Court Opinion

ID: 2801906
Source: CourtListenerOpinion
Date Created: 2015-05-19 20:03:47.369881+00
Date Added: 2024-06-11T12:39:22.678392
License: Public Domain

Filed 5/19/15 County of L.A. v. Superior Gunite, Inc. CA2/4
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           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                   SECOND APPELLATE DISTRICT

                                                DIVISION FOUR

                                                                     B254801
COUNTY OF LOS ANGELES,                                               (Los Angeles County
                                                                     Super. Ct. No. BC446694)
             Cross-complainant and
             Appellant,

v.

SUPERIOR GUNITE, INC.,

              Cross-defendant and
              Respondent.

         APPEAL from a judgment of the Superior Court of Los Angeles County,
Richard Fruin, Jr., Judge. Reversed and remanded with directions.
         Greenberg, Whitcombe, Takeuchi, Gibson & Grayver, Richard Greenberg,
Michael J. Weinberger and Aaron M. Lavine; Office of the County Counsel,
Richard D. Weiss, Acting County Counsel, Robert C. Cartwright, Assistant County
Counsel, Rosa Linda Cruz, Senior Deputy County Counsel, for Cross-complainant
and Appellant.
         Castle & Associates, Nomi L. Castle, David C. Romyn and Marian K.
Selvaggio for Cross-defendant and Respondent.
      In the underlying action, appellant County of Los Angeles (the County)
asserted a cross-claim under the California False Claims Act (CFCA; Gov. Code,
§ 12650 et seq.) against respondent Superior Gunite, Inc. (SGI), together with a
related cross-claim for interference with contract.1 The trial court sustained SGI’s
demurrer to the County’s second amended cross-complaint and granted its motion
to strike without leave to amend, concluding that the County’s claims were legally
untenable. We reverse and remand the matter for further proceedings.

                    RELEVANT PROCEDURAL BACKGROUND
      In September 2011, Accent Builders, Inc. (ABI) filed a complaint against the
County and the La Plaza de Cultura y Artes Foundation (the Foundation), asserting
breach of contract and other claims arising from a restoration project involving two
historic buildings in downtown Los Angeles. ABI’s complaint alleged that the
County and the Foundation failed to pay ABI for work performed on the project.2
      In July 2012, the County filed its original cross-complaint against ABI and
SGI, asserting claims related to the contract underlying ABI’s complaint. The
County alleged that ABI and SGI were alter egos under common ownership, that
ABI served as SGI’s “instrumentality or conduit . . . in the pursuit of a single
business venture,” and that ABI and SGI “disregarded the separate nature of the
corporations” in performing work under the contract.
      In September 2012, the County filed a first amended cross-complaint
(FACC) containing claims against SGI for violations of the CFCA and interference
with contract. The FACC alleged that in 2004, the County leased the historic

1      All further statutory citations are to the Government Code, unless otherwise
indicated.
2     The underlying action was later consolidated with several related actions to which
the County is not a party.

                                            2
buildings to the Foundation to establish a museum. In December 2006, the County
and the Foundation entered into the above-described contract with ABI for the
restoration and seismic retrofitting of the buildings. The FACC alleged that ABI,
with the assistance of SGI’s employees, submitted “approximately 130 requests
seeking payment” -- identified as “[c]hange [e]stimates” and “time extension
requests” -- that constituted false claims under the CFCA. (Uppercase omitted.)
The FACC further alleged that SGI interfered with the contract by soliciting
subcontractors to submit claims to the County “without regard to whether the
claims were valid.”
      Relying on Fassberg Construction Co. v. Housing Authority of City of Los
Angeles (2007) 152 Cal. App. 4th 720 (Fassberg Construction), SGI demurred to
the FACC, contending the CFCA claim failed because the change estimates and
time extension requests did not constitute “false claims” under the CFCA; in
addition, SGI argued that the FACC did not plead the purported false claims with
specificity sufficient for a CFCA claim. SGI further contended the claim for
interference with contract failed because it was derivative of the defective CFCA
claim. Accompanying the demurrer was a motion to strike the FACC’s allegations
regarding the time extension requests. The trial court sustained the demurrer and
granted the motion to strike, but afforded the County leave to amend its claims.
      In August 2013, the County filed its second amended cross-complaint
(SACC), which again asserted claims against SGI for violation of the CFCA and
interference with contract.3 SGI demurred to the SACC on the grounds that its
allegations failed to cure the defects in the FACC; in addition, SGI filed a motion
to strike the SACC’s allegations regarding the time extension requests. In

3      The SACC, like the FACC, also asserted a CFCA claim and a claim for breach of
contract and fiduciary duty against ABI.

                                          3
opposing the demurrer and motion to strike, the County requested that the trial
court take judicial notice of ABI’s complaint, arguing that its allegations showed
that ABI regarded the change estimates as demands for payment.
         The trial court sustained SGI’s demurrer without leave to amend, concluding
that under Fassberg Construction, the SACC stated no CFCA claim, and that the
interference with contract claim therefore also failed. The court also granted SGI’s
motion to strike without leave to amend. On January 7, 2014, a judgment of
dismissal was entered in favor of SGI and against the County. This appeal
followed.

                                    DISCUSSION
         The County contends the trial court erred in sustaining SGI’s demurrer to the
SACC and granting the motion to strike. For the reasons discussed below, we
agree.

         A. Standards of Review
         “Because a demurrer both tests the legal sufficiency of the complaint and
involves the trial court’s discretion, an appellate court employs two separate
standards of review on appeal. [Citation.] . . . Appellate courts first review the
complaint de novo to determine whether . . . [the] complaint alleges facts sufficient
to state a cause of action under any legal theory, [citation], or in other words, to
determine whether . . . the trial court erroneously sustained the demurrer as a
matter of law. [Citation.]” (Cantu v. Resolution Trust Corp. (1992) 4 Cal. App. 4th
857, 879 (Cantu).) “Second, if a trial court sustains a demurrer without leave to
amend, appellate courts determine whether . . . the plaintiff could amend the
complaint to state a cause of action. [Citation.]” (Cantu, supra, 4 Cal.App.4th at
p. 879, fn. 9.)

                                           4
      Under the first standard of review, “we examine the complaint’s factual
allegations to determine whether they state a cause of action on any available legal
theory. [Citation.]” (Ellenberger v. Espinosa (1994) 30 Cal. App. 4th 943, 947.)
We accept the truth of “all material facts which were properly pleaded,” but not the
truth of contentions, deductions, or conclusions of fact or law. (Ibid.) The
complaint is also read “as containing the judicially noticeable facts” (Cantu, supra,
4 Cal.App.4th at p. 877), and in suitable circumstances, an appellate court may
take judicial notice of facts not subject to judicial notice by the trial court
(Taliaferro v. County of Contra Costa (1960) 182 Cal. App. 2d 587, 592).
      Under the second standard of review, the burden falls upon the plaintiff to
show what facts could be pleaded to cure the existing defects in the complaint.
(Cantu, supra, 4 Cal.App.4th at p. 890.) “To meet this burden, a plaintiff must
submit a proposed amended complaint or, on appeal, enumerate the facts and
demonstrate how those facts establish a cause of action.” (Ibid.)
      In connection with the demurrer, SGI also asserted a motion to strike certain
allegations in the SACC. Generally, when a portion of a claim is facially
defective, it may be challenged by a motion to strike. (PH II, Inc. v. Superior
Court (1995) 33 Cal. App. 4th 1680, 1682-1683 (PH II).) The grant of such a
motion without leave to amend is reviewed for an abuse of discretion. (See Dawes
v. Superior Court (1980) 111 Cal. App. 3d 82, 91.)
      Here, the County neither offers nor suggests factual amendments to the
SACC to cure the purported defects specified in SGI’s demurrer and motion to
strike. Our inquiry is thus focused primarily on questions of law, namely, whether
the facts as alleged in the SACC are sufficient to state a CFCA claim and a claim

                                            5
for interference with contract.4

      B. CFCA
      We begin by examining the CFCA, which permits the state and its political
subdivisions to recover treble damages and civil penalties for certain acts,
including the presentation of a “false claim” to the state or political subdivision.
(Rothschild v. Tyco Internat. (US), Inc. (2000) 83 Cal. App. 4th 488, 494-495;
§ 12561, subd. (a).) “The Legislature designed the CFCA ‘“to prevent fraud on the
public treasury,”’ and it ‘“should be given the broadest possible construction
consistent with that purpose.”’ [Citations.]” (San Francisco Unified School Dist.
ex rel. Contreras v. Laidlaw Transit, Inc. (2010) 182 Cal. App. 4th 438, 446 (San
Francisco Unified School Dist.), quoting City of Pomona v. Superior Court (2001)
89 Cal. App. 4th 793, 801 (City of Pomona).) As the CFCA is patterned after the
federal False Claims Act (31 U.S.C § 3729 et seq.), “authorities applying the
federal act may be persuasive to the extent the language of the two acts is similar.”
(Fassberg Construction, supra, 152 Cal.App.4th at p. 735.)
      Because the SACC alleges that SGI’s false claims and related misconduct
occurred in late 2009 and early 2010, the County’s CFCA claim is potentially
subject to two versions of the CFCA, as the Legislature amended the CFCA in
2009, with an effective date of January 1, 2010. (Stats. 2009, ch. 277, § 2, No. 7
West’s Legis. Service, pp. 3366-3373; San Francisco Unified School Dist., supra,
182 Cal.App.4th at p. 448, fn. 7.) Although the two versions of the CFCA define

4      The County suggests in its reply brief that the SACC could be amended to allege
additional facts and state a new theory of liability under the CFCA. As no such
contention was raised in the opening brief, however, it has been forfeited. (Horowitz v.
Noble (1978) 79 Cal. App. 3d 120, 138-139; 9 Witkin, Cal. Procedure (5th ed. 2008)
Appeal, § 701, pp. 769-771.)

                                            6
“‘claim’” in materially similar terms -- namely, as “‘any request or demand’” for
money -- they differ in certain respects, as discussed below.5
       Subdivision (a) of former section 12651 authorized the recovery of treble
damages for enumerated acts, including false claims, and specified civil penalties.
Pertinent here is the provision regarding false claims and the use of false records or
statements to support such claims, which stated: “Any person who commits any of
the following acts shall be liable . . . for three times the amount of damages which
the state or the political subdivision sustains because of the act of that person. A
person who commits any of the following acts . . . may be liable to the state or
political subdivision for a civil penalty . . . for each false claim: [¶] (1) Knowingly
presents or causes to be presented to an officer or employee of the state or of any
political subdivision thereof, a false claim for payment or approval. [¶] (2)
Knowingly makes, uses, or causes to be made or used a false record or statement to
get a false claim paid or approved by the state or by any political subdivision.”
(Former § 12651, subds. (a)(1), (a)(2).)

5       Subdivision (b)(1) of former section 12650 stated: “‘Claim’ includes any request
or demand for money, property, or services made to any employee, officer, or agent of
the state or of any political subdivision, or to any contractor, grantee, or other recipient,
whether under contract or not, if any portion of the money, property, or services
requested or demanded issued from, or was provided by, the state . . . or by any political
subdivision thereof . . . .”
         In its current form, subdivision (b)(1) of that section states in pertinent part:
“‘Claim’ means any request or demand, whether under a contract or otherwise, for
money, property, or services, and whether or not the state or a political subdivision has
title to the money, property, or services that meets either of the following conditions: [¶]
(A) Is presented to an officer, employee, or agent of the state or of a political subdivision.
[¶] (B) Is made to a contractor, grantee, or other recipient, if the money, property, or
service is to be spent or used on a state or any political subdivision’s behalf or to advance
a state or political subdivision’s program or interest . . . .”

                                              7
       Fassberg Construction identified certain requirements for causes of action
founded on the provision quoted above. The central issue presented there was
whether the provision authorized the recovery of civil penalties for the use of false
records or statements in support of a false claim. (Fassberg Construction, supra,
152 Cal.App.4th at pp. 727, 736-743.) Following an analysis of the statutory
language, the appellate court held that the provision authorized treble damages for
knowingly presenting either a false claim or a false record or statement in support
of such a claim, but authorized civil penalties only for false claims. (Id. at p. 727.)
In so concluding, the court observed that recovery of either treble damages or a
civil penalty required -- at minimum -- a “claim.” (Id. at pp. 727, 736-737, 739 &
fn. 13.)
       The factual situation in Fassberg Construction is similar in some respects to
that alleged in the County’s cross-complaints. There, the housing authority of the
City of Los Angeles entered into a contract with a contractor regarding the
construction of some residential buildings. (Fassberg Construction, supra, 152
Cal.App.4th at p. 728.) The contract permitted the contractor to submit “change
order proposals,” that is, requests to modify the contract price or extend the time
for performance. (Id. at p. 729.) During the construction project, the contractor
submitted numerous change order proposals, as well as payroll reports and requests
for “progress payment[s].” (Id. at pp. 738-742.) After the project’s completion,
the housing authority asserted a CFCA claim. (Id. at p. 730.) Following a jury
trial, the housing authority prevailed on the claim, and recovered treble damages
and civil penalties for the change order proposals, payroll reports, and requests for
progress payments. (Id. at pp. 731-732.)
       In reversing, the appellate court concluded (1) that former section 12651
authorized civil penalties solely for false claims, and (2) that only the requests for
progress payments constituted claims, for purposes of an award of civil penalties.

                                           8
(Fassberg Construction, supra, 152 Cal.App.4th at pp. 739-742.) The court
otherwise determined that neither the change order proposals nor the payroll
reports constituted claims, that is, requests or demands for money. (Id. at pp. 729-
730.) In the case of the change order proposals, the court observed that their status
presented a question of law, as there was no factual dispute regarding how the
parties viewed them during the project. (Id. at pp. 740-741.) The contract
specified that change order proposals were to be used to seek the housing
authority’s approval of project modifications, and the trial evidence established
that during the project, the parties acted with the shared understanding that the
housing authority had to approve a change order proposal and issue a written
change order before the contractor could request payment for the work
encompassed in the proposal. (Ibid.) In view of those facts, the appellate court
determined that the change order proposals did not, in themselves, amount to
requests or demands for money. (Id. at pp. 741-742.)
      After Fassberg Construction was decided, the Legislature amended the
CFCA. Effective January 1, 2010, subdivision (a) of section 12651 provides in
pertinent part: “Any person who commits any of the following enumerated acts
. . . shall be liable . . . for three times the amount of damages that the state or
political subdivision sustains because of the act of that person. A person who
commits any of the following enumerated acts . . . shall be liable . . . for a civil
penalty . . . for each violation: [¶] (1) Knowingly presents or causes to be
presented a false or fraudulent claim for payment or approval. [¶] (2) Knowingly
makes, uses, or causes to be made or used a false record or statement material to a
false or fraudulent claim.” (Italics added.) Although the apparent effect of the
amendments is to broaden potential liability for false claims and the use of records
and statements to support such claims (see In re Bank of New York Mellon Corp.
Forex Transactions Litigation (S.D. N.Y. 2014) 991 F. Supp. 2d 479, 490

                                            9
[discussing the current version of the CFCA]), they do not modify a key
requirement for that liability, namely, the existence of a “claim” (In re Bank of
New York Mellon Corp. False Claims Act Litigation (N.D. Cal. 2012) 851
F. Supp. 2d 1190, 1195-1197, 1199 (Bank of New York)).

        C. Analysis
      We turn to the rulings on SGI’s demurrer to the SACC and motion to strike.
As explained below, we conclude the SACC states tenable claims against SGI, and
that the motion to strike was improperly granted (see pts C.2, C.3 & C.4. post).

             1. Facts6
      The SACC alleges the following facts: The underlying contract established
a “guaranteed maximum price” for the project of $19,142,248, and required
completion of the project within 426 days of its commencement, absent
adjustments in the price or completion date by change orders from the County.
The contract provided for progress payments and final payment upon completion
of the project.
      During the project, the County issued change orders that increased the
guaranteed maximum price to $21,258,932, and granted ABI an additional 217
days in which to complete the project. On October 7, 2009, ABI submitted Pay
Application No. 28, which stated that as of September 30, 2009, the total of work
and labor completed was $21,542,557. Regarding that sum, the pay application
asserted that $18,757,987 had been paid, that $1,777,349 was held as “retainage,”

6      Our summary of the facts is informed by the relevant provisions of the underlying
contract, as the contract is the foundation of the County’s claims, and the SACC
incorporates by reference the copy of the contract attached to it. (City of Pomona, supra,
89 Cal.App.4th at p. 800.)

                                            10
and that the payment then due was $1,007,221.7 (Uppercase omitted.) The County
paid the requested sum. In December 2009, the project was substantially
completed.
       The SACC alleges that after presenting Pay Application No. 28, in late 2009
and early 2010, ABI submitted 130 claims for payment seeking more than
$5,200,000 for purported extra work performed during the project. These included
108 false claims for payment designated as “change estimates” and “time extension
requests.”
       According to the SACC, those purported “change estimates” and “time
extension requests” were not true change estimates. Under the contract, “change
estimates” were customarily proposals tendered by ABI to the County prior to the
County’s authorization of the proposed work and materials, and prior to the
completion of the proposed work. When such a change estimate involved or
included an extension of the project’s completion date, the contract permitted ABI
to negotiate an increase in the contract price. However, with respect to the
allegedly false claims set forth in the SACC, the purported “[c]hange [e]stimates”
and “time extension requests” were not proposals regarding future work and
materials, but were “intended . . . in and of themselves to induce payment . . . .”
Although “[t]hey proposed an increase” in the contract price for the work
described and sought “authorization to proceed,” they concerned completed work
addressed in prior pay applications, relied for support on information provided in
prior pay applications, and were “requests for additional payment . . . .”

7      The SACC attributes the difference between the actual guaranteed maximum price
and the total shown in the pay application to certain change orders not reflected in the pay
application.

                                            11
        The SACC described 50 false requests for payment designated as “[c]hange
[e]stimate[s].” All the requests concerned completed work, and 13 specifically
addressed work for which the County had already made payment. The SACC
further described 59 false claims for payment designated as requests for time
extensions, many of which were submitted in connection with the purported
change estimates. Those requests “were not submitted in connection with
proposed work, but with regard to work that had been completed.”

                 2. CFCA Claim
        We begin with the cause of action under the CFCA. In sustaining SGI’s
demurrer, the trial court concluded that the SACC failed to allege that the change
estimates and requests for time extensions constituted “claims,” within the
meaning of the CFCA. Our focus is on that determination.
         At the outset, we address two preliminary issues material to our inquiry,
namely, the scope of the application of the current version of the CFCA, which
became effective on January 1, 2010, and the relevance of ABI’s allegations in its
complaint against the County. As to the former, it is unnecessary to determine the
extent to which the CFCA cause of action is subject to the current version of the
CFCA, as the amendments to the CFCA did not modify the pertinent elements of
the law. The SACC asserts that the change estimates and request for time
extensions submitted in late 2009 and early 2010 constitute false claims for
payment under the CFCA, and seeks treble damages and civil penalties for each of
them. As noted above (see pt. B., ante), both versions of the CFCA authorize
treble damages and civil penalties for the presentation of false claims for payment.8

8     The extent to which the current law is applicable to the alleged false claims
submitted in late 2009 is also irrelevant for a second reason. Generally, “[a] demurrer
(Fn. continued on next page.)

                                            12
       As to the latter, the County urges us to examine ABI’s complaint in
assessing whether the SACC states a CFCA claim, arguing that the complaint
shows that ABI, in asserting its contract-based claims against the County, regarded
the change estimates at issue as demands for payment. The County further argues
that because “SGI and ABI are alleged alter egos . . . , ABI’s allegations are SGI’s
allegations.”
       We decline to consider ABI’s complaint, as “a cross complaint must itself be
sufficient and cannot be cured by the pleadings in the original action, that is, the
complaint and answer, apart from permissible incorporation by reference.” (Berg
v. Investors Real Estate Loan Co. (1962) 207 Cal. App. 2d 808, 816; accord, Pine
Terrace Apartments, L.P. v. Windscape, LLC (2009) 170 Cal. App. 4th 1, 17.) Here,
the SACC does not incorporate the allegations in ABI’s complaint; moreover,
those allegations cannot be ascribed to SGI, as the record discloses no
determination or finding that ABI and SGI are, in fact, alter egos (Las Palmas
Associates v. Las Palmas Center Associates (1991) 235 Cal. App. 3d 1220, 1248
[application of alter ego doctrine requires factual determinations]).9

does not lie to a portion of a cause of action.” (PH II, supra, 33 Cal.App.4th at p. 1682.)
SGI’s demurrer to the CFCA claim thus fails if the SACC’s allegations regarding the
change estimates and requests for time extensions in early 2010 state a claim under the
current version of the CFCA. For the reasons discussed below, we conclude that they do
so.
9       At SGI’s request, we have augmented the record with the statement of decision,
judgment, and related rulings regarding ABI’s complaint against the County, which were
filed after the judgment on the SACC. However, although SGI’s brief on appeal
mentions that ABI prevailed on its breach of contract claim against the County, SGI has
not requested judicial notice of the court records in question, and does not suggest they
demonstrate that the SACC states no claim. Because it is ordinarily improper for a court
to take judicial notice of the truth of factual findings contained in a statement of decision
or similar court record (Plumley v. Mockett (2008) 164 Cal. App. 4th 1031, 1050), we
decline to do so on our own motion. We therefore exclude the court records from our
analysis.

                                             13
       The key issue is thus whether the SACC itself adequately alleges the
presentation of “claims,” for purposes of the CFCA. To resolve that issue, we
must look beyond the SACC’s allegations that the change estimates and requests
for time extensions constitute claims, as those are legal conclusions. Generally, to
plead a cause of action, “a plaintiff is required . . . to set forth the essential facts of
his case with reasonable precision and with particularity sufficient to acquaint a
defendant with the nature, source and extent of his cause of action.” (Youngman v.
Nevada Irrigation Dist. (1969) 70 Cal. 2d 240, 245.) As CFCA actions sound in
fraud, they are subject to heightened pleading requirements. (State of California ex
rel McCann v. Bank of America, N.A. (2011) 191 Cal. App. 4th 897, 906.) “‘[T]he
allegations of a [CFCA] complaint must be pleaded with particularity. The
complaint must plead “‘the time, place, and contents of the false representations, as
well as the identity of the person making the misrepresentation and what he
obtained thereby.’”’” (State of California ex rel McCann, supra, quoting City of
Pomona, supra, 89 Cal.App.4th at p. 803.) In view of those requirements, the
County was obliged to allege facts sufficient to show that the change estimates and
requests for time extension, when presented to the County, constituted claims
under the CFCA, that is, “request[s] or demand[s]” for money (§ 12650, subd.
(b)(1)).
       In an effort to satisfy that requirement, the SACC alleges that ABI’s
submissions, although styled as “[c]hange [e]stimates” and “time extension
requests,” were intended under the circumstances to directly elicit payments from
the County. We find guidance from authority regarding the federal False Claims
Act as to whether those allegations establish the existence of “claims,” for
purposes of the CFCA. Like the CFCA, the federal law authorizes recovery for
false claims and false records or statements supporting such claims (31 U.S.C.A.
§ 3729(a)(1)), defines the term “‘claim’” to include “any request or demand . . . for

                                            14
money” (31 U.S.C.A § 3729(b)(2)(A)), and requires the existence of a claim for
recovery (U.S. v. Kitsap Physicians Service (9th Cir. 2002) 314 F.3d 995, 1002
[“an actual false claim” is essential for liability under the False Claims Act]).10
Because the term “‘claim’” is construed broadly (U.S. ex rel. Taylor v. Gabelli
(S.D. N.Y. 2004) 345 F. Supp. 2d 313, 329), claims are not limited to invoices (U.S.
ex rel. Schwedt v. Planning Research Corp. (D.C. Cir. 1995) 59 F.3d 196, 199
(Schwedt)).
       Schwedt is instructive regarding the scope of the term “claim” under the
federal False Claims Act. There, a federal agency entered into a contract with a
supplier regarding the installation of a computer system and its software.
(Schwedt, supra, 59 F.3d at pp. 197-198.) Later, in a qui tam action, the plaintiff
asserted causes of action under the federal law, alleging (1) that the supplier
submitted three progress reports falsely stating that certain software components
had been fully delivered, and (2) that in connection with one progress report, the
supplier also submitted an invoice for the relevant software component, which had
been paid.11 (Schwedt, supra, at p. 198.) The district court dismissed the bulk of
the plaintiff’s complaint, ruling that it stated no cause of action insofar as it relied
on the three progress reports unattended by an invoice. (Ibid.) In reversing, the
appellate court concluded that under the circumstances alleged in the complaint,

10       The federal False Claims Act imposes liability on “any person who -- [¶] (A)
knowingly presents, or causes to be presented, a false or fraudulent claim for payment or
approval; [or] (B) knowingly makes, uses, or causes to be made or used, a false record or
statement material to a false or fraudulent claim . . . .” (31 U.S.C.A. § 3729(a)(1).)
Under that law, the term “‘claim’” encompasses “any request or demand . . . for money or
property . . . that [¶] . . . is presented to an officer, employee, or agent of the United States
. . . .” (31 U.S.C.A. § 3729(b)(2)(A)(i).)
11     The federal law, like the CFCA, authorizes qui tam actions, that is, actions by third
parties on behalf of public entities. (U.S. v. Shasta Services, Inc. (E.D.Cal. 2006) 440
F. Supp. 2d 1108, 1111.)

                                               15
the three progress reports constituted false statements in support of implied claims
for payment. (Id. at p. 199.) The court stated: “Though [the supplier] did not
submit a bill for the software, its goal of receiving payment was implicit in the
submission of the goods, and the accompanying progress reports had the purpose
of “‘get[ting] . . . [the] claim . . . approved.’ [Citation.]” (Ibid.)
       In view of Schwedt, we conclude that the SACC pleads facts sufficient to
establish that notwithstanding the customary contractual procedure regarding
change estimates, the submissions were claims under the CFCA, that is,
“‘request[s] or demand[s]’” for money (§ 12650, subd. (b)(1)). As the SACC
acknowledges, a “[c]hange [e]stimate[],” as defined in the contract, functioned as
an intermediate step preceding approval of the work proposed in the change
estimate. Under the contract, after the change estimate prompted the County’s
issuance of a “[c]hange [o]rder” authorizing a modification of the project or its
time schedule, ABI could apply for payment for the approved work.
The SACC further alleges, however, that the submissions, although styled as
“change estimates” or “time extension requests,” departed from that contractual
procedure, and amounted to “requests for additional payment . . . .” They were
presented at or about the time that the project had essentially been completed,
addressed completed work for which payment had already been requested or made,
sought additional payment for that work, and were “intended . . . in and of
themselves to induce payment” (italics added). In essence, the SACC effectively
alleges a modification of the customary contractual procedure regarding payment.
(Davies Machinery Co. v. Pine Mountain Club, Inc. (1974) 39 Cal. App. 3d 18, 25
[a written contract may be modified by the parties’ subsequent communications
and conduct]; Civ. Code § 1698, subds. (a), (b).) The SACC thus alleges facts

                                            16
showing that the submissions constituted “claims,” for purposes of showing the
presentation of false claims for payment under the CFCA.12
       SGI maintains that the SACC admits that the submissions were not claims
because it alleges that they “proposed an increase” in the contract price and sought
“authorization to proceed.” We reject that contention, as it relies on selective
attention to certain allegations in isolation. In assessing a demurrer, we “give the
complaint a reasonable interpretation by reading it as a whole and with all its parts
in their context.” (Consumer Cause, Inc. v. Weider Nutrition Internat., Inc. (2001)
92 Cal. App. 4th 363, 367.) As explained above, the SACC’s allegations, viewed as
a totality, are sufficient to explain why the submissions constituted claims.
       SGI also suggests that the SACC’s allegation that the submissions concerned
completed work does not establish that they constituted claims. The crux of SGI’s
argument is that nothing in the contract barred ABI from requesting retroactive
approval for completed work, and then applying for payment for the work after the
approval was granted. This argument also fails because it disregards material
allegations in the SAC, namely, that the submissions concerned work for which
payment had already been requested or made, and were intended to directly induce
additional payment. In view of those allegations, the submissions could not have
been made to secure retroactive approval merely as a predicate for future pay
applications.
       SGI’s reliance on Fassberg Construction and Bank of New York is
misplaced, as those cases are factually distinguishable. As noted above (see pt. B.,
ante), in Fassberg Construction, the appellate court’s determination that the

12      In view of our conclusion, it is unnecessary to address the County’s contention
that the SACC states a claim under the current version of the CFCA based on “false
record[s] or statement[s] material to a false or fraudulent claim” (§12651, subd. (a)(2)).

                                             17
change order proposals were not claims was based on the undisputed facts
established at trial, namely, that the parties had acted throughout the underlying
project with the shared understanding that such proposals preceded approval of
project modifications and requests for payment for that work. (Fassberg
Construction, supra, 152 Cal.App.4th at pp. 740-741.) In contrast, the SACC
expressly alleges that the submissions in question marked a departure from any
such understanding by the parties.
      In Bank of New York, the plaintiffs initiated a qui tam action against two
banks under the CFCA on behalf of some public retirement funds, contending the
banks had engaged in misconduct while providing financial services to the funds.
(Bank of New York, supra, 851 F.Supp.2d at pp. 1193-1194.) The complaint
alleged that the banks, which had been engaged to make investment transactions
involving the funds’ assets, arranged the transactions so as to secure profits not
disclosed to the funds. (Ibid.) The complaint further alleged that although the
funds submitted monthly reports to the banks, those reports omitted information
necessary for the detection of the improper profits. (Id. at p. 1195.) In concluding
that the complaint stated no cause of action under the CFCA, the district court
determined that the monthly report did not constitute claims because they
contained “[n]o demand for payment or approval . . . .” (Bank of New York, supra,
at p. 1996.) The court stated: “The bare assertion that the monthly reports
‘constituted claims . . . [for payments] . . . ‘does not cure this defect in pleading.”
(Ibid.) As explained above, no such defect is found in the SACC, which does not
make a bare assertion regarding the status of pertinent submissions, but pleads
facts sufficient to establish that they constituted claims.
      SGI contends the demurrer to the CFCA claim is properly affirmed on a
ground not relied upon by the trial court, namely, that the claim is pleaded with
insufficient specificity. We disagree. Generally, “when a plaintiff asserts fraud

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against a corporation, the plaintiff must ‘allege the names of the persons who made
the allegedly fraudulent representations, their authority to speak, to whom they
spoke, what they said or wrote, and when it was said or written.’” (Cansino v.
Bank of America (2014) 224 Cal. App. 4th 1462, 1469, quoting Tarmann v. State
Farm Mut. Auto Ins. Co. (1991) 2 Cal. App. 4th 153, 157.) However, “[l]ess
specificity in pleading fraud is required ‘when “it appears from the nature of the
allegations that the defendant must necessarily possess full information concerning
the facts of the controversy . . . .’” (Cansino v. Bank of America, supra, 224
Cal.App.4th at p. 1469, quoting Committee on Children’s Television, Inc. v.
General Foods Corp. (1983) 35 Cal. 3d 197, 217.) Thus, a complaint need not
identify the person responsible for a misrepresentation attributed to a corporation
when the allegations establish the corporation can obtain that information from its
records (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal. App. 4th 780, 793
(West)) or through discovery (People ex rel. Sepulveda v. Highland Fed. Savings &
Loan (1993) 14 Cal. App. 4th 1692, 1717-1718 (Sepulveda)).
      Here, the SACC alleges that ABI and SGI are alter egos, and that the
pertinent submissions were submitted by ABI, “with the assistance [of,] and under
the direction of SGI and its employees who had been seconded to ABI.”
Regarding each of the 50 submissions styled as a change estimate, the SACC
describes its identification number and date, the date of its receipt, the amount of
payment demanded, and the reason why it asserted a false claim. Regarding each
of the 59 submissions styled as a request for a time extension, the SACC describes
the identification number of the purported “change estimate” with which it was
associated, and the length of the extension sought. The SACC states that the
purported requests were false claims because they “were submitted in the total
absence of any . . . justification for such requests or . . . any effort to determine the
actual time impact of the claimed work;” in addition, the SACC asserts that they

                                           19
constituted false claims for the reasons provided in connection with the related
change estimates.
      We conclude that the CFCA claim is pleaded with sufficient specificity. The
SACC’s allegations inform SGI of the dates, identification numbers, and substance
of the alleged false claims. (Murphy v. BDO Seidman (2003) 113 Cal. App. 4th
687, 693, 702-703 [plaintiff’s summary of purported false statements in financial
reports prepared by defendant accounting firms was sufficient to plead fraud, as the
summary provided “enough information for [the defendants] to know what
purported falsehoods they must defend against”].) Although the SACC does not
name the person or persons who prepared each submission, those allegations are
not essential, as that information is available to SGI in its records or through
discovery. (See West, supra, 214 Cal.App.4th at p. 793 [plaintiff adequately
pleaded fraud claim based on misrepresentations in letter from defendant bank,
even though letter did not identify its preparer, as that information was known to
the bank]; Sepulveda, supra, 14 Cal.App.4th at pp. 1717-1718 [plaintiffs pleaded
fraud claim against bank based on misrepresentations by property owners affiliated
with bank without identifying the owner responsible for each misrepresentation, as
that information could be obtained through discovery].) In sum, the SACC states a
CFCA claim against SGI.

             3. Interference with Contract Claim
      We turn to the claim for interference with contract. To plead such a claim,
the plaintiff must allege “(1) a valid contract between plaintiff and a third party; (2)
defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to
induce a breach or disruption of the contractual relationship; (4) actual breach or
disruption of the contractual relationship; and (5) resulting damage.” (Pacific Gas
& Electric Co. v. Bear Stearns & Co. (1990) 50 Cal. 3d 1118, 1126.) Here, the

                                          20
SACC asserts that SGI intentionally induced a breach of ABI’s contract with the
County, alleging that SGI employee Kris Mason solicited subcontractors working
on the project to submit claims “without regard to whether [they] were valid,” and
that SGI officers and employees assisted ABI in preparing the false claims
described above that were presented to the County.
      In sustaining SGI’s demurrer, the trial court determined that the SACC’s
interference with contract claim was derivative of its CFCA claim, and thus failed
“for the same reason.” As the SACC states a CFCA claim, we conclude that it also
alleges misconduct by SGI sufficient to state a claim for interference with
contract.13

              4. Motion to Strike
      We further conclude that SGI’s motion to strike was improperly granted.
The motion contended the SACC’s allegations regarding the purported requests for
time extensions were defective because the requests did not constitute false claims
under the CFCA. The trial court agreed. For the reasons explained above, we
vacate that ruling as well.

13     We recognize that a claim for interference with contract may not be asserted
against a “‘party to the contract’” (Webber v. Inland Empire Investments, Inc. (1999) 74
Cal. App. 4th 884, 897-898, and that the SACC alleges that ABI is SGI’s alter ego.
However, a determination that ABI and SGI are, in fact, alter egos would not
automatically shield SGI from liability for inducing a breach of the contract. (Webber, at
pp. 898-890.)

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                                  DISPOSITION
      The judgment is reversed, and the matter is remanded with directions to the
trial court to vacate its rulings on SGI’s demurrer to the SACC and motion to
strike, enter new rulings denying them, and conduct further proceedings in
accordance with this opinion. The County is awarded its costs on appeal.
        NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                             MANELLA, J.

We concur:

WILLHITE, Acting P. J.

COLLINS, J.

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