City of L.A. v. Katangian CA2/2 ( 2022 )

Filed 9/28/22 City of L.A. v. Katangian CA2/2
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
CITY OF LOS ANGELES, B309215
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 18STCV02275)
v.
SHELLINE KATANGIAN et al.,
Defendants and
Appellants.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Malcolm H. Mackey, Judge. Affirmed.
Law Offices of Thomas A. Nitti and Thomas A. Nitti for
Defendants and Appellants.
Michael N. Feuer, City Attorney, Michael J. Bostrom and
Steven S. Son, Deputy City Attorneys, for Plaintiff and
Respondent.
Shelline Katangian, Shelly’s Volume Transportation
Services, Inc. (SVT), and Key Disposal and Recycling, Inc. (Key)
(collectively appellants) appeal from a judgment entered against
them following the trial court’s grant of summary judgment in
favor of the City of Los Angeles (city) on the city’s claims against
appellants for violations of the California False Claims Act (Gov.
Code, § 12650 et seq.) and the city’s solid waste hauling
ordinance (L.A. Muni. Code, § 66.32 et seq.).
Appellants do not challenge the underlying factual findings
against them, which led to the entry of summary judgment in
favor of the city.1 Instead, appellants challenge (1) the
constitutionality of the penalties imposed upon them, (2) the trial
court’s legal conclusion that a permit was required for appellants’
waste hauling activities, and (3) the constitutionality of the
“recycLA program” under the California constitution. Since
appellants failed to raise it below, their first argument is
forfeited. Because appellants failed to provide sufficient legal
authority and factual support for their claims, all three
1 For the first time in their reply brief, appellants raise a
factual argument that Katangian’s signature on the city’s waste
hauling forms was inadequate to show an intent to violate the
False Claims Act by knowingly or recklessly making false
statements. “Raising a new theory in a reply brief is improper
and unfair to [respondents],” and “[w]e may decline to consider
an argument raised for the first time in a reply brief if no good
reason is demonstrated for the delay in raising the point.”
(Simpson v. The Kroger Corp. (2013) 219 Cal.App.4th 1352,
1370.) As appellants have failed to set forth a good reason for
their delay in raising the point, we therefore decline to address
the issue since the city has not had a fair opportunity to respond.
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arguments fail. As appellants have failed to establish error, we
affirm the judgment.
FACTUAL BACKGROUND
Key’s permit and revocation
Under the Los Angeles Municipal Code, a trash hauler may
not collect, remove, or transport solid waste generated within the
city unless the hauler obtains a permit (AB 939 compliance
permit) from the city. (L.A. Muni. Code, § 66.32.1(a)(1).) After
receiving an application signed by Katangian on behalf of Key,
the city issued Key an AB 939 compliance permit in December
2002. To renew the permit, Key was required to file yearly
renewal applications and annual reporting forms disclosing the
amount of solid waste hauled within the city and the gross
receipts. This information was required to ensure that all AB
939 compliance fees were paid.
In 2010, the city audited Key’s business operations for the
period of January 2006 through December 31, 2007, and found
that Key underreported its gross receipts and failed to pay
$236,616.45 in AB 939 compliance fees. Following the audit, Key
agreed to a monthly payment plan with the city, but failed to
comply with the plan.
In 2012, the city conducted a second audit of Key’s
operations, for the period of January 1, 2008, through
December 31, 2010. This audit revealed that Key had again
underreported its gross receipts and failed to pay an additional
$441,175.51 in AB 939 compliance fees. The city made numerous
attempts to collect, but Key again failed to pay all amounts owed.
In March 2013, the city revoked Key’s AB 939 compliance
permit and has not reinstated Key’s AB 939 compliance permit.
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SVT’s permit and revocation
On June 10, 2011, after the city first audited Key’s
operations, the city received SVT’s application for an AB 939
compliance permit signed by Katangian, SVT’s sole owner,
officer, and director. On June 13, 2011, the city issued SVT an
AB 939 compliance permit, permitting SVT to collect, remove,
and transport solid waste generated within the city.
From May 2012 through April 2017, the city received SVT’s
permit renewal applications and annual reporting forms, all of
which were signed by Katangian as SVT’s president or
owner/president. In each of the annual reporting forms,
Katangian represented that SVT hauled less than 1,000 tons of
solid waste generated within the city for the prior calendar year.
On May 11, 2017, the city informed SVT that it intended to
inspect SVT’s books and records on May 26, 2017, to audit the
information SVT provided in its annual reporting forms for the
period of January 1, 2014, through December 31, 2016. SVT
delayed the inspection on the city’s first three attempts to inspect
SVT’s records. After further communications, SVT agreed to
bring its business records to the Bureau of Sanitation’s Los
Angeles office.
On June 20, 2017, a representative of SVT arrived at the
Bureau of Sanitation in Los Angeles. While the representative
brought several boxes of documents, the representative would not
wait for city staff to copy all of the records. City staff were only
able to copy one register of documents, containing a schedule of
invoices from December 2, 2013, to January 1, 2014. The billing
register was under the name of Key, not SVT.
City staff demanded that SVT provide specific reports,
including its payment register and customer list with service
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addresses. On July 17, 2017, after more than 10 separate calls
from city staff to SVT, SVT finally turned over to the city the
requested records.
The records revealed that 584 of the 589 invoices listed
under Key’s name had the same date, invoice number, account
number, and account name as under the complete billing register
SVT produced. In addition, SVT had only one vehicle registered
to it, and that vehicle was not listed on SVT’s permit application.
Of the eight trucks SVT listed in its permit application, seven
were actually registered to Key.
The records further revealed that the reported tonnage and
gross receipts reported by SVT were inaccurate. The city
calculated that for the period of January 1, 2014, to December 31,
2016, SVT owed $1,204,834 in AB 939 compliance fees (10
percent of $12,048,332 in gross receipts) and an additional
$120,483 in late fees (10 percent of the outstanding AB 939
compliance fees).
The city scheduled for August 17, 2017, an exit interview
with SVT to allow SVT to ask questions or provide additional
information. SVT failed to attend the exit interview. The city
thus finalized the audit and mailed the audit report to SVT on
September 1, 2017. Later that month, the city informed SVT
that its AB 939 permit would be revoked.
SVT lost an administrative appeal, and on February 16,
2018, the city revoked SVT’s AB 939 compliance permit and
informed SVT that it must immediately cease all solid waste
hauling activities within the city. The city has not reinstated
SVT’s AB 939 compliance permit. The city has also not received
any payment on the $1,325,317 invoice the city mailed to SVT on
September 1, 2017.
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PROCEDURAL HISTORY
The pleadings
On October 25, 2018, the city filed a complaint against
appellants for violations of the False Claims Act and the city’s
solid waste hauling ordinance. The city prayed for treble
damages, in an amount to be proven at trial but no less than
$3,614,502, civil and statutory penalties, and an injunction
prohibiting appellants from continuing their solid waste
operations within the city.
On December 14, 2018, appellants filed general denials to
all of the city’s allegations without asserting any affirmative
defenses.
Preliminary injunction and contempt
On March 13, 2019, the city obtained a preliminary
injunction enjoining appellants from collecting, removing, or
transporting solid waste generated within the city.
On May 31, 2019, the trial court held a contempt trial
against appellants arising out of their continued operations
within city limits in violation of the preliminary injunction. The
trial court adjudged appellants guilty of contempt, imposed a
fine, and ordered appellants to pay the city’s attorney fees and
costs. On February 28, 2020, the trial court entered an order of
contempt against appellants.
Summary judgment and appeal
On June 5, 2020, the city moved for summary judgment
against appellants.
On August 14, 2020, appellants filed their opposition to the
city’s motion for summary judgment.
On August 24, 2020, the city filed its reply.
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On August 31, 2020, the trial court issued a minute order
granting the city’s motion for summary judgment. On
September 21, 2020, the trial court entered judgment in favor of
the city. The trial court found appellants jointly and severally
liable to the city in the amount of $3,614,502 in the form of treble
damages for knowingly making false statements to the city in
April 2015, April 2016, and April 2017 in violation of the False
Claims Act. The trial court further found appellants jointly and
severally liable to the city in the amount of $33,000 in the form of
civil penalties, for the same false statements. Finally, the trial
court found appellants jointly and severally liable to the city in
the amount of $1,447,500 in the form of statutory penalties, for
collecting, removing, and transporting solid waste generated
within the city without an AB 939 compliance permit for a period
of 579 days from February 16, 2018, to September 17, 2019.
Appellants were enjoined from collecting, removing or
transporting any solid waste within the city without first
obtaining an AB 939 compliance permit.
On November 13, 2020, appellants filed their notice of
appeal from the judgment.
DISCUSSION
I. Standard of review
The grant of summary judgment is subject to de novo
review. (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32
Cal.4th 1138, 1142.) “[W]e independently examine the record in
order to determine whether triable issues of fact exist to reinstate
the action.” (Ibid.) Where there is no dispute over the facts
regarding the basis for a summary judgment motion, “the only
dispute is over the legal effect and significance of the undisputed
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facts, which is a pure matter of law.” (Schrader v. Scott (1992) 8
Cal.App.4th 1679, 1684.)
II. Appellants have failed to raise a triable issue of
material fact
Appellants do not raise any triable issue of material fact in
their opening brief. Thus, we decline to address in detail the
underlying facts regarding appellant’s violations of the provisions
at issue and address only the legal issues raised by appellant on
appeal.
III. Constitutionality of penalties
Appellants’ first argument is that the penalties ordered by
the trial court violate the excessive fines clauses of the federal
and state Constitutions. The Eighth Amendment to the United
States Constitution provides that “[e]xcessive bail shall not be
required, nor excessive fines imposed, nor cruel and unusual
punishments inflicted.” The California Constitution includes an
almost identical provision. (Cal. Const., art. I, § 17.) Appellants
argue that the fines imposed by the trial court constituted
penalties and trebled damages, and because the trebling of
damages is punitive in nature, appellant argues, most of the
award is a penalty.
We find appellants’ constitutional argument forfeited for
several reasons. First, appellants failed to raise this defense in
the trial court and failed to allege any constitutional claims as
affirmative defenses in their responsive pleadings below. With
the filing of its complaint, the city put appellants on notice that
the city was seeking treble damages under the False Claims Act,
up to $11,000 in penalties for each of appellants’ false claims, and
up to $2,500 in daily penalties for appellants’ violations of the Los
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Angeles Municipal Code. Appellants cannot now claim in earnest
to have been surprised by the amount awarded against them.
As appellants point out, we have discretion to reach the
merits of an issue raised for the first time on appeal in certain
circumstances. For example, an appellant may be permitted to
change his or her theory when a question of law alone is
presented on the facts appearing in the record. (Renee J. v.
Superior Court (2002) 96 Cal.App.4th 1450, 1459.) However, we
decline to do so under the circumstances of this case because
appellants’ arguments depend on facts that were not made part of
the record in this case.
Appellants first argue that the penalties were
disproportionate to the gravity of the offense because a
substantial portion of appellants’ waste hauling activities, for
which the penalties were awarded, were accomplished by
servicing facilities that are exempt from the city’s general waste
hauling law. As will be discussed below, appellants have failed to
provide legal authority suggesting that trash haulers may service
specific facilities without a permit. Further, appellants provide
no citation to supporting evidence in the record showing that they
serviced such allegedly exempt facilities.2
2 Katangian’s declaration provides an unsupported legal
conclusion that “. . . SVT was hauling waste from facilities that
are exempt from the City’s waste hauling ordinance.” In the
absence of any legal authority showing that waste haulers were
permitted to haul waste from certain facilities without permits,
and in the absence of specific evidence supporting this assertion,
the trial court properly disregarded this statement as conclusory.
(Hayman v. Block (1986) 176 Cal.App.3d 629, 638 (Hayman)
[declarations in support of or in opposition to summary judgment
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Appellants next argue that courts must consider the
individual circumstances of the defendant when deciding whether
a penalty is excessive. Specifically, without citation to the record,
appellants argue that the individual appellant was, and remains,
in bankruptcy. Appellants fail to clarify what type of bankruptcy,
nor do they specify any details of the individual appellant’s
financial condition or ability to pay. Further, appellants make no
mention of the financial condition of SVT or Key, the corporate
appellants. Appellants fail to point to any evidence in the record
supporting their argument that appellants’ financial conditions
were disproportionate to the fines imposed. In the absence of
such evidence, appellants’ excessive penalty claim cannot be
properly analyzed. Thus, we decline to address it further.
(Twenty-Nine Palms Enterprises Corp. v. Bardos (2012) 210
Cal.App.4th 1435, 1450 [“‘The appellate court can deem an
argument raised in an appeal from a grant of summary judgment
waived if it was not raised below and requires consideration of
new factual questions.’”].)
Appellants forfeited their constitutional argument by
failing to raise it below. Although we have discretion to decide
this issue, we decline to do so because the factual record below
has not been adequately developed.
IV. Exemption
Appellants next argue that their waste hauling activities
did not violate the city’s law because hauling waste from state,
county, and other government facilities is exempt from the Los
Angeles permit requirement. In support of this argument,
“must cite evidentiary facts, not legal conclusions or ‘ultimate’
facts”].)
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appellants cite a November 9, 2012 report sent to the city council
stating that “[s]tate, county and other government agencies are
immune from local regulation of trash collection” and that
“[w]aste haulers serving those government entities would
therefore not be restricted by an exclusive franchise system.” The
document does not support appellants’ position that they were
not required to have a valid permit, or comply with the permit
fees, in order to service government entities. Further, as set
forth above, appellants provided no competent evidence that they
serviced government facilities.
Appellants have failed to establish that they were exempt
from the Los Angeles permit requirement. The document
provided by appellants does not amount to legal authority
suggesting that trash haulers that service government entities
are not required to have permits and pay fees, nor are there any
facts in the record supporting appellants’ claim that they serviced
government entities. Therefore, we decline to address this
argument further.
V. Constitutionality of “recycLA program”
Appellants next argue that the city’s law requiring permits
is unconstitutional. Appellants argue that their permits were
improperly revoked when the city implemented its recycLA
program pursuant to City of Los Angeles Ordinance No. 182986.
Appellants provide a lengthy argument with no citation to any
law or facts in the record to support it.
Appellants have forfeited their argument that the recycLA
program is unconstitutional. First, appellants failed to develop
this argument in the trial court or provide any factual support for
their conclusory claim that the recycLA program is
unconstitutional. Appellants argued in opposition to city’s
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summary judgment motion that “there are several pending cases
that allege that permits are not required to haul waste in Los
Angeles, thus [appellants] would not be liable for permit fees.”
Appellants argued that “summary judgment/ adjudication is
improper until these other actions pending in this same superior
court have been determined.” Appellants point to no authority or
support for their position that any pending case supports the
proposition that waste haulers do not need permits in the city.3
For this reason, on May 31, 2019, the trial court denied
appellants’ ex parte application for leave to file a cross-complaint
to allege a claim against the city in connection with recycLA.4
And just a few weeks earlier, on May 8, 2019, the trial court
declined to relate the present matter with the recycLA litigation,
stating that “the cases in Department 17 are not factually
related . . . in any significant way and involve different legal
theories and claims.” (Boldface omitted.) Appellants make no
argument on appeal that these rulings were incorrect.
Not only did appellants fail to properly develop this
argument below, appellants have failed to support the argument
on appeal with proper citations to the record and citations to
3 The city provided the trial court with a copy of a
consolidated class action complaint filed by private property
owners. The complaint alleged that the city’s implementation of
recycLA imposed an illegal tax and sought a refund of those
taxes. Contrary to appellants’ assertion below, the complaint did
not allege that permits were not required to haul waste in Los
Angeles.
4 The city pointed out that it sought summary judgment
arising out of appellants’ false claims and failure to pay AB 939
compliance fees through April 2017, months before recycLA even
came into effect.
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legal authority. Appellants provide a long description of the
purported history of the implementation of the recycLA program
without citation to the record.5 This violates the Rules of Court,
which provide that “[i]f a party fails to support an argument with
the necessary citations to the record, that portion of the brief may
be stricken and the argument deemed to have been waived.”
(Duarte v. Chino Community Hospital (1999) 72 Cal.App.4th 849,
856; see Cal. Rules of Court, rule 8.204(a)(1)(C).) In addition,
appellants have failed to provide any citation to legal authority to
support their argument that recycLA is unconstitutional. “To
demonstrate error, appellant must present meaningful legal
analysis supported by citations to authority and citations to facts
in the record that support the claim of error.” (In re S.C. (2006)
138 Cal.App.4th 396, 408.) Appellants have not done so,
therefore their claim that the recycLA program is
unconstitutional “‘is deemed to be without foundation and
requires no discussion’” by this court. (Ibid.)
The trial court’s judgment is presumed to be correct, and it
was appellants’ burden to affirmatively show error. (Denham v.
Superior Court (1970) 2 Cal.3d 557, 564.) Appellants have failed
to meet their burden of showing error.
5 Appellants also fail to provide any factual support for their
position that the city failed to comply with the requirements of
Proposition 218 (Gen. Elec. (Nov. 5, 1996).). Instead, their
argument to this court is made “[u]pon information and belief.”
In their reply brief, appellants cite the same argument made
below, also without citation to authority or evidentiary support.
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DISPOSITION
The judgment is affirmed. The city is awarded its costs of
appeal.
________________________
CHAVEZ, J.
We concur:
________________________
LUI, P. J.
________________________
HOFFSTADT, J.
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