Thornton v. California Unemployment Ins. Appeals Bd.

• Citation: 2012 Daily Journal D.A.R. 4796,12 Cal. Daily Op. Serv. 4202,139 Cal.Rptr.3d 737,204 Cal.App.4th 1403
• Decision Date: 17 April 2012
• Docket Number: No. D058635.,D058635.
• Court: California Court of Appeals
• Parties: Cynthia K. THORNTON, Plaintiff and Appellant, v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD, Defendant and Respondent.

12 Cal. Daily Op. Serv. 4202

139 Cal.Rptr.3d 737

2012 Daily Journal D.A.R. 4796

204 Cal.App.4th 1403

Cynthia K. THORNTON, Plaintiff and Appellant,

v.CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD, Defendant and Respondent.

No. D058635.

Court of Appeal, Fourth District, Division 1, California.

April 17, 2012.

Cynthia K. Thornton, La Jolla, in pro. per., for Plaintiff and Appellant.

Kamala D. Harris, Attorney General, Alicia M.B. Fowler, Assistant Attorney General, Chris A. Knudsen and Patti W. Ranger, Deputy Attorneys General, for Defendant and Respondent.

IRION, J.

The question on this appeal from a judgment of dismissal after a demurrer was sustained without leave to amend is whether, under Government Code section 996.4 or Labor Code section 2802, an employee of a public agency who is hired into a different position within the agency has a right to reimbursement from the agency for attorney fees and other expenses the employee incurred in an investigation by law enforcement of potential conflicts of interest in the hiring, when no formal civil action or proceeding was commenced against the employee. We hold the answer is no and affirm the judgment.

IFACTUAL AND PROCEDURAL BACKGROUND

A. Underlying Facts

Because this case comes to us after entry of a judgment of dismissal based on the sustaining of a demurrer without leave to amend, we accept as true the well-pleaded material allegations of the complaint. ( Shoemaker v. Myers (1990) 52 Cal.3d 1, 7, 276 Cal.Rptr. 303, 801 P.2d 1054.) Those allegations are as follows:

In January 2000, Governor Gray Davis appointed Cynthia K. Thornton to the California Unemployment Insurance Appeals Board (the Board), and elevated her to chairperson in May of that year. Thornton held that position until her term expired in October 2005.

After Thornton had chaired the Board for two years, several long-term employees of the Board encouraged her to take an examination that, if passed, would allow her to serve as an administrative law judge (ALJ) for the Board and other state agencies. She passed the examination and was added to the list of candidates eligible for ALJ positions.

Near the end of Thornton's term as chairperson of the Board, the Board's executive director offered her a job as an ALJ for the Board. The executive director and the Board's chief counsel assured Thornton it was permissible for a Board member to be offered and to accept a position as an ALJ for the Board. Thornton accepted the offer, and she began her duties as an ALJ in the Board's San Diego office in November 2005.

After Thornton was hired, the Board's executive director “expressed concern that he would be criticized by the incoming [Governor] for hiring a [Board] member ... who had [been] appointed by the prior Governor from the other political party.” The executive director therefore “took the unusual step of asking the [Board] to vote on the job offer to [Thornton] for ‘political cover’—even though she had already been offered the job.” The Board, “without input or participation from [Thornton],” voted to extend her an offer for a position as an ALJ.

Three years after Thornton began her duties as an ALJ, the State Auditor issued a report concerning, among other matters, the Board's hiring practices. The report mentioned the hiring of a former Board member as an ALJ for the Board. Although the report did not name Thornton, the hiring referred to was hers. The State Auditor was required to, and did, refer the matter to the Sacramento County District Attorney and the Attorney General for investigations into whether Thornton's hiring violated Government Code section 1090 ¹ or any other state conflict of interest laws.²

After Thornton learned of these referrals, she retained an attorney to assist her with the investigations. The attorney had numerous conversations with and wrote several letters to the investigating authorities.

In January 2009, Thornton's attorney requested that the Board provide her with a defense pursuant to Government Code section 995. The Board denied the request.

By April 2009, the district attorney and the Attorney General informed Thornton's attorney that they had concluded their investigations and would not be filing either a civil claim or a criminal charge against Thornton. The following month, Thornton filed a claim under the Government Claims Act (Gov.Code, § 810 et seq.) for reimbursement of the attorney fees and other expenses she incurred in connection with the investigations, but the claim was rejected.

B. The Litigation

Thornton sued the Board for reimbursement of the attorney fees and other expenses she incurred in responding to the district attorney's and the Attorney General's investigations of the circumstances of her hiring as an ALJ for the Board. In her complaint, Thornton asserted she was entitled to reimbursement under two statutes, Government Code section 996.4 and Labor Code section 2802.

The Board demurred to the complaint. The Board argued Thornton was not entitled to reimbursement under Government Code section 996.4 because: (1) there was no civil action or proceeding she had to defend; and (2) the matter investigated—her hiring as an ALJ for the Board—did not arise out of an act or omission in the scope of her employment. The Board argued Thornton was not entitled to reimbursement under Labor Code section 2802 because: (1) the statute does not apply to public employees; (2) no formal civil claim or criminal charge was instituted against Thornton; and (3) the attorney fees and other expenses incurred by Thornton were not a direct consequence of the discharge of her duties as an employee.

The trial court, over Thornton's opposition, sustained the Board's demurrer without leave to amend on the grounds “there was no action or proceeding filed against her, and the investigation was not of a civil nature but of a criminal nature.” A judgment of dismissal followed.

IIDISCUSSION

Thornton contends the judgment must be reversed because she is statutorily entitled to reimbursement from the Board for the attorney fees and other expenses she incurred in connection with the district attorney's and the Attorney General's investigations of the circumstances of her hiring as an ALJ for the Board. Thornton raises three arguments on appeal: (1) the investigations were “civil action[s] or proceeding[s]” within the meaning of Government Code sections 995 and 996.4; ³ (2) the investigations concerned actions taken in the course and scope of her employment within the meaning of those sections; and (3) she necessarily incurred the attorney fees and expenses “in direct consequence of the discharge of ... her duties” within the meaning of Labor Code section 2802, subdivision (a). We disagree.

As we shall explain, we conclude the Board had no obligation to reimburse Thornton under Government Code section 995 or 996.4 because no civil action or proceeding was ever instituted against her. We also conclude the Board had no obligation to reimburse her under Labor Code section 2802 because that statute does not apply here. Because these conclusions dispose of Thornton's claims, we need not and do not address her arguments that the expenses she incurred in responding to the investigations of potential conflicts of interest in her hiring arose out of an act or omission by Thornton within the course and scope of her employment.

A. Standard of Review

A demurrer tests the legal sufficiency of the factual allegations of a complaint to state a cause of action. ( McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415, 106 Cal.Rptr.2d 271, 21 P.3d 1189.) When reviewing a judgment dismissing a complaint after the sustaining of a demurrer without leave to amend, we assume the truth of all of the properly pleaded and implied allegations of facts. ( Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081, 6 Cal.Rptr.3d 457, 79 P.3d 569.) “We do not, however, assume the truth of contentions, deductions, or conclusions of fact or law.” ( Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125, 271 Cal.Rptr. 146, 793 P.2d 479.) Further, we give the complaint a reasonable interpretation by reading it as a whole and its various parts in context. ( Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) If the complaint does not state a cause of action, and the plaintiff does not show how the defects can be cured, we must affirm the judgment of dismissal if any of the grounds of demurrer is well taken. ( Hendy v. Losse (1991) 54 Cal.3d 723, 742, 1 Cal.Rptr.2d 543, 819 P.2d 1 ( Hendy ); Longshore v. County of Ventura (1979) 25 Cal.3d 14, 21, 157 Cal.Rptr. 706, 598 P.2d 866.) On the other hand, if the complaint does state a cause of action, or the plaintiff shows a reasonable possibility the defects can be cured by amendment, we must reverse the judgment of dismissal. ( Aubry v. Tri–City Hospital Dist. (1992) 2 Cal.4th 962, 967, 9 Cal.Rptr.2d 92, 831 P.2d 317.)

B. Pertinent Statutes

The Government Claims Act (Gov.Code, § 810 et seq.) requires public employers to defend their employees under certain circumstances: “Except as otherwise provided in Sections 995.2 and 995.4, upon request of an employee or former employee, a public entity shall provide for the defense of any civil action or proceeding brought against him [ or her ], in his [or her] official or individual capacity or both, on account of an act or omission in the scope of his [or her] employment as an employee of the public entity.” (gov.code, § 995, italics added.) “if after request a public entity fails or refuses to provide an employee or former employee with a defense against a civil action or proceeding brought against him and the employee retains his [or her] own counsel to defend the action or proceeding, [the employee] is entitled to recover from the public entity such reasonable attorney's fees, costs and expenses as are necessarily incurred by him [or her] in defending the...