Procedural Posture by The Posture Lyrics

Plaintiffs, a mobilehome park's owners association and its members, appealed a judgment of the Superior Court of San Diego County, California, which dismissed their action based on promissory estoppel that challenged defendant general law city's two-step plan to divest itself of ownership of the park. The trial court also granted the city's request for validation of its sale of the park and associated tax-exempt bond financing.OverviewDuring pretrial civil discovery the parties retained class action lawyers as their experts during the first designation. Plaintiffs alleged the city breached a promise to the association and park tenants by requiring tax-exempt bond financing for purchase of the park. The court held that plaintiffs' second amended complaint did not allege exceptional circumstances necessary to justify application of the promissory estoppel doctrine against the city and that leave to amend would not cure the defect. Gov. Code, § 40602, impliedly required a written contract in the case because an oral contract would violate the statute's purpose of requiring a city's governing body to make considered decisions on important matters affecting the public fisc. However, the court concluded that the city's public hearing under the Tax Equity and Fiscal Responsibility Act of 1982, 26 U.S.C. § 147(f), was insufficient. Despite the city's attempts to defend the bond resolution, a reader could only conclude from its language that the city intended to do an unauthorized act: issue tax-exempt bonds under Health & Saf. Code, div. 31, pt. 5, ch. 8, which pertained to tax-exempt charitable corporations under 26 U.S.C. § 501(c)(3), and loan the proceeds to the redevelopment agency, which did not qualify as such an organization.OutcomeThe court affirmed the judgment on the owners association's action and reversed the judgment on the city's validation action.Procedural PostureFollowing a one-day bench trial, the Orange County Superior Court (California) found defendants sold a restaurant they did not own, but it declined to order disgorgement or other relief in favor of plaintiffs, the rightful owners. The trial court allowed defendants to keep the proceeds of the sale, concluding plaintiffs' first amended complaint failed to adequately plead claims for unjust enrichment, conversion, or trespass. Plaintiffs appealed.OverviewThe court held that plaintiffs adequately stated claims in quasi-contract and tort. Plaintiffs' detailed cause of action for breach of contract fully raised all the facts and circumstances in which equity could contemplate a quasi-contractual remedy to prevent defendants from being unjustly enriched at the expense of plaintiffs. The trial court mistakenly assumed plaintiffs' second cause of action for “intentional tort” only pertained to a claim for emotional distress or fraud. But the second cause of action alleged defendants “took full control of the Business from Plaintiffs without paying the agreed purchase price, or any price at all; essentially defendants stole the Business from Plaintiffs.” Those allegations were sufficient to support claims for the tort of conversion or the tort of trespass. Defendants could not appropriate plaintiffs' property interest in their restaurant without having to answer legally—whether in contract, quasi-contract or tort—for the resulting injury to plaintiffs. The court concluded that plaintiffs were entitled to a determination on all causes of action.OutcomeThe court reversed the judgment and remanded the matter for a new trial that resolved plaintiffs' claims under the quasi-contract and tort theories. In the interests of justice, the court also reversed the trial court's determination defendants did not breach the restaurant sales contract with plaintiffs; the parties were free to relitigate that issue if they so chose.