Abouab v. City and County of San Francisco

• Decision Date: 20 July 2006
• Docket Number: No. A110940.,A110940.
• Citation: 141 Cal.App.4th 643,46 Cal.Rptr.3d 206
• Court: California Court of Appeals Court of Appeals
• Parties: Joe ABOUAB et al., Plaintiffs and Appellants, v. CITY AND COUNTY OF SAN FRANCISCO et al., Defendants and Respondents.

46 Cal.Rptr.3d 206

141 Cal.App.4th 643

Joe ABOUAB et al., Plaintiffs and Appellants, v. CITY AND COUNTY OF SAN FRANCISCO et al., Defendants and Respondents.

No. A110940.

Court of Appeal, First District, Division 2.

July 20, 2006.

Wayne Lesser, San Francisco; Michael Mendelson, for Plaintiffs and Appellants.

Dennis J. Herrera, City Attorney, Julie Van Nostern, Chief Tax Attorney, Owen J. Clements, Chief of Special Litigation, for Defendants and Respondents.

RICHMAN, J.

Appellants here, Petitioners below, are Joe Abouab, Karl Plischke, and Terri Chantrelle (Petitioners). They filed a mandamus action against the City and County of San Francisco, its recorder, tax collector, and assessor (when referred to collectively, the City), seeking to compel the City to investigate an unreported change in ownership of a San Francisco property and reassess it. The reassessment happened, the upshot of which, after many years and many proceedings, was an increase in property tax revenue of some $64,000,000.

Petitioners made a motion seeking a determination that they are entitled to attorneys' fees in connection with that $64,000,000. The trial court rejected all of the theories on which Petitioners' fee claim was based, and denied them any fees. We, too, reject their claim and affirm.

I. THE BACKGROUND

A. Introduction

The appeal arises out of the 1993 reassessment of a San Francisco property called One Market Plaza, a commercial office building and nearby parking garage (One Market Plaza or the property). The reassessment was triggered under Article XIIIA of the California Constitution (Proposition 13), following a determination that there had been a change in ownership. The change in ownership was not a simple, straightforward transaction by any means, but a complex series of transactions beginning in 1986, involving The Equitable Life Assurance Company of the United States (Equitable), the International Business Machines Retirement Plan Trust Fund (Plan), and various "separate accounts," highly regulated transactions authorized by the insurance laws of both California and New York, where Equitable was incorporated. The transactions are described in detail in the recent opinion by Division Five of this court, IBM Personal Pension Plan v. City and County of San Francisco (2005) 131 Cal.App.4th 1291, 32 Cal. Rptr.3d 656, and such detail is not necessary to an understanding of the issue here. Suffice to say that the reassessment came about only after an extensive investigation, review of thousands of pages of documents, a federal lawsuit, a lengthy hearing before the Assessment Appeals Board (AAB), two lawsuits in the San Francisco Superior Court, and more. While the ultimate outcome of the reassessment is still not finally determined, the net effect is, as of now, some $64,000,000-plus in the City coffers.

B. The Inkling of the Change in Ownership and the Request for Legislation

Attorney Wayne Lesser (Lesser), one of Petitioners' lawyers, represented the defendants in a declaratory relief action involving a "small sandwich shop" in One Market Plaza.¹ Those defendants were Joseph Abouab, one of the Petitioners, and his wife. According to Lesser, as part of his "due diligence" he investigated a fictitious business filing pertaining to the owner of the property, to learn that the filing had expired. This led to a successful demurrer, which led to a new complaint alleging a fictitious business certificate naming a new owner. Further investigation led Lesser to uncover other names and, to him, "confusion," the initial "clue the ownership of [One Market Plaza] had changed."

In late August 1991 a meeting was held to attempt to settle the declaratory relief action. This meeting was attended by Lesser, Abouab, and four others, one of whom refused to identify his principal or even answer why he was there. According to Lesser, this person told Abouab that the building owners wanted him out, that there would be no settlement, and that they would "bury him." This made Lesser even "more resolute."

Though the declaratory relief action continued, Lesser's representation of Abouab terminated by October 1991. Lesser nevertheless continued to investigate the change in ownership at One Market Plaza, and along the way apparently developed various sources, including a "confidential source" within Equitable and other "street sources."

Meanwhile, beginning in October 1991, Lesser started communications with the San Francisco Mayor's Office and City Attorney's Office to inform them about the "possible change of ownership of a large downtown building." Lesser did not identify the building.² In Lesser's words, he "sought to interest them in potential legislative action in the nature of a local whistle blowers (qui tam) statute styled after California Government Code section 12652 (the Cal. Qui Tam statute) to benefit Mr. Abouab and the City." There was interest in such legislation, as evidenced by various memoranda and draft legislation in the record. However, for reasons not explained in the record, the Board of Supervisors did not pass the ordinance, and apparently in early October 1992, Lesser was advised of that fact. Days later, he filed the within petition.

C. The Writ Proceeding

On October 8, 1992, a petition for writ of mandamus was filed on behalf of Petitioners, allegedly taxpayers of the City and County of San Francisco.³ The petition sought to compel the City to investigate an unreported change of ownership at One Market Plaza and to reassess the property. The petition was followed shortly by a first amended petition, filed October 20, 1992, which sought the same relief as the original, on the same theory, apparently only adding the Assessment Appeals Board (AAB) as a Respondent and some exhibits. Both petitions sought attorneys' fees under former section 7.700 of the Charter of the City and County of San Francisco (Charter) and the common fund doctrine.

As Petitioners stipulated below, in a stipulation filed over 12 years after the petition, prior to filing their petition they did not discuss the basis for their position with the assessor's office or share any information concerning the unreported change of ownership—not even the identity of the property. The scope of the stipulation is broad, as the facts "deemed as conclusively established" included the following:

"2. Petitioners' moving papers refer to `a confidential source within The Equitable who was Lesser's client . . . .' Petitioners and their counsel have declined to identify this person to Respondents, based on a claim of privilege. The identity of this source was not disclosed to Respondents during the course of their investigation of the One Market Plaza matter, nor was it made public in any other way . . . .

"3. Petitioners' moving papers refer to numerous `street sources' that counsel for Petitioners developed during his investigation of the One Market Plaza matter . . . . Neither Petitioners nor their counsel ever disclosed the identity of any of these sources to the City before the end of the AAB proceedings in this matter. None of these sources testified at the AAB proceedings or provided any documentary evidence that was submitted into the record in front of the AAB.

"4. Petitioners' moving papers refer to their efforts to have a local tax reward ordinance adopted by the San Francisco Board of Supervisors. . . . During discussions concerning this proposed ordinance, counsel for Petitioners told representatives of San Francisco that there was a possible unreported change of ownership affecting one or more large downtown properties in San Francisco. During these discussions, neither Petitioners nor their counsel identified the property or properties in question nor did they request any representative of San Francisco to take any action with respect to the One Market Plaza Property.

"5. Prior to serving their writ action on San Francisco, neither Petitioners nor their counsel provide [sic] any information to any City employee that identified One Market Plaza as the property involved in the unreported change of ownership.

"6. Prior to serving their writ action on San Francisco, neither Petitioners nor their counsel made any effort to discuss the issues raised in their writ petition with any City employee, or to resolve those issues without resorting to litigation."

Petitioners arranged to serve the petition at a meeting at the office of Deputy City Attorney Burk Delventhal. The meeting was attended by three attorneys on behalf of Petitioners, Lesser, Michael Mendelson, and John Doherty, and two attorneys for the City, Delventhal and Claude Kolm, head of the city attorney's tax division. According to Lesser, they explained the nature of the petition and offered to cooperate with the City, at which point Delventhal telephoned Steven Dunbar of the assessor's office, to ask that he join the meeting. And, according to Lesser, at the end of the meeting Delventhal reportedly "jumped up and said `let's get them'" and "expressed appreciation and delight for the potential joint efforts to follow." Efforts followed all right, but hardly joint.

D. The Assessor's Investigation and the Reassessment

Following receipt of the information from Petitioners' counsel, the assessor's office began its investigation into the matter, under the supervision of Chief Assistant Assessor Dunbar, who was second in command of the San Francisco office and with extensive experience involving change in ownership issues.⁴ Dunbar began almost immediately, and on October 30, 1992, acting under the statutory power of Revenue and Taxation Code sections 441, subdivision (d), and 470, he sent letters with document demands to the Plan, Equitable, and related entities concerning the ownership of One Market Plaza.

As Dunbar began his investigation, on November 2, 1992, the city attorney wrote to Lesser, advising "that the Assessor's office has begun prompt action to investigate the change...