Court Opinion

ID: 899606
Source: CourtListenerOpinion
Date Created: 2013-06-11 00:00:30.449713+00
Date Added: 2024-06-11T12:18:47.911190
License: Public Domain

Filed 6/10/13 Medic Ambulance Service v. Solano Emergency Medical Services Cooperative CA1/4
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIRST APPELLATE DISTRICT

                                                 DIVISION FOUR

MEDIC AMBULANCE SERVICE, INC.,
         Plaintiff and Appellant,
                                                                     A134772
v.
SOLANO EMERGENCY MEDICAL                                             (Solano County
SERVICES COOPERATIVE,                                                Super. Ct. No. FCS034250)
         Defendant and Respondent.

                                                             I.
                                                INTRODUCTION
         Appellant Medic Ambulance Service, Inc. (Medic) had a contract (the Agreement)
with respondent Solano Emergency Medical Services Cooperative (SEMSC), a
government agency, that gave Medic the exclusive right to provide advanced life support
(ALS) ambulance services in a specified geographical area. The Agreement obligated
SEMSC to enforce Medic‟s exclusivity rights, and provided for a contractual claims
procedure in the event of a dispute. After Medic learned that some ALS ambulance
transports were being handled by competing ambulance services, the parties engaged in
informal communications and negotiations regarding the enforcement of Medic‟s
exclusivity rights. These efforts were unsuccessful, and Medic sued for breach of
contract.
         SEMSC demurred on the basis of Medic‟s failure to follow the contractual claims
procedure. Medic amended its complaint to allege that SEMSC was estopped from

                                                             1
relying on Medic‟s failure to comply with the contractual claims procedure as a bar to
Medic‟s damages claims. The trial court found Medic‟s estoppel allegations insufficient,
and sustained SEMSC‟s renewed demurrer without leave to amend. On this appeal, we
hold Medic‟s fourth amended complaint pleaded sufficient facts to support Medic‟s
estoppel claim. We therefore reverse, and remand for further proceedings.
                                             II.
                    FACTS AND PROCEDURAL BACKGROUND
                                    A. The Agreement
       The Agreement between SEMSC and Medic was entered into in April 2000, and
was periodically extended so that it was in effect continuously through April 2010. It
provides that SEMSC will require that all 911 calls for ambulance services in Medic‟s
exclusive operating area be directed to Medic. It imposes various obligations on Medic
with regard to the number and qualifications of emergency paramedical personnel with
whom Medic is required to staff its ambulances; the level of service Medic is required to
deliver, the standby and special event coverage Medic is required to provide; and the
insurance and bonding Medic is required to maintain. It provides that Medic can provide
critical care transport, but not in response to 911 calls unless expressly requested. It
specifies the compensation Medic shall receive for delivering services; the rates Medic
may charge and how those may be adjusted; and the fees Medic shall pay to SEMSC and
other parties in exchange for its franchise. An exhibit to the Agreement details fines to
be assessed against Medic for particular types of shortcomings in its adherence to
required performance standards.
       The Agreement provides that SEMSC can terminate the Agreement in the event of
a “major breach” by Medic, and defines what constitutes such a breach on Medic‟s part.
It also sets forth the procedure to be followed in the event SEMSC decides that an
emergency takeover of Medic‟s operations is necessary to avoid endangering public
health and safety. The Agreement defines “minor breach” to include various types of
failure on Medic‟s part to comply with the level of service required by the Agreement;

                                              2
minor infractions of applicable laws and regulations by Medic; or any other breaches “not
specifically defined as major breaches.”
       The Agreement also provides that Medic can terminate the Agreement in the event
of a major breach by SEMSC, and defines that to mean either a “breach by SEMSC
which substantially endangers the public health and safety,” or—more pertinent for our
purposes—if “SEMSC fails to take reasonable steps to protect Medic‟s contractual right
to provide all emergency ambulance service, advanced life support and Parahospital
medical services in the exclusive operating area as provided by this Agreement.” A
separate subsection of the Agreement reiterates that “SEMSC shall take all reasonable
steps to ensure that Medic is, during the period of this [Agreement], the sole provider of
ALS[1] Ambulances for Solano County.” (Original capitalization.) Various defined
exceptions to Medic‟s exclusivity rights are provided in an exhibit to the Agreement.
       The Agreement contains several provisions relating to the process to be followed
in the event of an alleged major breach or other dispute. The first of these is section 6.0,
which governs major breaches. Subsections 6.1 through 6.9 apply to situations in which
the agency administrator of SEMSC (the Agency Administrator) declares that a major
breach has occurred on Medic‟s part.
       Major breaches by SEMSC are addressed in a separate subsection, numbered 6.10
(section 6.10). Section 6.10 reads in its entirety as set forth below.

       1
          It appears from a July 2006 resolution (the Resolution) adopted by the SEMSC‟s
board of directors (the Board), which is attached as an exhibit to the fourth amended
complaint, that “ALS” is an abbreviation for “advanced life support,” which is a
particular level of ambulance service. The other levels of service, with their
abbreviations, are basic life support (BLS), limited advanced life support (LALS), and
critical care transport (CCT) (also referred to as specialty care transport, or SCT). As
will be discussed post, the Resolution purported to protect Medic‟s exclusivity rights, but
Medic alleges that SEMSC failed to implement it.

                                              3
       “6.10.1[:] If Medic determines that a major breach has occurred, then Medic shall
notify[2] the SEMSC Medical Director [(the Medical Director)] in writing of such
existence and occurrence and the reason, if any, it endangers public health and safety and
the SEMSC shall have a reasonable period of time to correct the deficiency. Medic and
the EMS Agency [i.e., SEMSC] shall attempt in good faith and with reasonable effort to
resolve all allegations between and among themselves without recourse to other remedies
available herein.
       “6.11.2[:] [sic] If an allegation of major breach cannot be resolved under the
above, Medic shall notify the SEMSC Agency [Administrator3] in writing and the matter
shall be referred to the SEMSC Board for resolution.
       “6.12.3[:] [sic] Medic shall not be precluded hereby from seeking further relief
through litigation should the matter not be resolved by the SEMSC Board to its
reasonable satisfaction.”
       A separate section, section 10.0, addresses “contract monitoring, administration
and dispute resolution.” (Original capitalization omitted.) It requires SEMSC to “utilize
a multi-layered system to enforce the terms and conditions of this Agreement,” and
provides that “Medic shall assume the initial role by ensuring that its personnel and
equipment comply with the terms of this Agreement at all times.” This provision is
followed by a diagram of the “hierarchy to be employed by the SEMSC to enforce [the
Agreement].” The diagram shows Medic at the bottom, with the Agency Administrator
as the next layer up, followed by the Medical Director, and culminating with the Board at
the top. It provides that Medic must “formally designate” persons to attend and represent
Medic at meetings of various standing committees, and participate in the implementation
of system requirements specified in an exhibit to the Agreement.

       2
        The Agreement provides that “[a]ny notice necessary to the performance of this
Agreement shall be given in writing by personal delivery” or by mail to specified
addresses.
       3
         The Agency Administrator is referred to in section 6.11.2 as the Agency
Director, but this appears to have been an inadvertent error.

                                             4
       Section 10.2 provides for an appeals procedure, defined in exhibit G to the
Agreement (Exhibit G). Section 10.5 states that both Medic and SEMSC may bring any
matter relating to the Agreement, including allegations of minor breach, to the Agency
Administrator for resolution, followed by an appeal procedure as set forth in Exhibit G.4
The section goes on to say: “However, except as provided herein, neither party shall
thereby be precluded from pursuing any other legal or equitable remedies which may be
available to it.” A separate section of the Agreement requires Medic to “keep SEMSC
informed at all times as to litigation, or reasonable expectations of litigation, insofar as it
pertains to Medic‟s operations under this Agreement . . . .”
       Regarding waiver, the Agreement provides that “[w]aiver of a breach or failure to
perform any provision . . . shall not be deemed a waiver of future performance nor shall it
prejudice the waiving party‟s right to require strict performance of the same provision or
any other provision. No term or condition of this Agreement shall be waived except by
an instrument, in writing, signed by the parties hereto.” Another provision specifies that
“No verbal [sic5] agreements or conversations prior or subsequent to the execution of this
Agreement shall affect or modify any of the terms or conditions of this Agreement unless
reduced to writing.” The last section of the Agreement, entitled “Entire Agreement,”
provides that “This Agreement, including any exhibits referenced herein, constitutes the
entire agreement between the parties and there are no inducements, promises, terms,
conditions or obligations made or entered into by SEMSC or Medic other than those
contained herein.”

       4
          Despite the broad language of section 10.5, Exhibit G itself is framed in
contemplation of appeals by Medic from the imposition of fines and penalties imposed by
SEMSC. For example, the first step in the process is that the Agency Administrator
“reviews the circumstances for imposing a fine or penalty,” and “determines that the
grounds are sufficient to justify imposing the fine or penalty.” One section of Exhibit G
consists of a nonexclusive list of grounds for appeal of penalties. Nothing in Exhibit G
sets forth any grounds for appeals by Medic of any other type of decision by SEMSC.
       5
         We understand this to be a reference to oral agreements or conversations.
Neither party contends otherwise.

                                               5
   B. Communications and Negotiations Regarding Breach of Exclusivity Claim
       The operative pleading for purposes of this appeal is Medic‟s fourth amended
complaint (FAC). By way of introduction, the FAC alleges in general terms that SEMSC
“failed to uphold the material provisions of the Agreement, including specifically its
contractual obligation to take all reasonable steps to protect Medic‟s right to exclusively
provide all ALS ambulance services in the EOA” (i.e., the “Exclusive Operating Area”
defined in the Agreement). Without specifying a time frame, the FAC alleges that
“[d]uring the period of the Agreement, Medic from time to time learned of patient
transports by competing ambulance providers that it believed were in violation of the
exclusivity provisions of the Agreement, in that Medic believed that those transports
were ALS transports or should have been characterized as ALS transports and were
therefore to be performed by Medic.” When this occurred, “[a]t the behest of the Agency
Administrator and the Medical Director and consistent with the terms of the Agreement
regarding contract monitoring, these alleged violations were reported in writing to the
Agency Administrator and his staff for investigation. Medic was repeatedly assured that
SEMSC would investigate the incidents and protect the contractual rights of Medic
relating to the ALS EOA as required by the Agreement.”
       The FAC also alleges—again in general terms, and without specifying any dates—
that SEMSC‟s investigations of the violations of Medic‟s exclusivity rights were
untimely, inadequate, and sometimes nonexistent. It alleges that to the extent SEMSC
did investigate the violations, it “communicated to Medic that the incidents were either
isolated and being resolved or permissible exceptions.” It also alleges that Medic “relied
entirely on SEMSC to track the transports and to monitor and enforce [Medic‟s]
exclusivity rights,” which Medic had no way of doing, and that SEMSC failed to fulfill
its contractual obligation to “adequately audit and monitor transports by competing
ambulance providers” and “investigate potential violations . . . .”
       The first specific date mentioned in the FAC is July 2006, when the SEMSC
Board adopted the Resolution (referred to ante). As described in the FAC, the Resolution
required all ambulance providers operating in the EOA in Solano County to register with

                                             6
SEMSC to obtain its authorization to operate and to refrain from providing service at any
level and in any area of Solano County as to which SEMSC had awarded exclusivity
rights. The FAC alleges that SEMSC failed to implement the Resolution until April
2008, and then only after Medic demanded that SEMSC verify that it had done so.
       The FAC alleges that until September 7, 2007, SEMSC “misled Medic as to both
the scope and nature of the exclusivity violations and SEMSC‟s efforts to enforce
[Medic‟s] exclusivity rights [under] the Agreement.” Although “SEMSC and its agents
and/or employees had actual knowledge prior to September 7, 2007, that competing
ambulance providers were frequently transporting ALS patients within the EOA in
violation of Medic‟s contractual rights under the Agreement,” it was not until SEMSC
released an internal audit (the Audit), on or about September 7, 2007, that it was “for the
first time demonstrated to Medic that several ambulance companies were blatantly
violating the exclusivity provision granted to Medic under the Agreement,” and that
“these violations were not merely isolated incidents as had been previously reported by
SEMSC to Medic.”6
       The FAC alleges that at a meeting of the SEMSC Board in October 2007, after the
Audit results were released, Medic provided oral notice to the Board that SEMSC had
committed a major breach of the Agreement by not taking all reasonable steps to protect
Medic‟s exclusivity rights. The Board responded by “remov[ing] the matter from the
Agency Administrator and the Medical Director and form[ing] an Ad Hoc Committee . . .
to specifically address Medic‟s complaints that its contractual exclusivity rights were
being violated.” The Ad Hoc Committee was charged with “investigat[ing] Medic‟s
complaints on behalf of the Board and attempt[ing] to resolve the matter directly with

       6
         SEMSC contends this allegation is contradicted by allegations made in earlier
versions of Medic‟s complaint. This issue is discussed post.

                                             7
Medic,” and was appointed “to act as the final arbiter of Medic‟s allegation of major
breach.”7
       The FAC alleges that the Board created the Ad Hoc Committee and charged it
with resolving the issue “even after having been reminded by Medic of the procedures for
resolution as set forth in Section 6.10, et seq., of the Agreement.” When the Board
created the Ad Hoc Committee, SEMSC “knew and intended that Medic . . . would be
reasonably induced to rely on the SEMSC Board‟s representations and stated intentions
that the resolution of the issue . . . was in the sole hands of the SEMSC‟s Ad Hoc
Committee and the SEMSC Board and no further notice to the Medical Director or
Agency Administrator was required of Medic under Sections 6.10.1 and 6.11.2 of the
Agreement.” Medic relied upon and acted on these representations by “participat[ing] in
good faith in the Ad Hoc Committee meetings,” and “was ignorant of the true state of
facts, namely that SEMSC would later . . . assert that Medic had failed to exhaust
administrative remedies under Section 6.10 of the Agreement.”
       According to the FAC, SEMSC intended that Medic rely on its representations by
taking no further action under section 6.10 of the Agreement, and that Medic would
instead deal only with the Ad Hoc Committee in attempting to resolve the issue. Indeed,
if not for SEMSC‟s “representations and stated intentions . . . concerning . . . the
formation of the Ad Hoc Committee to act as the final arbiter of Medic‟s allegation of
major breach, Medic would have . . . followed the requirements of Section 6.10” of the
Agreement. Thus, the FAC alleges if SEMSC is allowed to defend against Medic‟s
claims on the basis of Medic‟s failure to exhaust administrative remedies, Medic will be
damaged by its reliance on SEMSC‟s representations, because Medic will be unable to
pursue its claims through litigation.

       7
         The FAC also alleges that the Board‟s action in delegating the matter to the Ad
Hoc Committee constituted an oral modification of the Agreement; that the agreement, as
orally modified, was fully executed within one year; and that by delegating to the Ad Hoc
Committee the task of resolving the issue, SEMSC waived the Agreement‟s requirement
that Medic give written notice of any alleged major breach of the Agreement to the
Agency Administrator and Medical Director.

                                              8
       From October 2007 through July 2008, Medic met with the Ad Hoc Committee,
and continued to communicate with the SEMSC Board Chair and Solano county counsel,
who were aware of the actions of the Ad Hoc Committee. During this period, Medic also
continued to report newly discovered violations of Medic‟s exclusivity rights to the
Agency Administrator and the Medical Director. On March 19, 2008, Dr. Paul Kivela, a
Medic representative, sent an email to the Medical Director, Dr. Richard Lotsch, in which
Kivela reported that that “the EMS Agency [i.e., SEMSC] suspects that „pirating‟ of ALS
calls has occurred,” and suggested the adoption of criteria and procedures to address the
problem.8 Lotsch was “indisputably made aware,” through other written and in-person
communications, of SEMSC‟s failure to enforce Medic‟s exclusivity right by preventing
ALS calls from being mischaracterized.
       On August 25, 2008, Medic for the first time received a copy of an independent
audit, the Fitch Report, which SEMSC had requested and obtained. The Fitch Report
was based on data which had been in SEMSC‟s possession for some time, but which
SEMSC had not revealed to Medic. Unbeknownst to Medic until August 28, 2008, the
Fitch Report had been completed in late May 2008, three months before it was provided
to Medic. The Fitch Report “demonstrated that the number of ongoing ALS calls taken
by non-authorized ambulance providers was substantially greater than was previously
known to Medic and substantially greater than demonstrated in the [internal] Audit
results obtained in September, 2007.”
       On August 28, 2008, three days after Medic obtained the Fitch Report, the Agency
Administrator of SEMSC reported to the Board that he was not enforcing, and was
unable to enforce, Medic‟s exclusivity rights under the Agreement. After that, “SEMSC
took no further action to protect Medic‟s rights to be the exclusive provider of ALS
ambulance service in the EOA.”

       8
         SEMSC‟s contends that the versions of this allegation set forth in earlier
versions of Medic‟s complaint were sham. This issue is discussed post.

                                             9
       On September 5, 2008, Medic served a formal claim pursuant to Government
Code section 910 (dated September 4, 2008) on Solano County, its counsel, the Board,
and the Agency Administrator, for damages resulting from the failure to enforce Medic‟s
exclusivity rights. The FAC alleges that this claim also satisfied the requirement of
written notice in section 6.11.2 of the Agreement. SEMSC never responded to the claim,
nor did it inform Medic that it was taking the position that Medic‟s claim was deficient or
that Medic had failed to exhaust its administrative remedies.
                              C. Trial Court Proceedings
       On September 3, 2009, Medic filed a complaint against SEMSC in the Solano
County Superior Court. As already noted, several rounds of demurrers and amended
complaints ensued. Finally, on August 17, 2011, Medic filed the FAC, pleading causes
of action for breach of contract and breach of the duty of good faith and fair dealing. On
August 30, 2011, SEMSC again responded with a demurrer.
       On January 6, 2012, the trial court entered an order sustaining the demurrer to the
FAC without leave to amend, and ordering the matter dismissed in its entirety with
prejudice. On February 29, 2012, Medic filed a notice of appeal.9

       9
          No judgment of dismissal was entered. This appeal is therefore premature.
Nonetheless, in the interest of judicial economy, we shall deem the trial court‟s order
sustaining the demurrer without leave to amend to incorporate a judgment of dismissal.
(See, e.g., Smith v. Hopland Band of Pomo Indians (2002) 95 Cal.App.4th 1, 3, fn. 1.)
This is particularly appropriate here, inasmuch as SEMSC never moved to dismiss the
appeal, and it is now fully briefed and ready for decision. (See Zipperer v. County of
Santa Clara (2005) 133 Cal.App.4th 1013, 1019.) Moreover, the clerk of the Solano
County Superior Court served the parties with notice of the trial court‟s order using
Judicial Council form CIV-130. This form may be used to give notice of entry either of a
judgment or of an order, and the clerk failed to indicate which type of notice was
intended. Thus, the absence of an appealable judgment may to some extent be the result
of an oversight on the part of the trial court, which we have the discretion to remedy by
construing the order as an appealable judgment. (See Molien v. Kaiser Foundation
Hospitals (1980) 27 Cal.3d 916, 920-921, disapproved on other grounds in Burgess v.
Superior Court (1992) 2 Cal.4th 1064, 1074.)

                                            10
                                             III.
                                      DISCUSSION
             A. Standard of Review and Effect of Sham Fact Allegations
       Our standard of review of a trial court‟s ruling sustaining a demurrer is governed
by well settled principles. “ „A demurrer tests the sufficiency of a complaint as a matter
of law.‟ [Citation.]” (Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1379.)
Accordingly, we review the trial court‟s ruling de novo, exercising our independent
judgment. (Ibid.; Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.) “ „The
judgment must be affirmed “if any one of the several grounds of demurrer is well taken.
[Citations.]” [Citation.] However, it is error for a trial court to sustain a demurrer when
the plaintiff has stated a cause of action under any possible legal theory. [Citation.] And
it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff
shows there is a reasonable possibility any defect identified by the defendant can be cured
by amendment.‟ [Citation.]” (Hale v. Sharp Healthcare, supra, 183 Cal.App.4th at
p. 1379.)
       Normally, “[i]n reviewing the propriety of the sustaining of a demurrer, the „court
gives the complaint a reasonable interpretation, and treats the demurrer as admitting all
material facts properly pleaded. [Citations.]‟ ” (Hale v. Sharp Healthcare, supra, 183
Cal.App.4th at p. 1379.) Thus, in most appeals arising from an order sustaining a
demurrer, our statement of facts simply summarizes the allegations of the plaintiff‟s
complaint, and our opinion assumes the truth of those facts.10 (See, e.g., Mendoza v.
Town of Ross (2005) 128 Cal.App.4th 625, 629, fn. 3.)
       In the present case, however, SEMSC argues that certain of the allegations in the
FAC contradict those pleaded in earlier versions of Medic‟s complaint, and should
therefore be disregarded as a sham. SEMSC is correct that a plaintiff cannot survive a
demurrer by pleading facts flatly inconsistent with those alleged in an earlier version of

       10
         We do not, however, assume the truth of contentions, deductions or conclusions
of law. (Hale v. Sharp Healthcare, supra, 183 Cal.App.4th at p. 1379.)

                                             11
the plaintiff‟s complaint. (See Banis Restaurant Design, Inc. v. Serrano (2005) 134
Cal.App.4th 1035, 1044 [when complaint contains allegations fatal to cause of action,
plaintiff cannot avoid defects by filing amended complaint that omits problematic facts or
pleads inconsistent facts].) Thus, to the extent any allegations in Medic‟s FAC squarely
contradict those made in its earlier pleadings, we cannot accept their truth. In addition,
we must disregard facts alleged in the pleadings if they are contradicted by exhibits to the
complaint. (See id. at pp. 1044-1045.)
       On the other hand, the sham pleading doctrine is intended to enable courts to
prevent abuse of process, not to prevent honest complainants from correcting erroneous
allegations or clarifying ambiguous facts. (See Deveny v. Entropin, Inc. (2006) 139
Cal.App.4th 408, 425-427 [where party‟s counsel offered plausible explanation for
change in factual allegations in amended complaint, trial court improperly granted
summary judgment against plaintiffs based on treatment of earlier allegations as binding
judicial admissions].) Thus, “[a]n amendment which supplements a pleading with new
facts which are neither inconsistent nor contradictory is permissible.” (Parsons v.
Tickner (1995) 31 Cal.App.4th 1513, 1530.) Where a plaintiff‟s amended complaint
presents a fuller explanation of the operative circumstances, and is not fatally inconsistent
with its earlier complaint, the facts alleged in the amended complaint should be accepted
for demurrer purposes. (See Morgan Phillips, Inc. v. JAMS/Endispute, L.L.C. (2006) 140
Cal.App.4th 795, 802, fn. 2.)
       In accord with the above principles, in our summary of the facts, ante, we noted
those factual allegations in the FAC that SEMSC contends are a sham. Before analyzing
the legal sufficiency of the FAC, we must determine whether these allegations should be
accepted as true or disregarded.
                      B. Allegations SEMSC Contends Are Sham
                  1. When Medic Learned of Exclusivity Violations
       SEMSC‟s brief on appeal characterizes the first two versions of Medic‟s
complaint (the original and first amended versions) as alleging that Medic first learned of
the exclusivity violations on August 25, 2008, and argues that this allegation contradicts

                                             12
allegations made in later versions of the complaint. This is based on a misreading of the
allegations of Medic‟s original and first amended complaints. In those versions of the
complaint, Medic alleged that it was unaware until August 25, 2008 (when it received the
Fitch Report) that (1) SEMSC had known at least since May 2008 that Medic‟s
exclusivity rights were being violated, and (2) SEMSC had not disclosed these violations
to Medic. These statements do not address the issue of when Medic itself first learned of
the violations.
       Medic‟s second amended complaint added the allegation that August 25, 2008,
was when “Medic initially received information . . . [regarding] the breadth and extensive
nature of the exclusivity violations . . . .” It also alleged that “[o]n or about August 25,
2008, Medic learned of violations of the exclusivity provision of the Agreement.”
However, none of the first three versions of the complaint alleged that August 25, 2008,
was the first time Medic itself learned that there had been any violations of its exclusivity
rights. Thus, contrary to SEMSC‟s argument on appeal, the second amended complaint‟s
references to Medic‟s communications with SEMSC about the issue prior to August 25,
2008, do not contradict the allegations in other versions of Medic‟s complaint regarding
what Medic learned when it obtained the Fitch Report.
       SEMSC also argues that the earlier versions of the complaint contradict an
allegation added in Medic‟s third amended complaint regarding Medic‟s knowledge of
the exclusivity violations. Again, this argument is based on a misreading of the third
amended complaint. SEMSC‟s brief says the third amended complaint alleged that
September 7, 2007, was when Medic first learned of SEMSC‟s breach. What the third
amended complaint actually alleged was that the internal audit SEMSC released on
September 7, 2007 “for the first time demonstrated to Medic that several ambulance
companies were blatantly violating the exclusivity provision” and that “Medic only then
initially learned of the possible extent and ongoing nature of the exclusivity violations”
which SEMSC had previously told Medic were “merely isolated incidents.” (Italics
added.) Thus, nothing in this aspect of the third amended complaint contradicts any of

                                              13
the allegations in the earlier versions. The subsequent FAC repeats the same allegations
on these points that were already pleaded in the third amended complaint.
       In short, all of the versions of the complaint, taken together, paint the following
picture. Medic knew prior to September 2007 that violations of its exclusivity rights
were occurring, but believed SEMSC‟s assurances that these were isolated incidents.
Then, on September 7, 2007, Medic learned for the first time from SEMSC‟s internal
audit that the violations were not isolated; that several of Medic‟s competitors were
blatantly violating Medic‟s exclusivity rights; and that the problem was possibly more
serious than SEMSC had given Medic reason to believe. Finally, on August 25, 2008,
when Medic obtained the Fitch Report, Medic learned for the first time that SEMSC had
been concealing the extent of the violations from Medic. The Fitch Report also
confirmed Medic‟s suspicions that the violations were even broader and more extensive
than indicated by the September 2007 internal audit.
       The foregoing version of the events is essentially what is pleaded in the FAC.
Nothing in Medic‟s earlier pleadings contradicts it. Accordingly, we construe the FAC as
alleging these facts, assume their truth for purposes of this appeal, and reject SEMSC‟s
argument that this aspect of the FAC is a sham. (See Parsons v. Tickner, supra, 31
Cal.App.4th at p. 1530; Morgan Phillips, Inc. v. JAMS/Endispute, L.L.C., supra, 140
Cal.App.4th at p. 802, fn. 2.)
                             2. Written Notice of Breach
       As already noted, on March 19, 2008, a Medic representative sent an email to the
Medical Director conveying Medic‟s suspicions that ALS calls were being pirated, and
thus its exclusivity rights were being violated. In that same email, it was suggested that
criteria be adopted and procedures implemented to address the problem. This email was
referenced in, but not attached to, Medic‟s second amended complaint. In that version of
the complaint, Medic characterized the email as having constituted written notice of a
major breach to the Medical Director, in compliance with the notice provisions of the
Agreement.

                                             14
       In Medic‟s third amended complaint, the email was attached as an exhibit. In
sustaining SEMSC‟s demurrer to the third amended complaint, the trial court properly
looked to the contents of the email, rather than Medic‟s characterization of it, and
determined that it did not qualify as a formal written notice of a major breach under the
terms of the Agreement. (See Banis Restaurant Design, Inc. v. Serrano, supra, 134
Cal.App.4th at pp. 1044-1045.)
       Presumably for that reason, in the FAC, Medic alleged that the notice of claim
served by Medic on September 5, 2008, constituted written notice of a major breach
under section 6.11.2 of the Agreement. However, section 6.11.2 of the Agreement is the
second step in the procedure governing claims by Medic of a major breach of the
Agreement. The first step, set forth in section 6.10.1, is that Medic is to notify the
Medical Director in writing, and then engage in a good faith attempt to resolve the
matter. Neither the third amended complaint, nor the FAC, alleges facts showing that
Medic gave written notice of a claim of major breach to the Medical Director as required
by section 6.10.1. For purposes of this appeal, therefore, we decline to assume the truth
of Medic‟s allegation that it complied with the notice requirements of section 6.10 of the
Agreement.
                               C. Excuse from Compliance
       As both parties acknowledge in their briefs on appeal, because SEMSC is a
government agency, Medic cannot sue it for breach of contract without first complying
with the claims procedures set forth in the Agreement. These procedures function as a
substitute for the government claims procedures required under the Government Claims
Act (Gov. Code, § 810 et seq.). (See generally Arntz Builders v. City of Berkeley (2008)
166 Cal.App.4th 276, 287-289 (Arntz).) Thus, Medic‟s failure to comply with section
6.10 of the Agreement vitiates its claim against SEMSC unless Medic can establish a
legally valid ground for excusing it from that requirement.
       When the trial court sustained SEMSC‟s demurrer to the third amended complaint,
it granted leave to amend specifically in order to allow Medic to allege facts in support of
the contention that SEMSC either was estopped from relying on Medic‟s failure to

                                             15
comply with the contractual claims procedure, or had waived its right to enforce that
provision of the contract. Accordingly, we consider the estoppel and waiver issues first,
and then proceed to assess Medic‟s contentions on appeal that it actually or at least
substantially complied with the contractual claims procedure, and, alternatively, that
SEMSC agreed to an oral modification of the contract in this regard.
                                       1. Estoppel
       In its ruling on SEMSC‟s demurrer to the FAC, the trial court acknowledged that
Medic had attempted to plead estoppel, but ruled that Medic had not adequately alleged
the necessary facts. On appeal, Medic contends this was error.
       “The doctrine of equitable estoppel is founded on concepts of equity and fair
dealing. It provides that a person may not deny the existence of a state of facts if he
intentionally led another to believe a particular circumstance to be true and to rely upon
such belief to his detriment. The elements of the doctrine are that (1) the party to be
estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted
upon, or must so act that the party asserting the estoppel has a right to believe it was so
intended; (3) the other party must be ignorant of the true state of facts; and (4) he must
rely upon the conduct to his injury. [Citation.]”11 (Strong v. County of Santa Cruz
(1975) 15 Cal.3d 720, 725.) The elements of equitable estoppel may also be described as
follows: “(1) The party to be estopped has engaged in blameworthy or inequitable
conduct; (2) that conduct caused or induced the other party to suffer some disadvantage;
and (3) equitable considerations warrant the conclusion that the first party should not be
permitted to exploit the disadvantage he has thus inflicted upon the second party.” (City
of Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 488 (City of Hollister).)
       A government entity defendant can be estopped from raising the plaintiff‟s failure
to file a claim under the Government Claims Act as a bar to the plaintiff‟s right to sue.
“ „It is well settled that a public entity may be estopped from asserting the limitations of

       11
          The detrimental reliance must be reasonable. (Waller v. Truck Ins. Exchange,
Inc. (1995) 11 Cal.4th 1, 35; Berkeley Police Assn. v. City of Berkeley (1977) 76
Cal.App.3d 931, 938.)

                                             16
the claims statute where its agents or employees have prevented or deterred the filing of a
timely claim by some affirmative act. [Citations.]‟ [Citation.] „The purpose of the
requirement that claims be filed is to provide the public entity with full information
concerning rights asserted against it, so that it may settle those of merit without litigation.
Therefore, the public entity cannot frustrate a claimant‟s ability to comply with the
statutes enacted for its benefit and then assert noncompliance as a defense. [Citation.]‟
[Citation.]” (Ard v. County of Contra Costa (2001) 93 Cal.App.4th 339, 346-347.)
       SEMSC argues that “estoppel is applied in a very limited manner against public
entities, and only in those special cases where the interests of justice clearly require it,”
citing only a 50-year-old case, Imperial Beach v. Algert (1962) 200 Cal.App.2d 48, 52, in
support of this proposition. SEMSC also cites cases from the same era, Adler. v City of
Pasadena (1962) 57 Cal.2d 609, 615, and City of Los Angeles v. Industrial Acc. Com.
(1965) 63 Cal.2d 255, 257-258, for the proposition that “[t]o invoke estoppel against a
public entity, that entity must have acted in an unconscionable or unreasonable manner or
have set out to, and did, take unfair advantage of the plaintiff.”
       However, the law on this point has changed since the cases relied on by SEMSC
were decided. In 1970, our Supreme Court formulated a less stringent test that still
governs today: “The government may be bound by an equitable estoppel in the same
manner as a private party when the elements requisite to such an estoppel against a
private party are present and, in the considered view of a court of equity, the injustice
which would result from a failure to uphold an estoppel is of sufficient dimension to
justify any effect upon public interest or policy which would result from the raising of an
estoppel.” (City of Long Beach v. Mansell (1970) 3 Cal.3d 462, 496-497.)
       Thus, in determining whether a party has properly pleaded estoppel against a
government entity, we apply the same principles as in a case involving private parties,
with only one addition. If the other elements of estoppel are properly pled, we must also
consider “ „[w]hether the injustice [that] would result from a failure to uphold an estoppel
is of sufficient dimension to justify the effect of the estoppel on the public interest . . . .‟ ”
(Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346, 1360 (Feduniak),

                                               17
quoting Smith v. County of Santa Barbara (1992) 7 Cal.App.4th 770, 776.) This is a
question that “ „must be decided by considering the matter from the point of view of a
court of equity.‟ [Citation.]” (Feduniak, at p. 1360.)
       “The goals of the claims statutes [i.e., the Government Claims Act] are to provide
entities with sufficient information to investigate and appropriately resolve claims and to
plan for potential liabilities.” (DiCampli-Mintz v. County of Santa Clara (2012) 55
Cal.4th 983, 994.) In the present case, according to the allegations of the FAC, SEMSC
had actual notice at least as early as September 2007, from its own internal audit, that
Medic‟s exclusivity rights were being violated; SEMSC commissioned an external
investigation of the extent of those violations, resulting in the Fitch Report; and SEMSC
then sought to resolve Medic‟s claims by setting up a special committee (the Ad Hoc
Committee) to deal with them. Accordingly, assuming the truth of the allegations in
Medic‟s FAC, applying estoppel against SEMSC in the present case would not frustrate
the goals of the Government Claims Act.
       The question remains whether the FAC adequately alleges the elements of
equitable estoppel against SEMSC. We note, at the outset, that the general fact pattern
alleged by Medic in this case has been described by one court as a paradigm for the
proper application of equitable estoppel. “The paradigmatic equitable estoppel arises
where a prospective defendant induces a prospective plaintiff not to protect his rights, and
when the plaintiff attempts to assert them, raises a defense that exploits the plaintiff‟s
lapse. The classic example is the assertion of a procedural bar, such as a statute of
limitations, after the defendant has induced plaintiff not to file suit within the allotted
time. If the court is satisfied that the facts and the equities justify application of the
doctrine, it will hold the defendant estopped to assert the defense, and the matter will
proceed as if the claim had been seasonably asserted.” (City of Hollister, supra, 165
Cal.App.4th at p. 487.) Moreover, the determination of equitable estoppel ordinarily is a
question of fact for the trier of fact, unless the facts are undisputed and can support only
one reasonable conclusion as a matter of law. (Platt Pacific, Inc. v. Andelson (1993) 6
Cal.4th 307, 319.) Thus, the question of equitable estoppel is generally inappropriate for

                                               18
resolution at the demurrer stage. (Ard v. County of Contra Costa, supra, 93 Cal.App.4th
at p. 347.)
       In its ruling on SEMSC‟s demurrer, the trial court concluded that Medic had
pleaded “conclusory allegations essentially rephrasing the various elements of estoppel.”
Nonetheless, the court went on to sustain the demurrer on the grounds that Medic had
failed to allege “any specific facts showing [(1)] that [SEMSC] knew or intended that its
creation of the Ad Hoc Committee would be construed as a satisfactory substitute for the
written claims procedure, [(2)] that [Medic] was ignorant of the true state of facts, or
[(3)] that [Medic] actually acted upon [SEMSC‟s] conduct.”
       It was not necessary, however, for Medic to allege that SEMSC knew or intended
that Medic would construe SEMSC‟s conduct as dispensing with the need for compliance
with the contractual claims requirement. As SEMSC implicitly acknowledges in its brief,
estoppel may apply even if the estopped party did not intend to induce the other party‟s
detrimental reliance, so long as the estopped party “acted in such a way that the party
asserting estoppel would have a right to believe that that was its intention.”
(DRG/Beverly Hills, Ltd. v. Chopstix Dim Sum Café & Takeout III, Ltd. (1994) 30
Cal.App.4th 54, 59 (DRG v. Chopstix); see also City of Hollister, supra, 165 Cal.App.4th
at p. 488 [application of equitable estoppel is not limited to situations amounting to
fraud]; 13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity, § 192, p. 530 [“Actual
fraudulent intent is ordinarily unnecessary to raise an estoppel if the circumstances are
such that a fraud would be perpetrated by permitting a denial of the representations”]; cf.
Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 43 [defendant will be estopped to invoke
statute of limitations where defendant‟s conduct, relied on by plaintiff, induced plaintiff
to refrain from instituting legal proceedings; “[i]t is not necessary that the defendant
acted in bad faith or intended to mislead the plaintiff”].)
       In our view, Medic‟s allegations adequately allege that SEMSC‟s conduct led
Medic reasonably to believe SEMSC would not insist on receiving formal written notice
of Medic‟s claims. In particular, the FAC alleges that when the violations of Medic‟s
exclusivity rights were brought to the attention of the Board, its response was not to

                                              19
demand that Medic comply with the process outlined in section 6.10 of the Agreement,
but rather to establish the Ad Hoc Committee and charge it with resolving Medic‟s
complaints on behalf of the Board. Given these allegations, a trier of fact could properly
find that it was reasonable for Medic to believe that formal notice of its claims was not
necessary in order to preserve Medic‟s right to pursue litigation if the parties could not
resolve their dispute.
       Second, the FAC alleges Medic was unaware that SEMSC intended to insist on
Medic‟s formal adherence to the contractual claims resolution procedure. Indeed,
SEMSC itself appeared, for all practical purposes, to have telescoped that process into the
single step of attempting a resolution under the auspices of the Ad Hoc Committee. In
our view, this is an adequate allegation that Medic was ignorant of the true facts.
       Finally, the FAC alleged that if not for SEMSC‟s representations and stated
intentions concerning the formation of the Ad Hoc Committee to act as the final arbiter of
Medic‟s allegation of major breach, Medic would have followed the requirements of
Section 6.10 of the Agreement. We do not see how Medic could have alleged any more
clearly that its course of action was induced by SEMSC‟s conduct.
       In short, upon our review of the record and the parties‟ arguments, we conclude
that the trial court erred in sustaining SEMSC‟s demurrer to the extent that the court‟s
ruling was premised on the conclusion that Medic had not adequately pleaded estoppel.
Medic‟s allegations in that regard, if true, were adequate to estop SEMSC from relying
on Medic‟s failure to exhaust the contractual claims procedure as a bar to Medic‟s claim
for damages.
                                       2. Waiver
       In addition to its argument on estoppel, Medic also contends that SEMSC waived
Medic‟s compliance with the contractual claims procedure. Estoppel and waiver are
related doctrines, “often invoked in the same breath, and sometimes confused with [one
another].” (City of Hollister, supra, 165 Cal.App.4th at p. 487.) The critical difference
between the two is that “ „ “[w]aiver always rests upon intent. Waiver is the intentional
relinquishment of a known right after knowledge of the facts.[”] [Citations]. The

                                             20
burden, moreover, is on the party claiming a waiver of a right to prove it by clear and
convincing evidence that does not leave the matter to speculation, and “doubtful cases
will be decided against a waiver.” ‟ [Citations.]” (DRG v. Chopstix, supra, 30
Cal.App.4th at p. 60.)
       In the present case, the FAC does not allege facts that, if true, would establish that
SEMSC intentionally relinquished its right to require Medic‟s compliance with the
contractual claims procedure. Medic does not allege that SEMSC ever manifested an
intent to waive section 6.10 of the Agreement, or informed Medic that SEMSC did not
expect Medic to comply with that provision in making its exclusivity violation claims.
       Moreover, the Agreement itself provides that all waivers of its terms must be in
writing, and Medic does not allege the existence of such a writing, nor does Medic allege
facts showing that SEMSC intended to waive its contractual right to require that waivers
of any provision in the Agreement be documented in writing. (Cf. Biren v. Equality
Emergency Medical Group, Inc. (2002) 102 Cal.App.4th 125, 141 [parties‟ prior conduct
may demonstrate waiver of provision requiring amendments to contract to be in writing].)
Accordingly, we are not persuaded that the trial court erred in sustaining SEMSC‟s
demurrer to the extent that Medic sought to plead waiver as an excuse for its failure to
comply with the contractual claims provision.
                         3. Actual or Substantial Compliance
       Medic contends that the trial court erred in ruling that Medic did not allege facts
showing that it actually or substantially complied with the contractual claims procedure.
Medic premises its argument for actual compliance on the March 19, 2008 email from
Kivela to Lotsch, SEMSC‟s Medical Director. As discussed ante, however, we agree
with SEMSC and the trial court that this email cannot be construed as the written notice
called for by section 6.10.1 of the Agreement. (See Shaefer Dixon Associates v. Santa
Ana Watershed Project Authority (1996) 48 Cal.App.4th 524, 533.) Lotsch‟s actual
knowledge that Medic‟s exclusivity rights were being violated is not a substitute for that
written notice. (City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 738 [“ „claims

                                             21
statutes must be satisfied even in [the] face of the public entity‟s actual knowledge of the
circumstances surrounding the claim.‟ [Citation.]”].)
       Moreover, Medic alleged no facts showing that it complied, even substantially,
with the requirement of section 6.11.2 that Medic notify the Agency Administrator in
writing after notifying the Medical Director, and after attempting without success to
resolve the matter informally. Medic‟s September 5, 2008 notice of claim does not
constitute such compliance, because it did not reference the contractual claims procedure,
and did not include any language that can be construed as giving notice to the Agency
Administrator of the failure of attempts to resolve the issue via the informal dispute
resolution process, as required by section 6.10.1 of the Agreement. Accordingly, even if
substantial compliance with a contractual claims procedure is sufficient (an issue we need
not and do not resolve), we are not persuaded that Medic‟s FAC pleaded facts sufficient
to show substantial compliance.
                                  4. Oral Modification
       Finally, Medic argues that the establishment of the Ad Hoc Committee constituted
an oral modification of the contractual claims procedure, substituting the Ad Hoc
Committee process for the one contemplated by the Agreement. As Medic acknowledges
in its reply brief, however, the Agreement includes a provision precluding oral
modification, and a contract that so provides can only be modified orally if the
modification is fully executed by both parties. (Miller v. Brown (1955) 136 Cal.App.2d
763, 775.)
       In order to allege sufficient facts to show modification of the Agreement by an
executed oral agreement, Medic would have to plead facts showing both that SEMSC
manifested an intent to agree to substitute the Ad Hoc Committee for the contractual
claims process, and that the modification was fully performed by both parties. (See
Lockheed Missiles & Space Co. v. Gilmore Industries, Inc. (1982) 135 Cal.App.3d 556,
559 [in order to be “executed,” agreement must be fully performed on both sides].) As
already noted, however, the FAC does not allege facts showing that SEMSC manifested
the necessary intent. Moreover, full performance by SEMSC of the alleged modification

                                             22
could not occur unless and until SEMSC complied with the new terms of the Agreement
by recognizing Medic‟s right to file suit once the Ad Hoc Committee process concluded
without resolving the dispute. Obviously, SEMSC did not fully perform that aspect of
the alleged oral modification.
       Accordingly, we are not persuaded that the trial court erred in rejecting Medic‟s
contention that it was excused from compliance with the Contract‟s claims procedure by
virtue of a fully executed oral modification.
                                            IV.
                                     DISPOSITION
       The trial court‟s order sustaining SEMSC‟s demurrer to Medic‟s fourth amended
complaint is REVERSED. This proceeding is remanded for further proceedings
consistent with the views set forth in this opinion. Medic shall recover its costs on
appeal.

                                                     _________________________
                                                     RUVOLO, P. J.

We concur:

_________________________
RIVERA, J.

_________________________
HUMES, J.

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