Thursday, January 31, 2002
City’s Cross-Complaint in Suit Over Bridge Not SLAPP, C.A. Rules
By KENNETH OFGANG, Staff Writer/Appellate Courts
A cross-complaint filed by the City of Los Angeles in a multi-million dollar suit brought by a construction firm wasn’t a strategic lawsuit against public participation, even if brought in retaliation for the filing of the action, this district’s Court of Appeal ruled yesterday.
A motion by Kajima Engineering and Construction, Inc. to strike the cross-complaint, filed after Kajima sued for payment allegedly due for the building of a bridge at the Port of Los Angeles, was properly denied, Justice Dennis Perluss wrote for Div. Seven.
Kajima, which claimed the city was trying to deny the company its fundamental right of access to the courts, failed to show that the city was trying to retaliate for its exercise of free speech or petition rights, the justice said.
“The amended cross-complaint alleges causes of action arising from Kajima’s bidding and contracting practices, not from acts in furtherance of its right of petition or free speech,” Perluss said.
Monterey Park-based Kajima Engineering is a subsidiary of the Japanese construction company Kajima Corp., headquartered in Tokyo. Kajima sued the city in 1999, claiming it was owed $34.7 million on a 1995 contract to dismantle and replace the Badger Avenue Bridge, a 1920s structure over Cerritos Channel that links the port to Terminal Island.
The city, in its cross-complaint, initially sued only for breach of contract and bad faith. But it later added 19 additional causes of action, including claims under the state False Claims Act and Racketeer Influenced and Corrupt Organizations Act for treble damages approximating $400 million.
The city contended that Kajima was guilty of fraud and mismanagement in connection with the project, completed in 1997—at least 230 days behind schedule and $12.5 million over budget, the city said.
The city also alleged that Kajima officials deliberately underbid the project although they knew the company was incapable of carrying out the required work. The city contended that Kajima’s unrealistically low bid was part of a broad effort to recover business after the parent company was suspended in the mid-1990s from obtaining public contracts in Asia because of various scandals.
Kajima claimed that its problems with the bridge project were largely the fault of the city, which the company said failed to disclose adverse conditions at the site, including badly deteriorated pilings that added to the building costs, and insisted that Kajima use an expensive marine subcontractor.
Los Angeles Superior Court Judge Elizabeth Ann White initially granted Kajima’s motion to strike. On reconsideration, however, she concluded that only a single FCA cause of action, which specifically cited the filing of the lawsuit as part of an effort to fraudulently obtain payment, should be stricken under Code of Civil Procedure Sec. 425.16.
The city did not challenge the striking of the FCA claim on appeal.
Perluss agreed with the trial judge.
Since the conduct complained of by the city would all have occurred long before Kajima sued, the claims could not have arisen from Kajima’s exercise of its right to sue, the justice reasoned. Kajima’s allegations, Perluss said, “defeat the SLAPP motion because they demonstrate the alleged improper conduct does not arise from Kajima’s petitioning activities but rather from its bidding and contracting practices.”
Perluss noted that the court was not ruling on the merits of the city’s allegations and that Kajima remains free to seek sanctions, under Code of Civil Procedure Sec. 128.7, for the filing of a frivolous cross-complaint.
Kajima was represented on appeal by John B. Clark, Timothy L. Pierce and Amy L. Rubinfeld of Thelen Reid & Priest.
The city’s attorneys were William S. Davis, Gerald M. Fisher and Kenneth F. Mattfeld of Arter & Hadden; Patricia L. Glaser and Alisa Morgenthaler Lever of Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, Vincent H. Okamoto and Ronald T. Wasserman of Okamoto, Wasserman & Torii, and Assistant City Attorneys Richard M. Helgeson and David McKenna.
The case is Kajima Engineering and Construction, Inc. v. City of Los Angeles, B149642.
Copyright 2002, Metropolitan News Company