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On Friday, May 29, superior court judge Gregory Pollack handed environmental attorney Cory Briggs both a victory and a warning.

Pollack complimented Briggs for his work in defeating a proposal to impose new taxes on hotel guests to cover a $575 million expansion of San Diego's convention center.

At the same time, the judge tagged Briggs for performing some of the legal work while San Diegans for Open Government — the nonprofit Briggs represents — was suspended by the state for a six-month period in 2012 for failing to file the necessary paperwork .

As reported by online news organization inewsource, Pollack admonished Briggs for litigating the case despite knowing the nonprofit was suspended.

"I don't want to condone what was done here," Pollack said in his decision. "It seems Mr. Briggs was well aware of the unsuspended or suspended status of his client, [San Diegans for Open Government], and without disclosing that, proceeded to litigate, and that behavior is arguably violative of Revenue and Tax Code Section 1970–1971.9, which makes it a misdemeanor resulting, per terms of the statute, [in] imprisonment not exceeding one year."

Pollack veered from making any finding that Briggs committed a criminal act.

"So we have, and I am not making any finding with regard to whether Mr. Briggs did or did not violate that statute, but, certainly, it was inappropriate legal representation, and the court is not going to condone that by awarding attorney's fees for such representation."

Pollack followed by withholding dozens of hours of work by Briggs and his firm's staff, saving the city thousands of dollars in legal fees.

But court documents and written testimony show that the city could have saved the entire case, or, if nothing else, could have prevented Briggs and San Diegans for Open Government from participating.

Judge Pollack provided a similar opinion.

"So, I do believe that the city had a viable statute of limitations defense, and I do believe that if it had been asserted prior to or at the time of trial, [San Diegans for Open Government] would have been bounced out of the case….”

Pollack's statement raises the questions of whether the city knew, back in 2012, that San Diegans for Open Government was briefly suspended.

According to a declaration from Cory Briggs, not only were attorneys for the city aware, but a judge had acknowledged it in an unrelated case; and around the same time the city filed the convention-center case, the U-T had also reported on the suspension.

In November 2012, a paralegal for Briggs’s firm testified that in March of that year, during an attempt to file San Diegans for Open Government's required paperwork, she discovered that the nonprofit was suspended for failing to file necessary documents. The paralegal testified that she submitted the paperwork three days after learning of the error. Despite repeated attempts, the firm was unable to expedite the reinstatement. The state agency processed it in November 2012.

During that six months, San Diegans for Open Government continued to litigate. On August 5, 2012, Ashly McGlone, a former U-T reporter, broke the story that San Diegans for Open Government was suspended.

"...San Diegans for Open Government is a suspended corporation, according to the California Secretary of State. Briggs said the group’s status is the result of paperwork pileup at the state level and that their renewal documentation was sent months ago," reads the August 2012 article.

The following week, superior court judge Ronald Prager ruled against Briggs in a lawsuit the nonprofit filed against the county for violating the Brown Act.

"Petitioner is a corporation formed under the laws of the State of California. On April 2, 2012, the California Franchise Tax Board suspended its corporate powers, rights and privileges. As of October 18, 2012, Petitioner's corporate powers remained suspended. During the period that a corporation is suspended for failure to pay taxes, it may not prosecute or defend an action. Consequently, Petitioner lacked the legal capacity to bring this action through and including the date the statute of limitations expired."

Before the May 29 ruling from Judge Pollack, Briggs provided a declaration stating that one of the attorneys on the case, Glenn Spitzer, had discussed the suspension as the two waited for their hearing to begin.

"[I] sat next to Mr. Spitzer while waiting for the matter to be called," reads Briggs’s May 15, 2015, declaration. "During that time, Mr. Spitzer mentioned that he had seen the newspaper article about [San Diegans for Open Government's] suspension and asked [me] whether the suspension was likely to be lifted before the parties began briefing the merits. Upon hearing SDOG’s counsel estimate that the corporation’s status was expected to be revived 'surely by the end of the year,' Mr. Spitzer seemed satisfied with the answer and changed the subject of the conversation to the usual niceties that colleagues exchange while waiting for their matter to be called."

Spitzer has since denied ever having that conversation.

Despite the ruling from Judge Prager in 2012, the U-T article, and the alleged conversation between the attorneys, the city failed to connect the dots until September 2014, when Sally Down, investigator for the city, stumbled across the 2012 declaration from Briggs’s paralegal.

"I am not aware of anyone else in our office having seen the declaration or being aware of [San Diegans for Open Government's] suspension until I reviewed the declaration…. At that point I informed attorneys in our office….”

Despite the September 2014 notification, the city waited to bring it up in court until a motion for fees in the convention-center case. Judge Pollack is expected to award attorney’s fees to Briggs and his co-plaintiff's counsel Craig Sherman in the coming weeks, minus the amount claimed during the six-month suspension.

(See the related article on allegations surrounding the status of San Diegans for Open Government.)

(corrected 5/6, 10 a.m.)

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Comments

Diogenes June 5, 2015 @ 6:07 p.m.

It would be up to the City to assert that lack of capacity caused the lawsuit to be a nullity and, therefore, the statute of limitations had passed. The Courts of Appeal have not always upheld this reasoning for a dismissal because of the prejudice to a party. It is better to deal with the "lack of capacity" in other ways. Giving the party a chance to pay the fee or cure the defect while staying the case is the usual course. To wait to bring the challenge also creates a situation of waiver or partial waiver.

I always check corporate capacity as a possible defense. I bring it to the attention of the court through a demurrer. If the statute of limitations defense was available, I would have raised it. Failure to check corporate status and raise statute of limitations defenses could result in a waiver.

Statutes of limitations are a disfavored defense. Equity favors the dilligent.

It is not good to get sloppy about corporate matters, however. The consequences of piercing the corporate veil or a judicial finding the corporation is not de jure may be quite unpleasant.

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patflannery June 6, 2015 @ 2:09 p.m.

Dorian writes: "Despite the ruling from Judge Prager in 2012, the U-T article, and the alleged conversation between the attorneys, the city failed to connect the dots until September 2014, when Sally Down, investigator for the city, stumbled across the 2012 declaration from Briggs’s paralegal."

Judge Pollack said: "So, I do believe that the city had a viable statute of limitations defense, and I do believe that if it had been asserted prior to or at the time of trial, [San Diegans for Open Government] would have been bounced out of the case….”

So when did it all go wrong between Briggs and Goldsmith?

The Reader and Judge Pollack both agree that Goldsmith could have bounced the case out of court "prior to or at the time of trial". Why didn't he? Now he wants us to believe that his office only became aware of the "capacity" issue when Sally Down, an investigator in his office, stumbled across the 2012 declaration from Briggs’s paralegal.

No, something else happened (or didn't happen). This has all the signs of a deal gone bad. Goldsmith probably had been advising the hoteliers all along to settle because he knew they would lose. They didn't listen and lost $30 million per year. No wonder they are mad at Briggs. And probably at Goldsmith too. The big winner is the public.

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