Opinion
B189595
4-24-2007
MARJORIE CHIN, Plaintiff and Appellant, v. TOM MERCHANT, Defendant and Respondent.
Frank A. Weiser for Plaintiff and Appellant. Edmund G. Brown, Jr., Attorney General, David S. Chaney, Chief Assistant Attorney General, James S. Schiavenza, Assistant Attorney General, Marsha S. Miller and Christina Bull Arndt, Deputy Attorneys General, for Defendant and Respondent.
NOT TO BE PUBLISHED
Defendant and respondent Tom Merchant, a Medi-Cal fraud investigator for the California Department of Health Services, conducted an investigation that led to the criminal prosecution of plaintiff and appellant Marjorie Chin. After the prosecution dismissed the criminal action, Chin sued Merchant for federal civil rights violations (42 U.S.C. § 1983 (section 1983)), malicious prosecution, false arrest, and intentional infliction of emotional distress. The trial court entered judgment for Merchant after sustaining his demurrer to the malicious prosecution and emotional distress claims based on a governmental immunity statute (Gov. Code, § 821.6) and granting his motion for summary judgment of the section 1983 and false arrest claims. We affirm.
Chin voluntarily dismissed the causes of action for fraud and violation of the California Constitution. The negligence claims against defendants State of California (also named as the California Department of Health Services) and Diana Bonta, the former director of the Department of Health Services, were dismissed on demurrer. Merchant is the sole remaining defendant in the action.
Unless otherwise indicated, all further statutory references are to the Government Code.
BACKGROUND
Chin, as owner of the Valley Adult Day Health Center (the center), signed the centers Medi-Cal bills for outpatient services provided to its participants. During an inspection by Sharon Wasson of the California Department of Aging, Wasson found discrepancies in the centers Medi-Cal billings. Wasson informed the Department of Health Services of her suspicion that the center was engaged in Medi-Cal fraud. During the ensuing investigation by Merchant in 2002, several of the centers employees and participants provided information that led him to believe the center was engaging in Medi-Cal fraud and was falsifying attendance sheets to hide the crime. Merchant prepared a probable cause affidavit and obtained a search warrant for the centers computers and billing records. Merchant brought the evidence from his investigation to the district attorneys office, which conducted its own investigation and obtained witness affidavits that corroborated Merchants statements. The district attorneys office obtained a warrant for Chins arrest and initiated criminal proceedings against her for Medi-Cal fraud. Based on Merchants testimony at the preliminary hearing, Chin was held to answer.
In the probable cause affidavit, Merchant stated that the Department of Health Services had been informed by Wasson of her suspicions concerning the centers Medi-Cal billing and that the center "was destroying Medi-Cal billing patient records and contacting patients, and telling them what to tell the inspectors (Dept. of Aging) when they are contacted by the inspectors." Wasson informed the Department of Health Services that Medi-Cal had been billed for services not actually provided to Htay Myint and Khin Gyi, who denied attending the center on the dates stated on the bills. After reviewing the centers Medi-Cal billing records and speaking with several other participants, Merchant determined that Medi-Cal had been falsely billed for services not actually provided to Htay Myint, Khin Gyi, and Wan Chung Liu. Merchant learned from an anonymous informant (later revealed to be social worker Chichuan "Cherry" Wu) that the center was altering its files, 60 of which were missing, in order to conceal its false Medi-Cal billings. However, Merchant later learned from Wu that the missing files were in the centers music room.
In March 2003, the prosecution dismissed the charges and, according to the complaint, apologized to Chin for her arrest. Alleging that Merchant had "generated fraudulent evidence against [her] for improper personal gain," Chin sued Merchant in March 2004 for federal civil rights violations (§ 1983), malicious prosecution, false arrest, and intentional infliction of emotional distress. The complaint sought compensatory and punitive damages, prejudgment interest, costs, and attorney fees.
Merchant demurred to the malicious prosecution and emotional distress claims based on the immunity provided by section 821.6, which states: "A public employee is not liable for injury caused by his instituting or prosecuting any judicial or administrative proceeding within the scope of his employment, even if he acts maliciously and without probable cause." In September 2004, the trial court sustained the demurrer with leave to amend. Chin did not amend the complaint.
In May 2005, Merchant moved for summary judgment of the remaining false arrest and section 1983 claims. In his supporting declaration, Merchant described the centers fraudulent Medi-Cal billing practices and the evidence that had led him to conclude there was probable cause for the search and arrest warrants. Merchant contended that there was no evidence to show that he deliberately had misled either the court or the district attorney in the criminal prosecution.
Stacy Okun-Wiese, the prosecutor in the criminal action, stated in her supporting declaration that she independently had evaluated Merchants evidence and witness affidavits and interviewed Chichuan "Cherrie" Wu and Huiju "Maggie" Tsai, who corroborated Merchants information. Okun-Wiese stated that she had no reason to believe that Merchant had lied to her and confirmed that the evidence that was uncovered "during the prosecution of the case [was] consistent with [Merchants] representations." Okun-Wiese attested to exercising her independent judgment in filing the criminal case and denied having any reason to believe that Merchant had exerted undue influence, harbored malice, or acted from improper motives.
In opposition to the summary judgment motion, Chin contended that "[t]he veracity and the scope of the evidence presented by [Merchant] prior to procuring the search warrant and arrest warrant is a serious factual issue that cannot be decided at the summary judgment level." Chin argued that Merchant had failed to conduct a background check on Wu, a social worker employed by the center who was the anonymous witness cited in Merchants probable cause affidavit for the search warrant.
Chin obtained a continuance of the summary judgment motion to complete Wus deposition, which had been interrupted by Wus request for immunity. After Wu was granted prosecutorial immunity, Wu testified that she had told Merchant that the centers attendance sheets did not match "the real attendance of the participants." Wu testified: "Q. You mentioned earlier that you told Tom Merchant that participants had complained because they were [sic] Medi-Cal benefits were billed without their knowledge; is that right? [¶] A. Yes. [¶] Q. And it was your understanding that was happening at [the center]? [¶] A. Yes. [¶] Q. And you told Mr. Merchant that; right? [¶] A. Yes." Wu also testified that Chin was responsible for falsifying the centers attendance records and had instructed Wu to help her "finish the documentation, the paperwork, because they were coming to inspect . . . ." According to Wus testimony, when Chin was told by Wu that the attendance sheets incorrectly listed participants as present who "were not there" because "they were back in China for one month, two months," Chins response was, "Just fill out the paperwork. The state is coming." Wu testified that when Chin had told a participant to sign attendance sheets for dates on which she was absent, the participant felt "very uncomfortable" about doing this "because she didnt attend" the center on those dates.
In reply, Merchant argued that the evidence from his investigation had led him reasonably to believe that Chin was committing Medi-Cal fraud. Merchant contended that there were no triable issues of material fact as to the probable cause to support the search and arrest warrants.
The trial court concluded that Chins actual guilt or innocence of the criminal charges was irrelevant to the central issue whether Merchant had reasonable cause to believe the allegations "at the time he was conducting his investigation, gathering evidence, submitting affidavits, testifying in court and so forth. No evidence has been proffered that this was not the case. Indeed, the testimony of Deputy District Attorney Okun-Wiese reflects that in her independent interview of witnesses, the information provided by Merchant to her was confirmed and corroborated. (Okun-Weise Decl., ¶ 3.)" The trial court found that because Merchant had met his initial burden of establishing the existence of probable cause for the search and arrest warrants, the burden had shifted to Chin to show that Merchant disbelieved the evidence discovered in the fraud investigation.
The trial court pointed out that Chins reliance upon "the declarants silence rather than their actual statements to contest Merchants position" was insufficient to create a conflict in the evidence to establish a triable issue of material fact. The trial court also noted that Chin had set forth only "one set of facts that arguably calls some of Merchants statements into question. Merchant contends that Wei `Cindy Xin Gou told him that Plaintiff told her [Gou] to have participants sign the attendance sheets for days they did not participate and to tell them to say that they forgot about their attendance on those days. (Merchant Decl., ¶ 14.) Plaintiff argues that Ms. Gou testified that plaintiff did not ask her to have people sign in when they did not attend — only those people who did attend signed the attendance sheet. (Gou Depo., 48:11-53:3.) However, Ms. Gou testifies as to her communication with plaintiff rather than Merchant. She does not discuss whether she told Merchant that plaintiff asked her to falsify the attendance sheets. The latter is the key inquiry because it is Merchants state of mind at issue."
The trial court determined that Chin had failed to establish a triable issue of material fact as to whether Merchant: (1) disbelieved the probable cause information that supported the search warrant; (2) knowingly presented false evidence in support of the arrest warrant; (3) acted with malice; or (4) violated the law. The trial court concluded, as a matter of law, that Chin was incapable of establishing claims for: (1) unreasonable search because there was no evidence that Merchant disbelieved the information in the probable cause affidavit; (2) false arrest because Merchants affidavit "identified four instances where he believed that Chin was committing Medi-Cal fraud, any one of which would support a finding of probable cause"; (3) malicious prosecution because there was no evidence that Merchant lacked probable cause to believe that Chin had committed Medi-Cal fraud or that Merchant acted with malice; and (4) civil rights violations under section 1983 because there was no evidence that Chins constitutional rights were violated or that Merchant knowingly, intentionally, recklessly, or maliciously submitted false evidence in the criminal case. The trial court granted the summary judgment motion and entered judgment for Merchant. This appeal followed.
DISCUSSION
I. Demurrer
Chin challenges the sustaining of the demurrer to the malicious prosecution and emotional distress claims based on section 821.6. If applicable, section 821.6 bars Chins malicious prosecution and emotional distress claims for injuries caused within the scope of Merchants employment, even if done maliciously and without probable cause. (§ 821.6.) Chin argues that applying section 821.6 to this case would violate her constitutional right to petition the government. We disagree.
A. Standard of Review
"`In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. "We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed." [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) `To meet [the] burden of showing abuse of discretion, the plaintiff must show how the complaint can be amended to state a cause of action. [Citation.] However, such a showing need not be made in the trial court so long as it is made to the reviewing court. (William S. Hart Union High School Dist. v. Regional Planning Com. (1991) 226 Cal.App.3d 1612, 1621.) `[W]e may affirm a trial court judgment on any basis presented by the record whether or not relied upon by the trial court. (Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 252, fn. 1.)" (Blumhorst v. Jewish Family Services of Los Angeles (2005) 126 Cal.App.4th 993, 999.)
"Because the present case involves claims against public employees and is controlled by the California Tort Claims Act, the following rules apply: `. . . "to state a cause of action against a public entity, every fact material to the existence of its statutory liability must be pleaded with particularity." [Citations.] ([Lopez v. Southern Cal. Rapid Transit Dist. (1985) 40 Cal.3d 780,] 795.) It is a plaintiffs responsibility to plead `"facts sufficient to show [his or her] cause of action lies outside the breadth of any applicable statutory immunity." [Citation.] (Id. at p. 796.)" (Gates v. Superior Court (1995) 32 Cal.App.4th 481, 493-494 (Gates).)
B. Right to Petition
"The right to petition for redress of grievances includes the right to sue (California Transport v. Trucking Unlimited (1972) 404 U.S. 508, 510) private as well as governmental entities. (Wolfgram v. Wells Fargo Bank (1997) 53 Cal.App.4th 43, 50-53.) However, `the right to petition has never been absolute (id. at p. 56), and `baseless litigation is not immunized by the First Amendment right to petition. (Bill Johnsons Restaurants, Inc. v. NLRB (1983) 461 U.S. 731, 743.) The Wolfgram court recognized that constitutional rights to petition have been subjected to reasonable restrictions to prevent abuse of the right, and narrowly drawn restrictions on that right can be valid. (Wolfgram, supra, at p. 57.)" (Schroeder v. Irvine City Council (2002) 97 Cal.App.4th 174, 195.)
Chin argues that applying section 821.6 to this case would deprive her of the constitutional right to bring suits "against the state in such manner and in such courts as shall be directed by law." (Cal. Const., art. III, § 5.) The right to petition, however, does not trump the governmental immunities provided in the California Tort Claims Act. (Gov. Code, § 810 et seq.) The Constitution "specifically permits legislative promulgation of immunities that apply to all suits brought against public employees, including those for tort damages brought under terms of the California Constitution." (Gates, supra, 32 Cal.App.4th at p. 516, fn. 9.) "[T]he rule in this state is that, unless otherwise provided by statute, `[a] public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or a public employee or any other person. (§ 815, subd. (a).) Accordingly, governmental immunity is the rule, and liability is the exception. [Citation.]" (Amylou R. v. County of Riverside (1994) 28 Cal.App.4th 1205, 1213.)
The cases cited by Chin do not support her position. City of Long Beach v. Bozek (1982) 31 Cal.3d 527 is distinguishable because it addressed the ability of a public entity to sue for malicious prosecution. Wolfgram v. Wells Fargo Bank, supra, 53 Cal.App.4th 43, is also distinguishable because it addressed the constitutionality of vexatious litigant laws.
C. Equal Protection
Chin contends that "[a]pplying the state statutory scheme in a manner inconsistent with the petition rights afforded under the state constitution in a suit for malicious prosecution also raises a serious issue under the Equal Protection Clauses of the federal and state constitutions." Given our determination that applying section 821.6 to this case does not violate the right to petition, the issue is moot.
D. Unruh Civil Rights Act
Chin contends that she should have been allowed to amend her complaint to allege a claim under the Unruh Civil Rights Act. (Civ. Code, § 51 et seq.) The contention fails, not only because Chin was given leave to amend and failed to do so, but because the act applies only to "business establishments." (Civ. Code, § 51, subd. (b).) As Merchant is not a business establishment, the act has no bearing on this case. (See Spanish Speaking Citizens Foundation, Inc. v. Low (2000) 85 Cal.App.4th 1179, 1240 ["Since the Department is not a `business establishment within the meaning of the Unruh Civil Rights Act . . . , that law has no bearing on any regulation the Commissioner may adopt."].)
II. Summary Judgment
Summary judgment is appropriate only where no material issue of fact exists or where the record establishes as a matter of law that none of the causes of action has merit. After examining the facts before the trial judge on a summary judgment motion, an appellate court independently determines their effect as a matter of law. (Nicholson v. Lucas (1994) 21 Cal.App.4th 1657, 1664.)
Under section 437c, subdivision (p)(2) of the Code of Civil Procedure, "A defendant . . . has met his or her burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. The plaintiff . . . may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto."
In this case, the trial court concluded that: (1) Merchant had met his initial burden of showing that plaintiff was incapable of prevailing on her claims because there was probable cause to support the search and arrest warrants; (2) the burden had shifted to Chin to show that Merchant did not have an honest belief in the evidence discovered in the fraud investigation; and (3) Chin had failed to establish the existence of a triable issue of material fact as to whether Merchant violated her constitutional rights or whether Merchant knowingly, intentionally, recklessly, or maliciously submitted false evidence in the criminal case.
In concluding that Merchant had probable cause to believe that Chin was guilty of Medi-Cal fraud, the trial court relied upon evidence of falsified attendance records that are not disputed on appeal, including: (1) the affidavits of Fu Tin Liu and Wan Chung Liu stating that they were falsely shown to be present on 43 days during the summer of 2001, when Wan Chung Liu was present on only 10 days and Fu Tin Liu was in Taiwan; (2) the affidavit of Wei-Shen Huang stating that Huang was falsely shown to be present during August and September when Huang did not attend the center; (3) the affidavits of Shiangi Wann and Peng Wann stating that they were falsely shown to be present in August 2001 when they did not attend the center; and (4) the evidence that Chuan Dy was falsely shown to be present in September 2001 when Dy was in the Philippines.
A. False Arrest
The trial court concluded, as a matter of law, that Chin was incapable of prevailing on her false arrest claim because there was no evidence that Merchant disbelieved the information in his probable cause affidavit, which "identified four instances where he believed that Chin was committing Medi-Cal fraud, any one of which would support a finding of probable cause," and there was no evidence that Merchant harbored any malice toward Chin.
On appeal, Chin argues at length concerning Merchants references in his probable cause affidavit to several statements made by Wu, whose deposition testimony purportedly contradicted those statements. The record does not indicate, however, that Merchants probable cause affidavit was insufficient, misleading, or erroneous in any way. Contrary to Chins assertion on appeal, Merchants probable cause affidavit did not mislead the magistrate to believe that 60 files were still missing from the center. In his affidavit, Merchant referred both to Wus initial statement that 60 files were missing and Wus subsequent statement that the files had been found in the music room. Moreover, Merchant did not mislead the magistrate concerning Chins role in the centers false billing practices. Although Wu testified that her reference to false billing practices was limited to the activities of Chins partner, Mr. Feng, for acupuncture and massage treatments that participants were given outside the center, the record is undisputed that Merchant had probable cause to believe that Chin was falsifying the centers attendance sheets for fraudulent billing purposes. Whether Wu was aware of the centers billing practices or was told to have participants sign in when they were absent has no bearing on whether Merchant reasonably believed, based on other undisputed evidence from other witnesses, that Chin was falsifying the centers attendance records for false billing purposes.
"An issue of fact can only be created by a conflict of evidence. It is not created by `speculation, conjecture, imagination or guess work. [Citation.] Further, an issue of fact is not raised by `cryptic, broadly phrased, and conclusory assertions [citation], or mere possibilities [citation]." (Sinai Memorial Chapel v. Dudler (1991) 231 Cal.App.3d 190, 196-197.) Nothing in the record suggests that Merchant misled the prosecutor or the criminal court concerning his investigation or that he harbored any malice toward Chin. Even without the information obtained from Wu, Merchant had sufficient reason to believe that Chin was falsifying attendance records based on the undisputed and independent information from Sharon Wasson, Fu Tin Liu, Wan Chung Liu, Wei-Shen Huang, Shiangi Wann, Peng Wann, and Chuan Dy.
The fact that Merchant did not investigate Wus background does not, as Chin argues, require a reversal of the summary judgment under Aguilar v. State of Texas (1964) 378 U.S. 108, 114, overruled on other grounds, Illinois v. Gates (1983) 462 U.S. 213, 238. Aguilar, which involved an affidavit that offered only hearsay evidence to support a search warrant, held that a magistrate must be given sufficient information with which to evaluate probable cause. In this case, the magistrate had supporting documentation, which Chin did not dispute either below or on appeal, with which to evaluate probable cause.
Chins contention that "[t]here is a triable issue of fact that respondent misstated and misrepresented all this information to make it app[e]ar as if the appellant was the guilty party in his haste to procure the search warrant" is not supported by the evidence. As the trial court correctly stated, regardless whether Chin committed Medi-Cal fraud, the central issue is whether Merchant had reasonable cause to believe the allegations "at the time he was conducting his investigation, gathering evidence, submitting affidavits, testifying in court and so forth. No evidence has been proffered that this was not the case."
B. Section 1983 Claim
Citing Awabdy v. City of Adelanto (9th Cir. 2004) 368 F.3d 1062, Chin contends that she may prevail on her section 1983 claim by showing that Merchant wrongfully caused criminal charges to be filed against her with malice and without probable cause, for the purpose of violating her constitutional rights. (Id. at p. 1066.) The trial court, however, granted Merchants motion for summary judgment of the section 1983 claim because there was no evidence to show that Chins constitutional rights were violated or that Merchant knowingly, intentionally, recklessly, or maliciously submitted false evidence in the criminal case. As we explained above, there is nothing in the record to suggest that Merchant misled the prosecutor or the criminal court concerning his investigation or that he harbored any malice toward Chin. Given Chins failure to show that the trial courts determination was erroneous, she has failed to meet her burden of establishing grounds for reversal. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)
DISPOSITION
The judgment is affirmed. Merchant is awarded his costs on appeal.
We concur:
EPSTEIN, P.J.
MANELLA, J.