Exhibit,Appendix: GOLDEN PACIFIC BANK, N.A. VS. BILLFLOAT, INC. ET AL

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BRUCE A. SCHEIDT, State Bar No. 155088 ELECTRONICALLY

bscheidt@kmtg.com FILED
CHRISTOPHER ONSTOTT, State Bar No. 225968 Superior Court of Cailfornia,
constott(@kmtg.com County of San Francisco
ERROL C. DAUIS, State Bar No. 279313 06/15/2016

edauis@kmig.com Clerk of the Court

KRONICK, MOSKOVITZ, TIEDEMANN & GIRARD Deputy Clerk
A Professional Corporation

400 Capitol Mall, 27" Floor

Sacramento, California 95814

Telephone: (916) 321-4500

Facsimile: (916) 321-4555

Attorneys for Plaintiff and Cross-Defendant
GOLDEN PACIFIC BANK, N.A.

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO

GOLDEN PACIFIC BANK, N.A., Case No, CGC-16-549804
Plaintiff, SUPPLEMENTAL APPENDIX OF
FEDERAL AND OUT-OF-STATE
v. AUTHORITIES IN SUPPORT OF

PLAINTIFF/CROSS-DEFENDANT'S
BILLFLOAT, INC., RYAN GILBERT, SEAN | MOTION TO CHANGE VENUE
O'MALLEY, and DOES 1-50, inclusive,

Defendants.
TT Judge: Hon. Harold E. Kahn
BILLFLOAT, INC. Date: June 22, 2016
Time: 9:30 a.m.
Cross-Complainant, Dept.: 302

v.

GOLDEN PACIFIC BANK, N.A., and ROES Case Transferred
1-50, from Sacramento County: — January 11, 2016

Cross-Defendants. Trial Date: None Set

 

1464210.1 14023:

 

 

   

APPENDIX OF FEDERAL AND OUT-OF-STATE AUTHORITIES IN SUPPORT OF
PLAINTIFF/CROSS-DEFENDANT'S MOTION TO CHANGE VENUE

SUPPLE)nN

Ww

 

 

In support of Plaintiff and Cross-Defendant GOLDEN PACIFIC BANK, N.A.'s ("Golden
Pacific") Motion to Change Venue, Golden Pacific hereby submits the following federal and out-
of-state authorities:

Federal Authorities:

Exhibit 1: Flying J. Inc. v. Pistachio, 2008 WL 906396 (E.D. Cal. 2008)

Exhibit 2: Samica Enterprises, LLC v. Mail Boxes Etc. USA, Inc., 2010 WL 807440
(C.D. Cal. 2010)

Out-of-State Authorities:

Exhibit 3: Excel Ins. Co. v. Brown, 406 So. 2d 534 (Fla. Dist. Ct. App. 1981)

Dated: June 15, 2016 KRONICK, MOSKOVITZ, TIEDEMANN & GIRARD
A Professional pee
—_ rs 2m

By: (hy Hole Li

Christopher Onstott
Attorneys for Plaintiff and Cross-Defendant
GOLDEN PACIFIC BANK, N.A.

 

 

 

1464210.1 14023-004 1
SUPPLEMENTAL APPENDIX OF FEDERAL AND OUT-OF-STATE AUTHORITIES IN SUPPORT OF
PLAINTIFF/CROSS-DEFENDANT'S MOTION TO CHANGE VENUEEXHIBIT 1Flying J, Inc. v. Pistacchio, Not Reported in F.Supp.2d (2008)

2008 WL 906396
Only the Westlaw citation is currently available.
United States District Court,
E.D. California.

FLYING J, INC., Plaintiff,
v.
Thomas PISTACCHIO, et al., Defendant.
No. CV-F-03-6706 OWW/GSA.
|

March 31, 2008.

Attorneys and Law Firms

Matthew S. Urbach, Manatt Phelps and Phillips LLP, Los
Angeles, CA, Steven Dale Megee, Kimble MacMichael
and Upton, Fresno, CA, for Plaintiff.

Daniel Patrick Leonard, Baker Keener and Nahra, Los
Angeles, CA, Nick Zinkin, Zinkin & Bruce, John P.
Kinsey, Sagaser, Jones & Helsley, William C. Hahesy,
Law Offices of William C. Hahesy, Fresno, CA, for
Defendant.

MEMORANDUM DECISION GRANTING
DEFENDANTS’ MOTIONS TO DISMISS AND
STRIKE SAC AS MOOT AND AS BARRED BY

COLLATERAL ESTOPPEL (Docs. 78 & 83) AND
DENYING AS MOOT DEFENDANTS’ MOTIONS TO
STRIKE AND TO DISMISS (Does. 72, 84 & 85)

OLIVER W. WANGER, District Judge.

*1 On December 1, 2006, Plaintiff Flying J, Inc. (“Flying
J°) filed a Second Amended Complaint for Damages
(“SAC*). Defendants are Thomas and Delores Pistacchio,
Central California Kenworth (“CCK”), John R. Lawson,
and Lawson Rock & Oil, Inc. (“Lawson Rock & Oil”).

Defendants respectively filed (1) motions to dismiss

pursuant to Rules 12(b)(1) and 12(b)(6), Federal Rules of

 

| Procedure; and (3) motions to strike pursuant to
California Code of Civil Procedure § 425.16
(Anti-SLAPP motions).'

Because of the Court’s schedule and the sheer length and
complexity of these motions, the Court heard oral

argument on November 5, 2007 solely on the issues of
mootness and collateral estoppel.

At the November 5, 2007 hearing, Flying J requested and
obtained leave to file a supplemental brief; Defendants
were given leave to reply. All supplemental briefing is
now complete.

A. LIMITATION OF ISSUES IN FLYING J'S
SUPPLEMENTAL BRIEF.

At the November 5, 2007 hearing, the following
statements were made:

MR. KATZ: It was our strongly held position that they
had to have vacated what happened in 2003. That was

. the issue. They had to have vacated before they
could have a clean hearing in 2004. We lost on that.
But that was the only way the 2003 was involved. The
Court did not have jurisdiction to consider the 2003
The statute of limitations had past, and all we could ask
for, and all we did ask for was with respect to the 2004,
and all that the Appellate Court decided was with
respect to the 2004. There’s nothing else.

MR. KATZ: We would like permission of the Court to
brief the statute of limitations on the mandamus
proceedings. Because the '03 was-we hadn’t looked at
that, ironically, and the '03 was something by the time
we got into the case where the statute of limitations had
passed. There’s simply-there was only one thing at
issue in the mandamus-there’s only one thing that could
have been at issue. There was only one thing that the
court had the power, the jurisdiction to decide, and so
we would ask for permission of the Court to brief the
Court on the statute of limitations for mandamus
proceeding.

MR. KATZ: Well, the request is simply whether we
can brief two questions that I had mentioned to Your
Honor.

MR. HAHESY: Well, I want to make sure what we’re
briefing on so that-

THE COURT: Well, we’re-

MR. HAHESY: I know one issue’s about the statute ofFlying J, Inc, v. Pistacchio, Not Reported in F.Supp.2d (2008)

limitations-

THE COURT: Here’s what | understand. We're
briefing the legal ability of the superior court to hear
the '03 conflict claims and whether or not it was in
excess of its jurisdiction if it did consider them as well
as the court of appeal then affirming and discussing the
‘03 claims. If there’s law out there, I would like to see it
because I’m not familiar with it.

MR. KATZ: And there’s a second issue, Your Honor,
too, that | mentioned. And that is whether the CTC in
‘03 could even go forward-

*2 THE COURT: Yes.

MR. KATZ:-in '03-

THE COURT: Yes.

MR. KATZ:-based on the conflict-
THE COURT: All right.

MR. KATZ:-of interest.

MR. HAHESY: I’m not sure I understand the second
issue, Your Honor-

THE COURT: Well, he’s saying there’s a jurisdictional
bar once a conflict exists, and | don’t know whether
anybody brought it up that Lawson had a conflict, that
in effect the Commission is disabled, it's got to stop
and determine the conflict, and see if the hearing can
go forward. Now, I don’t know that to be the law, but
it’s the law, then we need to know it.

MR. HAHESY: We have briefed, Your Honor, ad
nauseam in this case the conflict of interest issues
under the Political Reform Act, Government Code
Section 1090, the common law conflict of interest. You
know, this motion’s been pending for a year. I’m not
sure why this issue is now being presented-

MR. HAHESY: No, but this issue about the conflict of
interest ... this was front and center in their case and
they-

THE COURT; Well-

MR. HAHESY:-we’ve been briefing it-

THE COURT:-here’s the thing. Discretely, if we can

do it in-

You can do it in five pages?

MR. KATZ: And I think we're pinpointing two
important issues that came after a lengthy hearing-

THE COURT: All right.

MR. KATZ:-and | don’t think 15 pages is too much,
Your Honor.

THE COURT: We’re overwhelmed. I'm going to say
that it is. Do it in 10 pages. That's my final word.

Flying’s J’s supplemental brief (Doc. 166) exceeds the
scope of the leave granted by the Court. On pages
2:11-4:3 of Flying J's supplemental brief, Flying J
presents legal arguments concerning the effect of the
Court of Appeal’s “express refusal to consider conflict of
interest issues affecting the CTC’s 2002 and/or 2003
decisions.” On pages 4:4-7:22, Flying J presents
arguments concerning the inapplicability of collateral
estoppel to the Court of Appeal’s decision. On pages
7:24-10:20, Flying J presents arguments that Defendant
Lawson's participation in the 2002 and 2003 CTC
proceedings should have barred the CTC’s decisions even
if Defendant Lawson was not the deciding vote, thereby
making the 2004 CTC hearing unnecessary.

 

Defendants correctly object to those portions of Flying J’s
supplemental brief that address issues which Flying J was
not given leave to raise. Defendants request that these
portions of the supplemental brief be stricken or that
Defendants be given the opportunity to respond. Because
resolution of Defendants’ motions has been delayed by
repeated stipulations of the parties and, on one occasion,
the press of court business, the unauthorized portions of
Flying J’s supplemental brief are STRICKEN and will not
be considered.

B. BACKGROUND.

1. PRIOR PROCEEDINGS BEFORE JUDGE COYLE.

This action commenced on November 26, 2003. By Order
filed on May 24, 2004, Judge Coyle dismissed Flying J’s
First Amended Complaint against Defendants Thomas
and Delores Pistacchio and Central California Kenworth
(Pistachio Defendants) for lack of subject matter
jurisdiction. (Doc. 32). Judge Coyle ruled that Flying J’s
claims against the Pistacchio Defendants were moot
because the California Transportation Commission (CTC)Flying J, Inc. v. Pistachio, Not Reported in F.Supp.2d (2008)

subsequently independently rejected the real property
conveyance:

*3 Plaintiff can no longer argue that its injury was
caused by Defendants’ alleged interference because the
CTC independently rejected the proposed conveyance.
Plaintiff can no longer prove that Defendants’ actions
led the CTC to reject the proposed conveyance.
Plaintiff no longer satisfies the causation element.

Plaintiff complains that the CTC’s reconsideration of
the proposal was flawed and that Plaintiff remains
injured to the extent that it has not obtained possession
of the property. Plaintiff's allegations of CTC error do
not persuade the court that it has jurisdiction. Plaintiff
does not allege that the flaws in the reconveyance are
the result of Defendants’ actions. In order to maintain a
suit against the Pistacchios, Plaintiff must allege that
the Pistacchios caused its injury. At the present time,
Plaintiff alleges that its current injury was caused by
the CTC’s mistaken legal analysis of the proposal, not
by the Pistacchios. Plaintiff is rightfully challenging the
CTC’s reconsideration of its proposal, and thereby
seeking redress for its injury, in state court.

Flying J appealed Judge Coyle’s ruling. The Ninth Circuit
reversed, limiting its ruling to granting Flying J leave to
amend:

Flying J argues that the February
2004 hearing did not sever the
connection between  Pistacchio’s
conduct and loss of the parcel, and
did not remedy the harm it had
suffered. Pistacchio contends the
opposite, that the February 2004
decision cut off any and all
damages. However, we need not
decide whether on the basis of the
FAC either side’s position, or that
of the district court, is correct, for it
is clear to us that leave to amend
should have been granted ... We
express no opinion on how new
allegations will play out, or
whether it is necessary to reach
them in order to decide the
underlying case, but we cannot say
at this stage of the proceedings that
amendment would be futile. Flying
J suggested ... that additional facts
could be averred which would
clearly show that the February

2004 decision was not independent
and that it suffered compensable
injury on account of Pistacchio’s
allegedly wrongful conduct,
Therefore, it should have the
opportunity to amend.

Thereafter, the SAC was filed adding the Lawson
Defendants.

2. ALLEGATIONS OF SAC.
The “Factual Background” in the SAC alleges in pertinent
part as follows:

25. In or around January 1997, Flying J acquired an
18.8 acre parcel of land, located adjacent to State Route
14 in the Mojave Area of Kern County, California (the
“Flying J Property’).

26. On August 26, 1999, Caltrans filed an action for
eminent domain against Flying J (the ‘Eminent Domain
Action’) seeking to condemn 4.43 acres along the
southeast border of the Flying J Property (the
“4,.43-Acre Parcel’) for the purposes of a proposed
highway expansion.

27. Throughout 2001, Flying J and Caltrans engaged in
negotiations concerning the 4.43-Acre Parcel and the
Eminent Domain Action. These negotiations resulted in
the creation of a December 13, 2001 Right-of-Way
Contract (‘Settlement Agreement’) between Caltrans
and Flying J wherein:

*4 a. Caltrans agreed to dismiss, and Flying J
consented to the dismissal of, the Eminent Domain
Action which, on information and belief, was worth
in excess of $200,000.00 to Caltrans;

b. Flying J agreed to convey to Caltrans the
4.43-Acre Parcel in exchange for $14,800.00, and;

c. Caltrans agreed to convey to Flying J, upon the
approval of the California Transportation
Commission (‘CTC’), an approximately 20-acre
parcel of State-owned land immediately adjacent to
the Flying J Property (the ‘20-Acre Parcel’) in
exchange for Flying J’s 4.43-Acre Parcel and
approximately $87,954.00 in cash.

28. The 20-Acre Parcel, which was part of a larger tract
of land owned by Caltrans, was specifically carved out
and made available to Flying J as a result of the
Settlement Agreement.Flying J, Inc. v. Pistacchio, Not Reported in F.Supp.2d (2008)

29. The acquisition of the 20-Acre Parcel was a
material inducement for Flying J to enter into the
Settlement Agreement.

30. Flying J has performed all conditions, covenants
and promises required on its part to be performed in
accordance with the terms and conditions of the
Settlement Agreement, except for those terms and
conditions that have been excused, prevented, waived
and/or released.

31. Throughout the negotiations leading up to the
Settlement Agreement, Caltrans repeatedly stated and
gave assurances to Flying J that Caltrans was willing
and able to convey the 20-Acre Parcel to Flying J and
that CTC approval of the conveyance was a mere
formality and would occur without any debate or
discussion.

32. The CTC consists of nine members appointed by
the Governor, all appointed to staggered four-year
terms, and two non-voting ex-officio members, one
from the State Senate and one from the State Assembly.

33. Flying J ... alleges that from November 8, 2000, at
least through February 26, 2003, Lawson was an acting
Commissioner of the CTC.

34. Flying J ... alleges that Pistacchio has maintained a
close personal and business relationship with Lawson
for over twenty-five years, that they meet socially on a
monthly, if not weekly basis, and that their children are
good friends.

35. Flying J ... alleges that at all relevant times, Lawson
knew that Pistacchio had a running feud with Flying J.
Flying J ... alleges that Lawson tried to help Pistacchio
settle a previous lawsuit with Flying J (a lawsuit that
resulted in a $7 million verdict against Pistachio) by
putting Pistacchio in touch with a mutual acquaintance
who knew a Flying J principal.

36. Flying J ... alleges that on at least a dozen occasions
prior to the CTC’s consideration of the conveyance of
the 20-Acre Parcel to Flying J, Pistacchio made
slanderous and libelous statements about Flying J to
Commissioner Lawson. Flying J ... alleges that Lawson
is the owner of Lawson Rock & Oil ... [and] that
Lawson, Lawson Rock & Oil and/or businesses
controlled by Lawson, utilize the types of trucks,
trailers and other heavy equipment sold by CCK and
that Lawson, Lawson Rock & Oil and/or businesses
controlled by Lawson have an ongoing business
relationship with Pistacchio, CCK and/or businesses
controlled by Pistacchio for the purchasing and leasing

of such trucks, trailers and/or equipment. Flying J ...
alleges that Lawson, Lawson Rock & Oil and/or
businesses controlled by Lawson have personally
negotiated and regularly purchased from Pistacchio
and/or businesses controlled = by __Pistacchio
approximately 20 large semi-trucks for Lawson’s
various trucking businesses for anywhere between
$70,000 and $85,000-even though the list price on
these trucks is somewhere in the range of $160,000 and
that over the past approximately five years, Lawson,
Lawson Rock & Oil and/or businesses controlled by
Lawson have been the beneficiary of retail price breaks
exceeding one million dollars from Defendant Thomas
Pistacchio’s truck franchise, CCK.

*5 37. Flying J... alleges that CCK’s Bakersfield,
California offices are located on property owned by
Lawson and leased to CCK.

38. Flying J ... alleges that Pistacchio learned of the
pending conveyance of the 20-Acre Parcel to Flying J
several months prior to the CTC’s consideration of the
proposed conveyance.

 

39. Flying J ... alleges that ... Pistachio expressed to
Lawson his desire to obtain the 20-Acre Parcel.

40. Flying J ... alleges that upon learning of the pending
conveyance of the 20-Acre Parcel to Flying J,
Pistacchio, at the request of Lawson, unlawfully and
fraudulently entered upon the 20-Acre Parcel to survey
and appraise the property.

41. Flying J alleges that Pistacchio used the
information obtained during his unlawful entry upon
the 20-Acre Parcel to prepare a secret bid for the
20-Acre Parcel, which he gave to Lawson, to induce
Caltrans and the CTC to cause the rejection of the
conveyance of the 20-Acre Parcel to Flying J.

42. Flying J ... alleges that through an express and/or
implied agreement by and among Defendants, Lawson,
Lawson Rock & Oil and/or businesses controlled by
Lawson received significant financial _ benefits
(‘Benefits’) from Pistacchio and/or _ businesses
controlled by Pistachio in the form of either political
contributions, surreptitious kick-backs on goods and
services purchased by Lawson, Lawson Rock & Oil
and/or businesses controlled by Lawson from CCK, or
other financial benefits. As a quid pro quo for these
surreptitious Benefits, Defendants embarked upon a
secret conspiracy to deprive Flying J of the 20-Acre
Parcel in a manner that would inure to the direct and
indirect benefit of Defendants.Flying J, Inc. v. Pistacchio, Not Reported in F.Supp.2d (2008)

43. The conveyance of the 20-Acre Parcel from
Caltrans to Flying J was initially placed on the consent
agenda for the CTC’s October 3, 2002, meeting. Even
though every other consent item on the October 3,
2002, agenda was approved without discussion,
then-CTC Commissioner Lawson, in furtherance of his
conspiracy with Defendants, unilaterally initiated
discussion and criticism over the conveyance of the
20-Acre Parcel to Flying J. This criticism was baseless
in that it was based on the allegedly one-sidedness of
the transaction favoring Flying J but did not take into
account the settlement value of Caltrans’ Eminent
Domain Action against Flying J.

 

 

44. Although it was clear from the CTC’s October 2002
staff report that Caltrans had worked out a settlement of
the Eminent Domain Action, and the damages and
exposure relating thereto, resulting in the proposed
conveyance of the 20-Acre Parcel to Flying J, Lawson
misleadingly characterized the settlement arrangement
aS a transaction requiring the State to sell 20 acres for
$55,000.00. This characterization wholly ignored the
substantial severance damages that were a material
component of the settlement. As a direct result of
Lawson's illegal actions, the Commission pulled the
conveyance from the CTC’s consent agenda.

*6 45. The conveyance of the 20-Acre Parcel to Flying
J was not agendized for CTC consideration again until
the CTC’s February 27, 2003, meeting. The
conveyance was specifically not agendized for the
CTC’s November 2002 meeting because Commissioner
Lawson could not be there. Flying J... alleges
Defendants orchestrated a push to strong-arm the staff
at Caltrans and undermine their support for the
conveyance, making it painfully clear that he would not
allow the conveyance of the 20-Acre Parcel pursuant to
the terms of the Settlement Agreement under any
circumstances. This strong-arm campaign worked in
that Caltrans ultimately agreed to pretend to support the
conveyance while actively working against it.

46. Flying J ... alleges that at a February 26, 2003,
dinner meeting of CTC Commissioners (the evening
before the publicly noticed February 27, 2003,
meeting), Commissioner Lawson circulated a written
document, prepared by Pistacchio, among the other
Commissioners that purported to be a bid, proposal or
offer to purchase the 20-Acre Parcel for $250,000.00.

47. The next morning, at the February 27, 2003, CTC
meeting, Commissioner Lawson made no mention
publicly of the fact that he had a written proposal from
Pistacchio to purchase the 20-Acre Parcel for
$250,000.00 or that he had shared such a written

proposal with other CTC Commissioners the evening
before, thus enabling him to ensure that the outcome of
the hearing would be predetermined. Further, during
the February 27, 2003, CTC meeting Lawson did not
publicly reveal that he had informed Pistacchio of the
pending sale of the 20-Acre Parcel to Flying J months
before; that Pistacchio was and is a close friend; that he
asked Pistacchio to provide him with an estimate on the
value of the 20-Acre Parcel; that Pistacchio had visited
the 20-Acre Parcel in January 2003, that Pistacchio
gained access to the site in January 2003, by informing
a foreman that he was there at the request of CTC
Commissioner Lawson; that Lawson, Lawson Rock &
Oil and/or businesses controlled by Lawson purchase
and lease trucks and equipment from Pistacchio, CCK
and/or businesses controlled by Pistacchio at a
significant discount; that Lawson has been the
beneficiary of retail price breaks exceeding one million
dollars from Defendant Thomas Pistacchio’s truck
franschise, CCK, or; that CCK’s Bakersfield offices are
located on property owned by Lawson and leased to
CCK.

48. Despite the fact that consent items are routinely
approved without inquiry or debate, that no other
Caltrans excess land disposition was rejected by the
CTC during Lawson’s tenure, and despite statements
and assurances from Caltrans that CTC approval of the
conveyance of the 20-Acre Parcel to Flying J would be
a mere formality, on February 27, 2003, the CTC, upon
Lawson's motion, ordered the 20-Acre Parcel sold at
public auction.

49. The CTC, however, is authorized only to accept or
reject proposed dispositions of Caltrans’ excess lands.
The CTC has no authority to order Caltrans to dispose
of excess land or to make any orders regarding the
method of such disposition-ie., direct sale, public
auction, exchange, ete. The CTC has admitted that its
February 27, 2003 order to dispose of the 20-Acre
Parcel by public auction exceeded the CTC’s authority.

*7 50. The auction of the 20-Acre Parcel took place on
May 20, 2003. Unsurprisingly, Pistacchio was the
successful bidder and obtained an option to purchase
the 20-Acre Parcel for a purchase price of $377,000.00.
The contract for the option to purchase the 20-Acre
Parcel, however, was executed in the name of
Pistacchio’s wife, Delores Pistacchio.

51. The CTC’s rejection of the conveyance of the
20-Acre Parcel to Flying J and the decision to sell the
20-Acre Parcel by public auction are the direct and
proximate result of Defendants’ wrongful conduct, as
alleged herein. But for the conspiracy betweenFlying J, Inc. v. Pistacchio, Not Reported in F.Supp.2d (2008)

Defendants, as alleged herein, the CTC would have
approved the conveyance of the 20-Acre Parcel to
Flying J in February 2003 and the auction of the
20-Acre Parcel would never have occurred.

  

Defendants’ wrongful and improper use and
manipulation of their personal and _ business
relationships and their manipulation and influence on
the CTC and Caltrans to deprive Flying J of the
20-Acre Parcel, not only constitutes actionable slander
and/or libel, bribery and trespass, but also a conspiracy
to commit violations of California’s Political Reform
Act (Government Code sections 81000-91014),
California Government Code section 1090 and
California’s common law doctrine against conflict of
interest, as alleged herein.

 

53. Upon learning of the existence and scope of the
relationship among Defendants, Lawson’s resulting
conflict of interest and Defendants’ conspiracy to
sabotage the CTC approval process for the conveyance
of the 20-Acre Parcel to Flying J, Flying J requested
the CTC to remedy the injustice that had occurred as a
result of the conduct described above.

54. On January 23, 2004, Flying J was advised that the
CTC would consider the following two issues at the
CTC’s February 26, 2004 agenda: (1) Should the
Commission reconsider the proposal to convey the
20-Acre Parcel to Flying J?, and (2) Assuming the first
question is answered in the affirmative, should the
Commission approve or disapprove the proposed
conveyance to Flying J?

55. On February 17, 2004, Flying J submitted a letter to
the CTC providing a detailed explanation of the
relevant facts and law necessitating that the CTC
reconsider and invalidate its decision of February 2003,
based on Lawson’s blatant conflict of interest and other
wrongful conduct of Lawson and Defendants which
rendered the CTC’s February 2003, disapproval of the
conveyance void from its inception.

56. At the February 26, 2004, hearing, the CTC refused
to consider, address or remedy the conflict of interest
and illegal activities described above or make any
determination whatsoever regarding the impropriety of
any of its previous actions concerning the proposed
conveyance to Flying J. Without invalidating its
February 2003, decision, which the CTC has admitted
exceeded its authority, or otherwise curing the blatant
improprieties surrounding such decision, the CTC
again voted to reject the proposed conveyance of the
20-Acre Parcel to Flying J on the alleged grounds that
the proposed conveyance is in conflict with the terms,

standards and conditions established by the
Commission in its procedures for sale of excess
property under CTC Resolution G-98-22 and on the
grounds that the terms of the Settlement Agreement
were based on an allegedly flawed appraisal.

*8 57. However, CTC Resolution G-98-22 does not
require that the 20-Acre Parcel be disposed of by public
auction. In fact, Resolution G-98-22 expressly states
that excess property (such as the 20-Acre Parcel) may
be exchanged for other land required for transportation
purposes (such as the 4.43-Acre Parcel). The sole basis
for the CTC’s purported conclusion that the
conveyance of the 20-Acre Parcel to Flying J was in
conflict with the terms, standards and conditions
established by the CTC was the personal opinion of a
CTC deputy director who had no prior experience with
Resolution G-98-22 or other Caltrans property
exchanges and not qualified to render a legal opinion.

58. Further, there was no documentary or testimonial
evidence presented to the CTC in support of its
conclusion that the appraisal of the 20-Acre Parcel was
flawed.

59. The CTC’s February 2004 alleged reconsideration
of the conveyance of the 20-Acre Parcel to Flying J
was not an independent review or reconsideration of
the CTC’s February 2003 decision. Rather the February
2004 ‘reconsideration’ was another by-product of
Lawson’s influence and improper conduct on the CTC
approval process, as alleged herein.

60. Six of the nine CTC Commissioners who were
exposed to Lawson’s improper conduct and
participated in the u/tra vires order that the 20-Acre
Parcel be sold at public auction were still sitting
Commissioners in February 2004 and were not acting
independently when they voted to re-approve the
unauthorized decision of February 2003. Lawson’s
continuing influence over these commissioners is
reflected by the fact that the CTC expressly refused to
consider whether Lawson had a conflict of interest, or
whether the CTC’s prior order was improper.

61. Despite specific questions regarding the value of
the 20-Acre Parcel raised in a CTC Staff Report
prepared in connection with the CTC February 2004
hearing, not a single Commissioner asked a single
substantive question during the ‘reconsideration’
hearing.

62. By refusing to invalidate its decision of February
2003, or even consider the improprieties associated
with such decision, the CTC’s February 26, 2004,Flying J, Inc. v. Pistachio, Not Reported in F.Supp.2d (2008)

decision was nothing more that a meaningless
after-the-fact rationalization of its previous flawed
decisions and in no way an independent review or
reconsideration. Had the CTC considered and
acknowledged the blatant improprieties of its actions of
October 2002, and February 2003, it would have had
no choice but to invalidate such actions and either order
that the property be sold by a new public auction or that
the 20-Acre Parcel be conveyed to Flying J, as intended
in the Settlement Agreement.

63. Because the CTC refused to invalidate its
ultra-vires decision of February 2003 and failed to
conduct an independent review of the February 2003
decision or the alleged improprieties relating thereto,
the CTC’s February 2004 ‘reconsideration’ is still
infected by Defendants’ wrongful conduct. As a result,
Defendants’ maintain the ill-gotten option to purchase
the 20-Acre Parcel and Flying J continues to be
damaged by the conduct alleged herein. Indeed, but for
Defendants’ wrongful conduct there never would have
been a February 2003 order to auction the 20-Acre
Property [sic] or a February 2004 reconsideration.
Accordingly, the CTC’s actions of February 26, 2004,
have had no effect on any of the relief sought herein.

*9 64. The CTC has never been asked to consider, has
never considered, and lacks the authority to render any
decision with respect to, Defendants’ wrongful and
illegal conduct, as alleged herein, or the damages to
Flying J resulting therefrom. Nor has the CTC ever
considered the propriety of Defendants’ acquisition and
retention of the rights to the 20-Acre Parcel or any legal
obligation for Defendants to convey such rights to
Flying J.

The SAC alleges the following Claims for Relief:

1. First Claim for Relief-intentional interference with
the Settlement Agreement between Flying J and
Caltrans by all Defendants;

2. Second Claim for Relief-intentional interference

with prospective economic advantage-against all
Defendants;

3. Third Claim for Relief-violation of California
Business and Professions Code § 17200-against all
Defendants;

4. Fourth Claim for Relief-imposition of constructive
trust on Pistacchio Defendants and CCK;

5, Fifth Claim for Relief-conspiracy to intentionally
interfere with contract-against all Defendants;

6. Sixth Claim for Relief-conspiracy to intentionally
interfere with prospective economic advantage-against
all Defendants.

The SAC prays for compensatory and punitive damages,
for an order prohibiting Defendants from selling or
otherwise disposing of the 20-Acre Parcel, for an order
that Defendants hold an interest in the 20-Acre Parcel in
trust for Flying J, and for an order requiring Defendants to
assign or convey the option to purchase the 20-Acre
Parcel and any tight, title and interest in the 20-Acre
Parcel to Flying J.

3. PROCEEDINGS IN STATE COURT RE FLYING J'S
PETITION FOR WRIT OF MANDATE.

On March 24, 2006, Flying J filed a petition for writ of
mandamus in the Kern County Superior Court, Case No.
S-1500-253208, SPC, against Caltrans and the CTC to in
substance set aside the 2003 auction of the real property
and the 2004 hearing before the CTC and to require
conveyance of the 20 Acre Parcel to Flying J. Following
the submission of evidence and arguments by the parties,
Judge Sidney P. Chapin issued a Statement of Decision on
October 17, 2005, denying the petition. Judge Chapin’s
Statement of Decision ruled in pertinent part:

 

The claim made for administrative mandamus (first
cause of action) has been previously disposed of and is
not part of this ruling. this ruling pertains to the
remaining causes of action.

Evidence had been introduced by the parties prior to
the hearing. At the hearing, the cause was argued and
submitted for decision. The court, having considered
the evidence and heard the arguments of counsel and
being fully advised, issued the following statement of
decision:

This case focuses on the propriety of actions by the
California Transportation Commission (“Commission”)
and the Department of Transportation (“Caltrans”) with
regard to 20 acres of state-owned land in Kern County.
According to the certified Administrative Record, the
state-owned land consists of two adjoining parcels. (AR
Tab Q.) One of the two state-owned parcels adjoins
land owned by Petitioner Flying J, Inc., and according
to Flying J is “fully developable.” (AR Tab 1, p. 3, last
paragraph.) The case arises due to the Commission’s
rejection of a proposal that Caltrans convey the 20-acre

property to Flying J.

*10 The legal presumption, pursuant to Evidence Code
§ 664 that the California Transportation CommissionFlying J, inc. v. Pistachio, Not Reported in F.Supp.2d (2008)

regularly performed its official duties, imposes on the
Petitioner the burden to establish the Commission’s
actions were arbitrary, capricious, unlawful, contrary to
public policy or procedurally unfair.

Petitioner/Plaintiff fails to carry its burden.

In amending Streets and Highways Code § 118, the
Legislature intended that the Commission exercise
independent discretionary oversight over conveyances
of excess land.

Although this decision discusses whether the
Commission properly exercised its discretion in acting
on the proposed conveyance, and whether former
Commissioner John J. Lawson had a conflict of interest
affecting the validity of the Commission’s actions,
there is a separate, independent basis far denying
Flying J’s petition. The proposed conveyance did not
comply with Streets and Highways code § 118 or with
the guidelines adopted by the Commission pursuant to
that section, and as a consequence the Commission did
not have the authority to approve it.

This result follows regardless which of two conceptions
of the nature of the proposed conveyance are assumed
to be correct. The Commission contends that the
conveyance of the 20-acre property was in exchange
for $55,000. Flying J contends that the conveyance of
the 20-acre property was part of an exchange of
properties, in which Caltrans would be receiving, as
part of the consideration for the 20-acre property, 4.5
acres of Flying J-owned property (part of an 18,8-acre
parcel adjoining the 20-acre state owned property)
needed by Caltrans for highway purposes.

At least one of the two state-owned parcels which make
up the 20 acres, and the parcel which was adjacent to
the Flying J owned parcel, was described by Flying J’s
representative as being “fully developable.”
(Administrative Record Tab J, p. 3, last par.) If so, and
if the proposed conveyance consisted of a sale of the
20-acres for $55,000 cash, as the Commission
contends, then the property should have been sold on a
competitive basis as required by Streets and Highways
Code § 118 and the guidelines adopted thereto by the
Commission.

If, on the other hand, as Flying J has argued, the
proposed conveyance consisted of an exchange of the
20-acres of State-owned land for flying J’s 4.5-acre
parcel (valued according to the contract between Flying
J and Caltrans at $14,800) and cash in the amount of
$40,200, Streets and Highways Code § 118 and the
guidelines adopted pursuant thereto do not allow that

type of property exchange. Streets and Highways Code
§ 118, subdivision (c), allows state-owned excess
highway property to be exchanged, “either as whole or
part consideration, for any other real property or
interest therein needed for state highway purposes.”
This provision means that Caltrans can dispose of
State-owned excess highway property on a
non-competitive basis in exchange for consideration the
major portion of which is cash. Based on the values set
forth in the contract between Flying J and Caltrans, the
monetary portion of the consideration for the 20-acre
property was 73%, making the acquisition of land by
the state a secondary part of the consideration for the
sale of two parcels of state-owned land to a private
party on a non-competitive basis.

*11 Whether the proposed conveyance of the 20-acres
of state-owned land is viewed as part of an exchange of
state-owned land for privately owned land and
monetary consideration, as described by Flying J, or as
simply a sale of the 20-acre property in exchange for
cash, as the Commission contends, it was not a
conveyance allowable under the applicable statutes and
guidelines. The Commission did not have authority to
approve such a conveyance, and its disapproval of the
proposed conveyance was not an abuse of discretion.
However, even if the Commission otherwise had the
authority to approve a conveyance of the property, it
was within its discretion to disapprove it for other
reasons.

The first Commission meeting at which the subject of
the proposed conveyance of the 20 acres was brought
up was the October 2002 meeting. Based on the
memorandum prepared by the Department of
Transportation, the proposed transaction appeared to
involve an exchange of parcels valued at $55,000. (AR
Tab F, p. 2.) Although it appears the item had been
placed on the consent agenda, it was brought up for
discussion. Former Commissioner John Lawson, as
well as several other Commissioners, participated in the
discussion which involved questions concerning the
value of the 20 acres, its location, the nature of the
transaction, and the nature of any property to be
received by Caltrans from Flying J. Caltrans staff was
unable to respond to all of the questions but offered to
provide more information at a later time. During the
discussion, statements were made by a Caltrans’
representative that suggested that the proposed
transaction was something other than the exchange of
two parcels valued at $55,000. The Chairperson of the
Commission then ordered that the matter be withdrawn
from the consent calendar.

To the extent that Mr. Lawson was involved inFlying J, Inc, v. Pistacchio, Not Reported in F.Supp.2d (2008)

removing the item from the October 2002 consent
calendar, he was not precluded from doing so by any
conflict of interest. Flying J alleges that Mr. Lawson
had a conflict of interest that should have prevented
him from being so involved based on a financial and
social relationship he allegedly had with Thomas
Pistachio, the person who later submitted the highest
bid at the May 2003 auction of the property. However,
according to Flying J’s own allegations, Mr. Pistacchio
first learned of the existence of the property from Mr.
Lawson in December 2002 or January 2003. (Flying J’s
Opening Brief on the Merits, p. 8.) Thus, at the October
2002 meeting, Mr. Lawson could not possibly have
been aware of any interest in the property on the part of
Mr. Pistacchio.

Flying J also alleges that Mr. Pistachio had often
complained to Mr. Lawson about Flying J’s treatment of
him in an unrelated legal dispute between Flying J and
Mr. Pistacchio, and had sought his intercession in an
effort to resolve the dispute, and contends that Mr.
Lawson was thereby prejudiced against Flying J at the
time the proposed conveyance was brought before the
Commission at the October 2002 meeting. However, there
is no evidence that any such complaints by Mr. Pistacchio
prejudiced Mr. Lawson with regard to Flying J.
Moreover, members of legislative and quasi-legislative
bodies are not precluded from acting on matters which
may come before them because they may have heard

 

something which pertains to the matter. (See, e.g., City of

Fairfield
Cal.Rptr.

Superior Court (1975) 14 Cal.3d 768, 122
43, 537 P.2d 375.)

 

 

*12 Furthermore, the evidence on which Flying J’s
allegations of a conflict are based is inadmissible. In
addition, the Court notes that removing an item from a
consent calendar subjects it to public discussion and
debate.

The proposed conveyance of the 20 acres was
tentatively scheduled for the November 2002 meeting.
However, the item was removed from the agenda prior
to the meeting by the Executive Director of the
Commission based on her having been informed that
Mr. Lawson would be absent from that meeting due to
medical reasons. She removed the item from the
November 2002 on her own initiative. She was not
asked to do so by Caltrans, by Mr. Lawson, or by
anyone acting on Mr. Lawson’s behalf. The removal of
the item was not the product of any conflict of interest,
does not establish the existence of any conflict of
interest, and did not constitute procedural abuse by the
Commission.

At the February 27, 2003, meeting of the Commission,

The Commission properly rejected the proposed
conveyance. In determining whether an agency
decision was within its discretion, the test is whether
substantial information supported the decision. Western
States Petroleum Association v. Air Resources Board
(1995) 9 Cal.4th 559, 565, 574, 38 Cal.Rptr.2d 139,
888 P.2d 1268. There was substantial information
before the Commission to support the Commission’s
rejection of the proposed conveyance.

Caltrans submitted a memorandum to the Commission.
(AR, Tab H.) Among other things, the Caltrans
memorandum made reference to an appraised value for
the 20 acres of $55,000 (AR Tab H, p. 1), described the
payment which the state would receive for the 20 acres
as consisting of $40,200 cash and land valued at
$14,800. (AR Tab H, p. 2.) The memorandum included
a map which showed that the 20 acres actually
consisted of two adjoining parcels. (AR Tab H, last
page.) The memorandum stated that Flying J°s property
adjoined the 20 acre property, and that the 20 acres
were located “adjacent to State Route 14, in Kern
County near the new alignment of State Route 58
(Mojave Bypass)....” (AR Tab H, p. 2.)

The Caltrans memorandum also stated that the
appraised value of the 20 acres “was based on existing
sales in the vicinity but excluded Flying J’s purchase of
their property from consideration on the basis the sales
price was not supported by market data.” Immediately
following this statement, the memorandum contained
the following:

“The Department [i.e., Caltrans]
is aware of a possible perception
of a financial windfall to the
buyer based on the perceived
speculative trends after
completion of the  State’s
highway project.”

(AR Tab H, p. 3; emphasis added.)

Following this statement the memorandum noted that
Caltrans had attempted to renegotiate its agreement
with Flying J so as to exchange equally sized parcels
which would have represented like value and which
would “preserve the before functional utility of their
[i.e., Flying J’s] parcel,” but that Flying J had deferred
the offer pending the Commission’s action. (AR Tab H,
p.3.)

*13 Steve Ikeda, Caltrans spokesman, presented the
item to the Commission. He repeated the statement in
the Caltrans memorandum concerning the “possibleFlying J, Inc. v. Pistacchio, Not Reported in F.Supp.2d (2008)

perception of an immediate windfall to the buyer” and
referred to Caltrans’ unsuccessful attempt “to
renegotiate with Flying J, recognizing the perception.”
(AR Tab J, p. 1.) Flying J’s representative addressed
the Commission but did not disagree with any of
Caltrans’ assertions.

In light of the discussions and the information
presented to the Commission, including those at the
October 2002 meeting, and to the extent that the
Commission had the discretion to approve or to
disapprove the proposed conveyance, it was not an
abuse of the Commission’s discretion to disapprove the
proposed conveyance.

The Commission's February 27, 2003, rejection of the
proposed conveyance took the form of the adoption of
a motion to put the property “out to bid.” Streets and
Highways Code § 118 gives the Commission the
authority to reject a proposed conveyance. However,
the Commission does not have the direct authority to
order Caltrans to sell property at auction. Nonetheless,
it is undisputed that the adoption of the motion
constituted a rejection of the proposed conveyance to
Flying J. Flying J so alleges in paragraph 29 of its
Petition (Pct., 8:26). Following the Commission’s
rejection of the proposed conveyance, the
Commission’s staff advised Caltrans that it could still
negotiate an exchange of property with Flying J.
However, Flying J. refused to engage in such
negotiations. Upon Flying J’s refusal, Caltrans was
under a statutory duty to dispose of the excess property,
“to the greatest extent possible,” through a competitive
sale pursuant to Streets and Highways code §§ 118 and
118.6, and the guidelines adopted pursuant to § 118.
Caltrans arranged the auction which occurred in May
2003 and in which several bidders, including Flying J,
submitted bids for the 20-acre property in excess of
$300,000.

Flying J contends that John Lawson had a conflict of
interest at the time of the February 27, 2003, meeting,
predicated on his relationship with Thomas Pistacchio.
This contention is based on two things: (1) the
allegation that Pistacchio had complained to Lawson
about how Flying J had treated Pistachio in unrelated
litigation, and (2) the alleged financial relationship
between Lawson and Pistacchio. However, there is no
admissible evidence showing any such conflict of
interest on the part of Lawson.

Putting aside its inadmissibility, the evidence offered
by Flying J still does not compel the conclusion that
Lawson had a conflict of interest. First, the fact that
Lawson may have heard complaints by Pistacchio

concerning Flying J and its treatment of Pistacchio in
litigation brought by Flying J against Pistacchio
(unrelated to the instant litigation) does not establish
that Lawson was precluded from acting as a member of
a quasi-legistative body with regard to a decision which
might affect Flying J. Legislators hear many things,
some negative, some positive, concerning persons and
entities who may be affected by decisions made by the
bodies on which those legislators serve. It does not
follow that they become prejudiced for or against such
persons or entities. Moreover, in the instant proceeding,
there has been no evidence offered to show that
Lawson became prejudiced against Flying J as a result
of whatever he may have heard from Pistachio.

 

*14 First, the evidence offered by Flying J does not
show that Mr. Lawson’s participation would have “a
reasonably foreseeable material financial effect” on one
or more of Lawson’s economic interests.

Second, the effect of the Commission’s February 2003
decision was to disapprove the proposed conveyance to
Flying J. However, Flying J and Caltrans could still
have negotiated a proper exchange. It was Flying J’s
refusal to renegotiate that opened the way to the
auction; the auction was not an inevitable consequence
of the Commission’s February 2003 decision.

Third, even if Lawson knew or believed that the
February 2003 decision would result in an auction, the
evidence does not support the assertion that he knew
that Pistacchio would participate in the auction. The
evidence offered by Flying J at most suggests that
Pistacchio told Lawson that “he might” bid on the
property if it were available.

Fourth, even if Lawson is presumed to have known that
Pistacchio would bid on the property if there were an
auction, there was no way for Lawson to know that
Pistacchio would be the successful bidder at such a
public, competitive auction.

Fifth, even if it is presumed that Lawson knew that
Pistacchio would be the successful bidder, the evidence
offered by Flying J does not establish that there would
be a “material” financial affect on any of Lawson’s
economic interests. According to Flying J’s evidence,
Lawson had interests in certain business entities.
However, the evidence does not show with sufficient
certainty, clarity, or detail the extent of Pistacchio’s
ownership in those entities, nor does it show the other
information on which an analysis could be made with
regard to the materiality standards set forth in
applicable law and regulation.Flying J, inc. v. Pistacchio, Not Reported in F.Supp.2d (2008)

Even if it is assumed that Lawson had a conflict of
interest which should have precluded his participation
at the February 2003 meeting, the proper remedy would
depend on whether the Commission would have
reached a different decision in the absence of Lawson’s
participation or whether Lawson's vote was essential to
the adoption of the decision. See, e.g., Downey Cares v.
Downey Community Dev. Comm. (1987) 196
Cal.App.3d 983, 989, 242 Cal.Rptr. 272. The
Administrative Record shows that the Commission’s
decision at the February 2003 meeting was adopted on
a vote of seven to one. Even if Lawson’s vote (one of
the seven) had been excluded from the total, there
would still have been sufficient votes to adopt the
decision. Moreover, there is no evidence of any kind to
support a finding that a different decision would have
been reached absent Lawson’s participation. See
Government Code § 91003, subdivision (b).

 

 

Even if it were assumed that Lawson’s participation
somehow affected the essence of the Commission’s
February 2003 decision, and assuming that the
Commission had not on its own initiative, reconsidered
the matter, the remedy would have been to require the
Commission to reconsider the decision to disapprove
the proposed conveyance without the participation of
Lawson. See, ¢.g., Clark v. City of Hermosa Beach
(1996) 48 Cal. App.4th 1152, 56 Cal.Rptr.2d 223. The
Administrative Record, however, shows that the
Commission did decide to reconsider the disapproval of
the proposed conveyance, without judicial compulsion,
and following a request by Flying J

*15 Flying J contends that there occurred a violation of
the Open Meeting Act in connection with the
Commission’s February 2003 meeting, or at the dinner
which occurred the evening before the meeting. The
Court does not find a violation of the Open