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Court of Appeal:
General Denial to Unverified Government Complaint Allowed
Opinion Says Corporation May File Unverified Answer If Admission Could Trigger Prosecution; Cautions Judges Not to Change Rulings After C.A. Issues Order to Show Cause Why Relief Should Not Be Granted
By a MetNews Staff Writer
A general denial is permissible in responding to an unverified complaint filed by a governmental entity, Div. Five of the First District Court of Appeal held yesterday.
It also declared that a corporation, as well as an individual, where the defendant fears that an admission could lead to prosecution, is exempted from the usual rule that a verified answer must be filed in response to a government complaint.
Those holdings, Justice Henry E. Needham Jr. said in his opinion, are on issues of first impression.
The opinion—in Paul Blanco’s Good Car Company Auto Group v. Superior Court, 2020 S.O.S. 4886—also advises that after the Court of Appeal issues an order to the Superior Court to show cause why a petition for a writ of mandate challenging an order should not be granted, that ruling should ordinarily not be changed by the judge.
UCL, FAL Suits
Appellants are Paul Blanco and four of his businesses. They have been sued by the State of California under the Unfair Competition Law and the False Advertising Law.
Their unverified answer was stricken by Alameda Superior Court Judge Michael M. Markman on Feb. 5 of this year; the Court of Appeal on April 28 issued an order to the Superior Court to show cause why the defendants’ petition for a writ of mandate should not be granted; the case was shifted to Judge James Reilly who, on May 22 vacated the order striking the answer.
Reilly’s action, Needham said, was a nullity because one Superior Court judge may not reverse another Superior Court judge, unless the first judge is unavailable, and the record did not reflect that to be so.
Examining Markman’s ruling, he said it was based on error.
Feb. 5 Ruling
Markham interpreted Code of Civil Procedure §446(a), which says, in part:
“When the state, any county thereof, city, school district, district, public agency, or public corporation, or any officer of the state, or of any county thereof, city, school district, district, public agency, or public corporation, in his or her official capacity is plaintiff, the answer shall be verified, unless an admission of the truth of the complaint might subject the party to a criminal.”
That section cannot apply to a corporation, Markham reasoned, because only an individual, not a corporation, may invoke the Fifth Amendment right against self-incrimination.
Needham’s Opinion
Disagreeing, Needham wrote:
“The question is whether the phrase, ‘unless an admission of the truth of the complaint might subject the party to a criminal prosecution’ applies to a corporate defendant. The plain language of section 446, subdivision (a) is clear that it does. Obviously, a corporate defendant can be a “party’….”
The justice noted that §446(a)—which says that “[w]hen a corporation is a party, the verification may be made by any officer thereof”—“explicitly confirms that a corporation may be a ‘party’ for purposes of the statute.”
He declared:
“Therefore, if the admission of the truth of the complaint might subject a corporation…to criminal prosecution, the corporation does not have to verify its answer.”
General Denial
Addressing an issue of broader application, Needham said that where an unverified complaint is filed by a governmental entity, the usual requirement that an answer must be verified does not preclude filing a general denial.
Code of Civil Procedure §431.30(b) authorizes either a general or specific denial and §431.30(d) provides that where a complaint is verified, “the denial of the allegations shall be made positively or according to the information and belief of the defendant.”
Needham pointed out:
“Nowhere does section 446 state that a pleading by the government is deemed verified….Thus, while the first paragraph of section 446, subdivision (a) says that unverified government complaints as well as verified complaints require answers that are verified, there is no indication that government complaints are deemed verified for the purpose of precluding a general denial under section 431.30.”
The jurist added:
“[I]f the Legislature had intended that section 431.30, subdivision (b) require specific denials in response to any government complaint, whether verified or not, it easily could have said so.”
Effect of OSC
While the issuance by the Court of Appeal of an order to show cause did not strip the Superior Court of the power to change its order, Needham said, the order in issue should generally not be altered. He explained:
“[I]t would have been preferable for respondent trial court to keep its February 2020 order in place after we issued our OSC directed to that order. To avoid future trial court confusion in this regard, it may be beneficial to emphasize the difference between an OSC and an alternative writ.
“An alternative writ of mandate requires the respondent to perform an act (e.g., change its order) or to show cause why it has not done so….By contrast, an OSC directs no act by respondent; instead, the OSC requires respondent only to show cause why it should not be required to perform an act. Thus, an OSC, such as the one issued here, does not invite the trial court to change the ruling under review.”
He continued:
“In our view, while a trial court retains power to change an order embraced by an appellate court's OSC, it should avoid doing so. Appellate courts carefully choose between the alternative writ and OSC procedures, cognizant of the difference between the two….Here, given that the petition raised a question of first impression appropriate for resolution in a published opinion, we deliberately chose to issue an OSC instead of an alternative writ, since the latter procedure would have permitted reversal of the challenged order with the undesirable result of potentially rendering the issue moot….Going forward, trial courts receiving an order from an appellate court should observe the distinction between an alternative writ and an OSC.”
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