposer, was a denial of due process protected by the Article I, Section 7 of the California Constitution and the 14th Amendment to the United States Constitution, as well as a denial of Equal Protection under the same Constitutions.” (Id. ¶ 23; see also Id. ¶ 28 [similar due process allegation].)

Petitioner seeks a “peremptory writ to declare invalid the Action of the City Council of El Monte authorizing the award of Towing Contracts to third party contractors on February 15, 2022.” (Pet. p. 1.) Petitioner also “seeks to compel Respondents City of El Monte and the Mayor and City Council of the City of Monte to enter into a contract with Petitioner to provide tow services as a successful bidder in the RFP for Towing Services, or, in the alternative, rescind its action of awarding contracts to two other bidders.” (Ibid.; see also Prayer for Relief.)

On February 24, 2022, Petitioner filed a verified petition for writ of ordinary mandate against Respondents City of El Monte; Jessica Ancona, Mayor; and City Council of the City of El Monte.

On April 29, 2022, Respondent filed this demurrer and a meet and confer declaration. The court has received Petitioner’s opposition and Reply’s reply.

A demurrer tests the sufficiency of a pleading, and the grounds for demurrer must appear on the face of the pleading or from judicially noticeable matters. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Saltarelli & Steponovich v. Douglas (1995) 40 Cal.App.4^th 1, 5.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

The allegations in the petition must be liberally construed in favor of Petitioner on demurrer. (Mobil Oil Corp. v Exxon Corp. (1986) 177 Cal.App.3d 942, 947.) A demurrer accepts as true “all material facts properly pleaded and matters subject to judicial notice, but not deductions, contentions, or conclusions of law or fact.” (Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal. App. 4th 531, 538.) “A demurrer must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)

Respondent contends that the petition is moot because “City has already entered into valid, binding agreements with third parties making the relief Petitioner seeks impractical.” (Dem. 6.)

“California courts will decide only justiciable controversies. [Citations.] The concept of justiciability is a tenet of common law jurisprudence and embodies ‘[t]he principle that courts will not entertain an action which is not founded on an actual controversy....’” (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1573.) “A case is considered moot when ‘the question addressed was at one time a live issue in the case,’ but has been deprived of life ‘because of events occurring after the judicial process was initiated.’” (Id. at 1574.) “The pivotal question in determining if a case is moot is therefore whether the court can grant the plaintiff any effectual relief.” (Ibid.)

Petitioner alleges an actual controversy concerning the fairness, legal validity, and constitutionality of the City Council’s award of towing contracts to two other operators and denial of a contract to Petitioner. If Petitioner proved its claims, the court could grant Petitioner effectual relief in a writ of mandate directing City to set aside its award of towing contracts to Haddick's Towing, Inc. and Royal Coaches and directing City to award a contract to Petitioner, as requested in the prayer for relief. The court could also theoretically grant other relief such as a writ directing City to hold a new public meeting on the contract bids in light of Petitioner’s claims, and reconsider its decision. Because it appears from the petition that there is a ripe, actual controversy and the court could grant effectual relief, the demurrer on the grounds of mootness is overruled.

Respondent contends that the action is moot because “Petitioner was not timely in bringing this petition.” (Dem. 6.) Mootness depends not on the timeliness of the action, but whether there is an actual controversy and whether the court could grant effectual relief. Furthermore, at least at the pleading stage, Respondent’s timeliness argument is not persuasive. City Council held a hearing on the contract bids on February 15, 2022, and awarded the contracts to Haddick's Towing, Inc. and Royal Coaches that same date. (Pet. ¶¶ 19-20.) Petitioner alleges that equal protection and due process violations occurred at the meeting on February 15. (Id. ¶¶ 15-19.) Petitioner filed this petition only nine days later on February 24, 2022. Filing the petition nine days later does not appear, on the face of the petition and judicially noticeable record, to be a significant or material delay.[1]

Respondent contends that granting the requested writ would be “impractical,” and therefore “moot,” because it would “force” City “into a situation where it would have no tow services for a period of time.” (Dem. 6.) Respondent has not shown the only remedy a court could fashion would leave City without tow services. In any event, these practical considerations with respect to the scope of writ relief do not support a finding the action is moot.

Respondent further contends that the action is “moot” because the requested writ would “potentially” force City “to do business with an entity that it unequivocally decided it does not want to do business with due to Petitioner’s pending criminal charges.” (Dem. 6.) This argument is not about mootness, but rather the scope of Respondent’s discretion and any writ fashioned by the court.

Based on the foregoing, Respondent does not show, on demurrer, that the writ petition is moot.

Respondent contends that the petition fails to state a cause of action for ordinary mandate because: (1) City’s discretionary decision is not properly subject to writ review and Petitioner has not alleged any abuse of discretion; (2) the petition does not allege membership in a protected class and therefore does not allege an equal protection violation; and (3) the petition concedes a rational basis for the disparate treatment of Petitioner based on the pending criminal charges against Mark Hassan. (Dem. 6-9.)

Contrary to Respondent’s assertion (Dem. 7-8), a discretionary decision of City can be subject to writ review under CCP section 1085 if the petitioner alleges and proves an abuse of discretion. “Normally, mandate will not lie to control a public agency's discretion, that is to say, force the exercise of discretion in a particular manner. However, it will lie to correct abuses of discretion. In determining whether a public agency has abused its discretion, the court may not substitute its judgment for that of the agency, and if reasonable minds may disagree as to the wisdom of the agency's action, its determination must be upheld. A court must ask whether the public agency's action was arbitrary, capricious, or entirely lacking in evidentiary support, or whether the agency failed to follow the procedure and give the notices the law requires.” (County of Los Angeles v. City of Los Angeles (2013) 214 Cal.App.4th 643, 654.)

Petitioner alleges that Respondent abused its discretion when it “effectively disqualif[ied] Petitioner strictly based upon unproven allegations in a Criminal Proceeding filed several months after the proposals had been submitted by refusing to allow any points to Petitioner for experience.” (Pet. ¶ 21.) Petitioner contends that disqualification of Petitioner based on Hassan’s pending criminal charges “was a gross abuse of discretion by the City and Respondents, and unlawful discrimination without any rational basis.” (Id. ¶ 22.) Thus, Petitioner has sufficiently alleged an abuse of discretion.

Respondent contends that Petitioner cannot allege an equal protection violation because it has not alleged “a protected/suspect class status as it relates to Mark Hassan and/or Freddie Mac … based upon his pending felony criminal charges.” (Dem. 8.) Respondent’s contention that the Equal Protection Clauses only apply to protected classifications is incorrect. Indeed, as Respondent later acknowledges, “[w]here, as here, a disputed statutory disparity implicates no suspect class or fundamental right, ‘equal protection of the law is denied … where there is no ‘rational relationship between the disparity of treatment and some legitimate governmental purpose’.” (Dem. 8, citing Johnson v. Department of Justice (2015) 60 Cal.4th 871, 881.)

Here, the petition sufficiently alleges that there was no rational basis to treat Petitioner differently than other bidders based on pending criminal charges against Mark Hassan. (Pet. ¶21.) Liberally construing the petition, as required for demurrer, it may also be inferred that Petitioner, Haddick's Towing, Inc., and Royal Coaches are otherwise similarly situated tow operators. (See Id. ¶¶ 15-16.) “The crux of the constitutional promise of equal protection is that persons similarly situated shall be treated equally by the laws.” (In re Evans (1996) 49 Cal.App.4th 1263, 1270.)

Because no protected class is alleged, Petitioner must prove at the writ trial that there was no rational basis for the alleged disparate treatment based on the pending criminal charges against Mark Hassan. “To mount a successful rational basis challenge, a party must ‘negative every conceivable basis' that might support the disputed statutory disparity…. If a plausible basis exists for the disparity, courts may not second-guess its ‘wisdom, fairness, or logic.’” (Johnson v. Department of Justice (2015) 60 Cal.4th 871, 881.) However, this standard of proof applies at the trial, and not at the pleading stage. To survive demurrer, Petitioner need only allege ultimate facts supporting a cause of action.

Respondent contends that the petition “concedes” a rational basis for the disparate treatment of Hassan. (Dem. 8-9; Reply 3-4.) Respondent does not cite any specific allegation from the petition in support. While unclear, Respondent seems to rely on paragraph 15 of the petition, which states that “the alleged criminal charges against Mark Hassan was [sic] initiated by a police officer who had been charged, himself, by the same Orange County District Attorney, with 27 Felony Counts of Fraud, a few weeks before the criminal charges were filed against Mr. Hassan.” (Pet. ¶ 15.) That allegation may suggest Hassan was also charged with fraud, but the pleading is inconclusive. Respondent has not requested judicial notice of any pending criminal charges against Hassan. The court cannot say, on demurrer, that disparate treatment of prospective tow operators based on any pending criminal charges would survive rational basis review. The petition does not disclose that Hassan has been convicted of criminal charges and there is insufficient information about the nature of the pending charges in the petition to conduct a rational basis review on the face of the pleading.

The demurrer for failure to allege an abuse of discretion and violation of the Equal Protection Clauses is OVERRULED.

As an additional basis for writ relief, the petition also alleges that “Failing and refusing to allow Petitioner to be heard on Item No. 14.7 at the City Council Meeting on February 15, 2022, and failing to disclose the material information comprising the actual scoring of each proposer, was a denial of due process protected by the Article I, Section 7 of the California Constitution and the 14th Amendment to the United States Constitution, as well as a denial of Equal Protection under the same Constitutions.” (Pet. ¶ 23; see also Id. ¶ 28 [similar due process allegation].)

Respondent does not address such allegations in the demurrer. In a heading in reply, Respondent refers to Petitioner’s “Due Process Claim.” (Reply 3:15-16.) Accordingly, for this demurrer, Respondent fails to show that Petitioner has not pleaded a cause of action for writ of mandate based on alleged due process violations. (Nelson v. Avondale HOA (2009) 172 Cal.App.4th 857, 862-863 [argument waived if not raised or adequately briefed]; Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th 1250, 1282 [same].)

In reply, Respondent states that “Petitioner Freddie Mac has not addressed the issue of whether these 2 towing companies are indispensable necessary parties, as the Court instructed it to do.” (Reply 3, fn. 1.) The demurrer did not raise an issue of the successful bidders being necessary or indispensable parties, requiring compulsory joinder or dismissal. The notice of demurrer only raised the issues of mootness and failure to state a cause of action. An objection based on compulsory joinder is a distinct issue, involving multiple statutory factors, that needed to be raised by Respondent in the demurrer. (See generally CCP § 389 and Bianka M. v. Sup.Ct. (2018) 5 Cal.5th 1004, 1016-17 [discussing compulsory joinder statute]; Citizens for Amending Proposition L v. City of Pomona (2018) 28 Cal.App.5th 1159, 1178-79 [compulsory joinder factors].)

To the extent footnote 1 of the reply was intended to raise an issue of compulsory joinder or failure to join indispensable parties, Respondent improperly raises the issue in reply. “The salutary rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before.” (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010.) Respondent does not show good cause to raise this issue for the first time in reply, depriving Petitioner of an opportunity to respond. The court does not reach the issue of compulsory joinder on procedural grounds because it was not properly raised in the demurrer.

[1] The City’s contracts with Haddick's Towing, Inc. and Royal Coaches, which the court judicially notices, were not signed until February 28, 2022, after Petitioner filed the writ petition. (RJN Exh. A, B.)