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Kearney v. Foley & Lardner

December 9, 2009


Appeal from the United States District Court for the Southern District of California M. James Lorenz, District Judge, Presiding. D.C. No. CV-05-02112-L.

The opinion of the court was delivered by: Ezra, District Judge


Argued and Submitted October 22, 2008 -- Pasadena, California.

Filed May 12, 2009; Amended September 18, 2009; Second Amendment December 9, 2009

Before: Harry Pregerson and Cynthia Holcomb Hall, Circuit Judges, and David Alan Ezra,*fn1 District Judge.


Joan Kearney ("Kearney") appeals the district court's dismissal of the federal and state law claims she filed against a representative of the Ramona Unified School District ("RUSD") and the law firm that represented RUSD (collectively "Defendants") in an earlier eminent domain proceeding regarding her property. We have jurisdiction pursuant to 28 U.S.C. § 1291. As to Kearney's federal law claims, we vacate the district court's judgment and remand so that those claims may be heard. As to Kearney's state law claims, we affirm the district court.

I. Background

A. Events Leading Up to the State Valuation Trial

We must begin, not with the case at hand, but with the earlier eminent domain proceedings from which Kearney's current claims arose.

Kearney is the former owner of a 52.06-acre parcel of property in Ramona, California. In June of 2000, RUSD initiated the condemnation process for that property. Pursuant to that, it hired Construction Testing & Engineering, Inc. ("CTE") to conduct a septic system assessment, including percolation testing, of Kearney's land and then issue a report with the results. Those results would reveal the number of residential lots the land could support, and thus determine the land's value.

CTE entered the property on December 12, 2000. On December 13, Kearney wrote RUSD that it must obtain her approval first. Two days later, Gregory Moser, of Foley & Lardner, LLP, replied on behalf of RUSD, requesting consent to enter to conduct percolation testing in exchange for a copy of the report generated. On December 26, Kearney's attorney responded, making disclosure of the report a condition of Kearney's consent. In late January and early February 2001, CTE completed its percolation testing. It did not prepare a formal report of the results.

In response to Kearney's March 2001 discovery request, RUSD produced no test results. Other documents produced suggested testing had been done. In his October 2001 deposition, Michael McCarty, RUSD's then-Business Manager, told Kearney's attorney that he thought testing had been done. Nonetheless, no results were produced.

B. The Valuation Trial and Subsequent Appeals

The trial to determine the property's value lasted from April 29 to May 9, 2002. Kearney's expert testified that, based on the percolation tests performed on the property in 1996, the parcel could support up to sixteen residential lots, giving it a total value of $1.4 million. RUSD's expert appraised the property at $850,000, based on her understanding that it could support six to eight lots. Larry Marshall ("Marshall"), one of RUSD's attorneys, said in trial that no new percolation testing had been performed. The jury awarded Kearney $953,000 in compensation.

It was only after the trial that Kearney learned from a school expense itemization report that percolation testing had actually been performed. But even then, her May 2002 California Public Records Act ("CPRA") request for documents obtained no results. RUSD said it did not possess anything that had not been provided during discovery. It also said that, to the extent any documents existed in the offices of professionals it employed, the documents were exempt from CPRA. Kearney moved for a new trial based on the itemization report. The state trial court denied the motion. Kearney appealed.

While that appeal was pending, Kearney made another CPRA request and exchanged letters with Marshall. In one of these, Marshall said RUSD would waive its CPRA exemption. On November 12, 2002, it produced a copy of the testing results, saying the document had never been in RUSD's possession and was obtained after the trial. Kearney had RUSD's experts review the results, and they determined that the results were significant to valuation and supported a higher value for the property.

Kearney filed more motions for a new trial, but both were denied on jurisdictional grounds. Kearney appealed these as well. On March 3, 2004, the California Court of Appeal issued three opinions. One affirmed the trial court's dismissal of Kearney's motion for new trial, finding that Kearney failed to show that RUSD's assertions about the absence of testing denied her a fair trial and that she should have instead pursued the evidence suggesting testing had been completed. The other two opinions affirmed the trial court's orders on the grounds that it lacked jurisdiction. The California Supreme Court denied review.

C. The Current Action

Having thus received no relief on valuation in state court, Kearney commenced the present action in federal court against RUSD's representative, the law firm that represented RUSD in the state proceedings, and two of that firm's law- yers, seeking relief for the conduct that led to that valuation. Her complaint alleged federal causes of action under RICO, conspiracy to violate RICO, and 42 U.S.C. § 1983. Her state causes of action included false promise, fraud and deceit, spoliation of evidence, and prima facie tort.

Defendants filed motions to dismiss. The district court granted them, dismissing Kearney's federal claims under the Noerr-Pennington doctrine because the conduct on which Kearney relied to establish liability was incidental to First Amendment-protected petitioning activity. The court further held that the complaint did not fit into the "sham exception" to that doctrine because Kearney had not supported the position that defendants' alleged intentional misrepresentations to the court "depriv[ed] the condemnation proceeding of its legitimacy." The court also dismissed Kearney's state claims under California's anti-SLAPP ...

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