Gong v. City of Rosemead (May 20, 2014, B247601) -- Cal.App.4th --, a Court of Appeal declined to hold the City of Rosemead ("City") liable for the alleged tortious conduct of former mayor and City Council member John Tran ("Tran"). Tammy Gong ("Gong") sued the City alleging that Tran blocked her development project after she refused to lend him additional funds and rejected his sexual advances. The Court held that Government Code section 815.3 does not create an independent cause of action, and Gong failed to follow the claims requirements of the Government Tort Claims Act. The City's immunity also barred Gong's promissory estoppel claim. Consequently, the Court affirmed the dismissal of all causes of action against the City.
For purposes of the demurrer, or dismissal, the Court accepted the truth of the facts alleged by Gong. According to Gong, she went to the City Hall to obtain a building permit for a 7,200 square foot office building in 2004. While in the parking lot, she met and engaged in casual conversation with Tran. Tran ultimately suggested the City would support a mixed-use building, but she would need to acquire an adjoining lot. After discussions with Tran and City staff, she decided to proceed with a mixed-use building and acquire the additional lot. The City's Community Development Commission gave preliminary design approval, and Gong was repeatedly and consistently assured the City would approve her plan.
While Gong's application was pending, Tran requested and obtained $38,000 in personal loans from Gong based upon an alleged family emergency. When Gong learned that Tran did not intend to repay the loans, she refused to lend him additional money. Also, Tran repeatedly sought to engage Gong in a romantic relationship. When Gong rejected Tran's overtures and refused to lend additional money, Tran allegedly caused the City to indefinitely table the final decision on Gong's proposed development. Tran also allegedly threatened to kill Gong if she reported him to authorities. Nonetheless, Gong, fearing for her life and safety, contacted the FBI. Upon investigation and arrest, Tran pled guilty to the federal felonies of attempted witness tampering and making false statements to a government agency.
In December of 2011, Gong filed the first of two claims with the City. The first claim alleged: "Prior City Managers & Employees made me purchase this property to build Mix Use Project. This purchase was completed in 2009. I went through all plan check and John Tran kept delaying me from continu[ing]. Now the City told me that I cannot build it anymore because City Council changed and Policy changed to." The City rejected Gong's first claim. Gong then filed a second cliam alleging essentially the same facts, and the City rejected Gong's second claim.
Gong then filed a complaint against Tran and the City. She alleged causes of action against Tran for money lent; against the City for promissory estoppel and based upon Government Code section 815.3; and against Tran and the City for fraud, extortion, assault and battery, and intentional infliction of emotional distress. The City demurred arguing that Gong failed to submit a timely claim as to the tort causes of action, that section 815.3 does not create an independent cause of action, and the City's immunity bars the promissory estoppel cause of action. The trial court sustained the City's demurrer without leave to amend and entered a judgment of dismissal.
After briefly discussing the history of the Government Tort Claims Act ("Act"), the Court first addressed whether section 815.3 creates an independent cause of action. Under the Act, a public entity is liable for the acts and omissions of a public employee only to the extent declared by statute or required by the state or federal constitution. Section 815.2, however, provides a public entity is liable for an employee's act or omission within the scope of his or her employment if the act or omission, apart from that section, would give rise to a cause of action against the employee.
In 1994, the Legislature enacted section 815.3 providing, in part, that a public entity is liable for an elected official's intentional torts arising from or directly related to the official's performance of his or her official duties. The entity is not liable for tortious acts committed outside the scope of the official's performance of his or her official duties or for sexual harassment, but the entity may pay any portion of the judgment the elected official is unable to satisfy, subject to reimbursement by the official. The elected official and the public entity must be joined as defendants in the same suit. The Legislature expressly intended that elected officials should assume full fiscal responsibility for intentional torts not directly related to their official duties.
Gong argued that section 815.3 created a separate and independent cause of action against a public entity, and the cause of action was not subject to the immunity or claims presentation provisions of the Act. The City argued that section 815.3 merely created a procedural framework when a plaintiff seeks damages from a public entity based upon the intentional torts of an elected official.
Upon review of the history of section 815.3, the Court rejected Gong's argument that section 815.3 created an independent cause of action. The Legislature intended that officials should be responsible for injuries caused by their intentional torts not related to the performance of their official duties. The plaintiff should first look to the officials to satisfy any judgment. If, however, the officials' assets are inadequate, the plaintiff can then look to the public entity for compensation.
The Court also noted that a plaintiff must allege compliance with the Act's claims procedure or that a recognized exception or excuse for non-compliance exists. The Court declined to accept the position taken in an unpublished federal district court decision that section 815.3 excuses the filing of a claim. (See Trevino v. Lassen Municipal Utility District (E.D. Cal. Jan. 29, 2008) 2008 WL 269087.) The Court found nothing in the text or legislative history to indicate the Legislature intended to eliminate the claim requirement for actions under section 815.3 based on intentional torts of elected officials.
The Court further found that Gong failed to comply with the claims presentation requirement of the Act since the complaint's factual allegations did not correspond with the claims' allegations. Unlike the complaint, the claims failed to include allegations that "Tran fraudulently promised that the City would approve [her] development plans, extorted $38,000 in loans from Gong, sexually harassed, physically assaulted, and threatened to kill her." "The claims only refer to [her] failed development project caused by changes in the composition of the City Council and the City's policies." The claim did not specify any damages caused by Tran's alleged tortious acts. Given the lack of any reference to Tran's tortious conduct or for damages due to such conduct, the claims did not even substantially comply with the Act's presentation requirement.
Finally, the Court held that Gong failed to state a cause of action against the City based upon promissory estoppel. Government Code section 818.4 holds that a public entity is not liable for injuries caused by a public employee's discretionary grant or denial of a permit, license or other similar authorization. Thus, the City was not liable for the alleged failure to approve the development project despite any alleged representations in support of it.
What This Means To You
This decision provides important guidance for public entities when faced with a lawsuit. The decision instructs that section 815.3 cannot provide an independent basis for suing a public entity based upon conduct of its officials. This decision reiterates the importance of the claim presentation requirement, and the need to carefully compare allegations in a claim with allegations in a complaint. This decision also confirms a public entity's immunity from a promissory estoppel cause of action after a discretionary decision to grant or deny an approval.