Motion for Leave in SYNERGY PROJECT MANAGEMENT, INC. VS. CITY AND COUNTY OF SAN FRANCISCO| Trellis.Law

On July 10, 2017 a Hearing was filed involving a dispute between City And County Of San Francisco, City And County Of San Francisco (Consolidated, Ghlotti Bros., Inc., A California Corporation, Synergy Project Management, Inc., and Breed, London, City And County Of San Francisco, Does 1-100, Does 2-100, Et Al., Ghilotti Bros., Inc., Nuru, Mohammed, San Francisco Department Of Public Works, San Francisco Municipal Transportation Agency, San Francisco Public Utilities Commission, for OTHER NON EXEMPT COMPLAINTS (Intentional interference with contractual relations) in the District Court of San Francisco County.

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1 JOHNNY D. KNADLER (SBN 220942)
LAW OFFICE OF JOHNNY D. KNADLER
2 1527-E Pershing Drive
ELECTRONICALLY
San Francisco, CA 94129
3 Telephone: (310) 564-6695 F I L E D
Facsimile: (888) 323-0611 Superior Court of California,
County of San Francisco
4 Email: jdknadler@gmail.com
01/22/2021
5 Clerk of the Court
BY: SANDRA SCHIRO
Deputy Clerk
6
Attorneys for Plaintiff
7 SYNERGY PROJECT MANAGEMENT, INC.
8

9 SUPERIOR COURT OF THE STATE OF CALIFORNIA
10 IN AND FOR THE COUNTY OF SAN FRANCISCO
11 SYNERGY PROJECT MANAGEMENT, Case No. CGC-17-560034
INC., (Consolidated with Case No. CGC-19-576488)
12
Plaintiff,
13 NOTICE OF MOTION AND
vs. MOTION FOR LEAVE TO FILE
14 FOURTH AMENDED
CITY AND COUNTY OF SAN FRANCISCO, COMPLAINT; MEMORANDUM
15 LONDON BREED, MOHAMMED NURU, IN SUPPORT
16 Defendants.
______________________________________
17 Date: February 17, 2021
GHILOTTI BROS., INC., a California Time: 9:30 a.m.
18 Corporation, Dept: 302
19 Plaintiff, Complaint filed: July 10, 2017
20
vs,
21
SYNERGY PROJECT MANAGEMENT,
22 INC., a California Corporation, and
DOES 1-30,
23 Defendants.
24 ______________________________________
25 SYNERGY PROJECT MANAGEMENT, a
California Corporation,
26
Cross-Complainant,
27
vs.
28
NOTICE OF MOTION AND MOTION FOR 1 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 GHILOTTI BROS, INC., a California
Corporation, and ROES 1-20,
2
Cross-Defendants.
3

28
NOTICE OF MOTION AND MOTION FOR 2 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 PLEASE TAKE NOTICE that on February 17, at 9:30 a.m., or as soon thereafter as the

2 matter can be heard, in Department 302 of the Superior Court, located at 400 McAllister Street,

3 San Francisco, California 94102, plaintiff, Synergy Project Management ("Synergy") will, and

4 hereby does, move for an order granting Synergy leave to file its Fourth Amended Complaint.

5 This motion is based on this Notice of Motion, the motion itself, the supporting

6 Memorandum of Points and Authorities, the proposed Fourth Amended Complaint and

7 Declaration of Johnny Knadler filed with the motion, the papers and pleadings on file and any

8 other such evidence as may be presented at the time of the hearing. This motion is made under

9 Code of Civil Procedure § 473 on the grounds that there is good cause to allow Synergy to

10 amend its complaint, that the motion is brought in good faith, and that it is in the interest of

11 justice that the court grant it.

12 The motion will be based on this Notice of Motion and Motion, the Memorandum of

13 Points and Authorities, Synergy’s Proposed Fourth Amended Complaint, the Declaration of

14 Johnny Knadler, and the [Proposed] Order filed herewith, on all of the files and records of this

15 action, and on any additional material that may be elicited at the hearing of this motion.

16
Dated: January 22, 2020 LAW OFFICE OF JOHNNY D. KNADLER
17

18
By: //SS//
19 JOHNNY D. KNADLER
20 Attorney for Plaintiff
SYNERGY PROJECT
21 MANAGEMENT, INC.
22

28
NOTICE OF MOTION AND MOTION FOR 3 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 MEMORANDUM OF POINTS AND AUTHORITIES

2 I. INTRODUCTION

3 In 2017 Synergy filed this action in San Francisco Superior Court, alleging federal due

4 process, and state claims against the City and County of San Francisco and city officials arising

5 out of Synergy’s termination from two successive public construction contracts. After the matter

6 was removed to federal court, Synergy added the general contractor for one of these contracts,

7 Ghilotti Bros, Inc. as a defendant. Following dismissal of the federal claims, this matter was

8 remanded to this Court.

9 Over the course of 2020, announcement of a series of federal criminal prosecutions

10 revealed that one of the originally-named defendants, San Francisco Department of Public

11 Works Director Mohammed Nuru and other high-level city officials, had engaged in a multi-year

12 scheme to deprive the public of honest services, by accepting bribes and kickbacks in exchange

13 for the exercise of these officials’ power and influence to award public contracts and other

14 benefits, to the detriment of other businesses, like Synergy, which did not pay bribes or

15 kickbacks to these official. These prosecutions, culminating with the November 30, 2020 arrest

16 of San Francisco Public Utilities Commission head Harlan Kelly, revealed that as a part of this

17 scheme, Nuru and Kelly terminated one of the Synergy contracts at issue in this case order to

18 compensate one of the companies paying them bribes, by assigning Synergy’s work to that

19 company. Further, the disclosures arising out of these investigations revealed that Synergy’s

20 removal from both of the contracts at issue stems from an entrenched system of abuse and

21 corruption by highly-placed officials colloquially known as the “City Family”.

22 Through this motion, Synergy seeks leave to amend its complaint to add and amend its

23 claims in light of the new disclosures.1 Specifically, Synergy seeks to amend its due process

24 claims to allege that Nuru and Kelly – and through them the City –terminated Synergy from the

25 contracts at issue, and effectively blacklisted Synergy from receiving City contracts, because

26
1
Synergy’s proposed Fourth Amended Complaint is to the Declaration of Johnny D.
27 Knadler (“Knadler Decl.”), as Exhibit 1. Exhibits to the Knadler Declaration are listed
numerically (i.e. Exh.1, Exh.2), to avoid confusion with the exhibits to the Fourth Amended
28 Complaint, which are listed alphabetically (i.e. Exh.A, Exh.B)
NOTICE OF MOTION AND MOTION FOR 4 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 Synergy had not paid the requisite bribes or kickbacks. Synergy also seeks to add claims against

2 Nuru and Kelly for conspiracy to violate civil rights, civil racketeering, and fraudulent

3 concealment, based on the fraud scheme disclosed in the criminal charges against Nuru and

4 Kelly and related disclosures, and the facts showing that the harms for which Synergy seeks

5 relief here were in part caused in furtherance of that scheme.

6 Concurrent with these amendments, Synergy also seeks to add federal due process

7 claims, and claims for unjust enrichment against Ghilotti Bros., Inc., based on events occurring

8 after Ghilotti was named as a defendant, and discovery produced by Ghilotti in this litigation.

9 Synergy was unaware of the newly-disclosed facts relating to the fraud scheme between

10 Nuru, Kelly and other City officials, or the role the scheme played in causing the injuries for

11 which Synergy seeks relief in this action. Synergy’s motion is supported by good cause, is not

12 brought in bad faith, and will not prejudice defendants. Leave to amend should be granted.

13 II. STATEMENT OF FACTS AND PROCEDURAL HISTORY

14 On July 10, 2017 Synergy filed suit in this Court against the City and County of San

15 Francisco (“the City”), and related departments and City personnel (Synergy v. City and County

16 of San Francisco, et al, San Francisco Superior Court Case No. CGC-17-560034. The case arose

17 out of a general contract entered into between the City and Ghilotti Brothers Inc. (“Ghilotti”) to

18 replace the sewer line at Haight Street (the “Haight Street Project”). Ghilotti selected Synergy as

19 a subcontractor, and Synergy was listed on the bid to the City. In the lawsuit, Synergy alleged

20 that the City unlawfully terminated Synergy as a subcontractor on the Haight Street Project, in

21 violation of California Public Contract Code section 4107, and interfered with Synergy’s

22 contract with Ghilotti. Synergy also alleged that the City’s termination of Synergy from the

23 Haight Street Project, and a subsequent project located on San Francisco’s Van Ness Street,

24 violated Synergy’s constitutional rights of due process, stigma-plus due process and rights to be

25 protected against retaliation for the exercise of constitutional rights.

26 Defendants removed the case to federal court on November 24, 2017.

28
NOTICE OF MOTION AND MOTION FOR 5 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 On February 19, 2019, Synergy moved unopposed for leave to file a third amended (“first

2 case TAC”) complaint adding Ghilotti as a defendant. On May 21, 2019, the Court granted

3 Synergy’s request for leave to file a third amended complaint, which Synergy filed on May 26,

4 2019.

5 On June 10, 2019 and June 26, 2019, City Defendants and GBI, respectfully, moved to

6 dismiss Synergy’s third amended complaint.

7 On June 26, the California Supreme Court denied Synergy’s petition for review of the

8 California Court of Appeal decision in Synergy Project Management, Inc. v. City and County of

9 San Francisco. See Synergy Project Management, Inc. v. City and County of San Francisco, No.

10 A151199, 33 Cal. App. 5th 21 (March 14, 2019), review denied June 26, 2019. In so doing, the

11 Supreme Court upheld the Court of Appeal’s finding that the City’s termination of Synergy was

12 authorized under section 4107.

13 On, Synergy moved for leave to file a fourth amended complaint, alleging Ghilotti’s

14 liability, as a state actor, for Synergy’s federal claims, based on the Supreme Court’s decision.

15 Synergy also moved to amend its claims against the government defendants, based on arguments

16 the government defendants raised for the first time in moving to dismiss the third amended

17 complaint.

18 On August 14, 2019, the district court denied Synergy’s motion to amend without

19 prejudice, pending ruling on the motion to dismiss. On November 21, 2019 the Court granted in

20 part the motions to dismiss, dismissing with prejudice Synergy’s federal claims against the

21 government defendants, and remanding Synergy’s state law claims to Superior Court, where the

22 action originally was filed. The district court never ruled on the merits of Synergy’s motion to

23 amend.

24 On December 19, 2019, Synergy appealed the district court’s order to the Ninth Circuit

25 Court of Appeal. Synergy Project Management, Inc. v. City and County of San Francisco, et al.,

26 (9th Cir. Case No. 19-17558) (On appeal from U.S.D.C. Case No. 4:17-cv-06763 JST).

28
NOTICE OF MOTION AND MOTION FOR 6 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 On August 12, 2020, the court consolidated this case with a latter-filed case, Ghilotti

2 Bros Inc. v. Synergy, Case No. CGC-19-576488. Ghilotti filed its answer to Synergy’s Third

3 Amended Complaint on November 4, 2020. The matters are currently set for jury trial on March

4 29, 2021.

5 In January 2020, Mohammed Nuru was charged with honest services wire fraud in a

6 federal criminal complaint. A copy of that complaint (the “Nuru Complaint”) is attached hereto

7 as Exhibit 2. The Nuru Complaint revealed an elaborate kickback scheme through which Nuru

8 and other officials accepted money and services from Azul Works principal, Balmore

9 Hernandez, in exchange for Nuru’s efforts to funnel contracts to Azul Works. In June 2020,

10 Walter Wong pled guilty, inter alia, to committing, as a part of the scheme, a RICO “predicate

11 act”, Conspiracy to Commit Honest Services Fraud in violation of 18 U.S.C. §§ 1343, 1346 and,

12 by conspiring with NURU and other public officials. On September 24, 2020, the City

13 Attorney’s Public Integrity unit issued a Public Integrity Preliminary Assessment titled, “Gifts to

14 Departments Through Non-City Organizations Lack Transparency and Create “Pay-to-Play”

15 Risk”. On or about September 17, 2020, AzulWorks’ owner, Balmore Hernandez, pled guilty to

16 one count of Conspiracy to Commit Honest Services Wire Fraud in violation of 18 U.S.C.

17 §§1343, 1346 and 1349. On or about November 30, 2020, Harlan Kelly was arrested by the FBI

18 on charges arising out of the FBI’s investigation of the Nuru kickback scheme. An affidavit filed

19 by the United States Attorney’s Office with the complaint against Kelly alleges that Kelly,

20 together with Nuru, engaged in a kickback scheme from 2014-2019, in which Kelly accepted

21 bribes in exchange for Kelly’s assistance in awarding City contracts to businesses that paid the

22 bribes. A copy of the that complaint and affidavit is attached hereto as Exhibit 2. (“Kelly

23 Complaint).

24 The Nuru Complaint and Kelly Complaints, together with documents arising out of these

25 prosecutions (including City Attorney investigation reports) explain how Nuru leveraged his

26 position as director of DPW to influence not only DPW, but other city agencies and officials.

28
NOTICE OF MOTION AND MOTION FOR 7 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 Synergy’s counsel reviewed the Kelly Complaint during at some time after it was

2 published publicly on November 30, 2020. Based on that complaint, together with the other

3 documents revealed by the United States Attorney’s Office investigation arising out of

4 Mohammed Nuru’s arrest, Synergy’s counsel determined that Synergy could state causes of

5 action against Nuru and Kelly for racketeering, conspiracy and fraudulent concealment, and that

6 the disclosures also disclosed facts relevant to Synergy’s originally-pled claims.

7 Synergy’s counsel contacted counsel for Defendant GBI regarding Synergy’s desire to

8 amend its complaint. GBI declined to stipulate to the motion.

9 II. ARGUMENT
A. Relevant Law
10
“The court may, in furtherance of justice, and on any terms as may be proper,
11
allow a party to amend and pleading[.]” Cal. Civ. Proc. Code § 473(a)(l); see also Cal. Civ.
12
Proc. Code § 576 (“Any judge, at any time before or after commencement of trial, in the
13
furtherance of justice, and upon such terms as may be proper, may allow the amendment of
14
any pleading.”). “There is a strong policy in favor of liberal allowance of amendments.”
15
Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290, 296 (1985). If the granting of a timely motion for
16
leave to amend “will not prejudice the opposing party, it is error to refuse permission to
17
amend, and where the refusal also results in a party being deprived of the right to assert a
18
meritorious cause of action[;j it is not only error but an abuse of discretion.” Morgan v. Super.
19
Ct., (1959)172 Cal. App. 2d 527, 530 . Leave to amend may be denied for unreasonable delay
20
after plaintiff ascertains a “Doe” defendant's identity resulting in prejudice to the defendant.
21
A.N. v. County of Los Angeles (2009) 171 CA4th 1058, 1068.
22
B. Leave to Amend Should Be Granted
23
In the present case, Synergy seeks to amend the Third Amended Complaint as
24
follows: (1) substitute the name of Harlan Kelly for Doe Defendant No. 1; (2) add and amend
25
due process causes of action against Kelly and originally-named Defendants Breed, Nuru and
26
the City and County of San Francisco; add RICO claims against Kelly and Nuru; and (4) add
27
claims against defendant Ghilotti Bros., Inc.
28
NOTICE OF MOTION AND MOTION FOR 8 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 Ordinarily a judge will not consider the validity of a proposed amended pleading

2 in deciding whether to grant leave to amend, however, in this case the need and validity of the

3 proposed amendments only serve to support the granting of this motion. See Atkinson v. Elk

4 Corp. (2003) 109 Cal.App.4th at 739, 760; Kittredge Sports Co. v. Superior Ct. (1989) 213

5 Cal.App.3d 1045, 1048.

6
1. Synergy’s claims and allegations based on Nuru and Kelly’s arrest, and
7 disclosure of the City Family pay-to play fraud scheme.
8 Synergy seeks to amend its complaint to reflect the new facts learned Nuru and

9 Kelly’s arrest, following revelation of their “City Family” pay-to-play bribery/kickback

10 scheme and its connection to Synergy’s claims in this case. These revelations relate to

11 Synergy’s originally-pled claims, and support additional related claims and defendants.

12 In Nuru’s case, the disclosures establish that Nuru and Kelly caused Synergy’s

13 injuries in this case through actions they took in furtherance of the “City Family” pay-to-play

14 bribery/kickback scheme to enrich themselves and protect the political ambitions of London

15 Breed, another member of the City Family. Although Nuru’s involvement in Synergy’s

16 termination from the DPW-run Haight Street Project is alleged in the Third Amended

17 Complaint, the new disclosures revealed how Nuru exerted influence beyond DPW

18 construction projects to other departments’ projects, including SFPUC contracts, and the Van

19 Ness Project specifically. These disclosures reveal, inter alia, how Nuru accepted bribes from

20 his “Family friend” contractor, AzulWorks, in exchange for helping Azul Works unjustifiably

21 win, and grossly overcharge the City for, work previously assigned to Synergy on the Van

22 Ness Project. These disclosures also reveal that Kelly and Nuru knew of, and agreed to, each

23 other’s acts in furtherance of the scheme to defraud.

24 The facts establishing Synergy’s proposed Fourth Amendment claims against

25 Nuru, including Synergy’s claims for conspiracy to violate civil rights, racketeering, and

26 fraudulent concealment were not known until disclosure of the pay-to-pay scheme, through

27 his and Kelly’s arrest, the subsequent charging of Azul Work’s principle, Balmore Hernandez,

28
NOTICE OF MOTION AND MOTION FOR 9 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 the disclosures contained in the City Attorney’s post-Nuru/DBI scandal reports and other

2 materials. These disclosures also revealed facts establishing the predicate acts establishing

3 Kelly for racketeering, pursuant to the 1970 RICO Act, 18 U.S. Code § 1961 et seq., and

4 conspiracy to violated civil rights pursuant to 18 U.S.C. § 1983 (including Kelly and Nuru’s

5 agreement to conduct the scheme, and use of interstate commerce).

6 Prior to issuance of the Kelly Complaint, filed December 1, 2020, Synergy was

7 ignorant of (1) Kelly’s participation in the association-in-fact and scheme to defraud, (2) his

8 liability for use of interstate commerce in furtherance of the association-in-fact and scheme to

9 defraud and (3) his knowledge of, and agreement with, Nuru’s acts in furtherance of said

10 association and scheme. These are facts Synergy learned after December 1, 2020, and

11 (together with related disclosures made in 2020) provide the basis for Synergy to substitute

12 Kelly as a Doe Defendant for Synergy’s due process claims (based on disclosure of , and to

13 plead, with sufficient particularity, claims against Kelly (and Nuru) for racketeering, and

14 against Kelly, Nuru and the City for conspiracy to violate civil rights pursuant to 18 U.S.C.

15 §1983. See Prakashpalan v. Engstrom, Lipscomb & Lack, 223 Cal. App. 4th 1105, 1136,

16 (2014), (where fraud is alleged to be the object of the conspiracy, the claim must be pleaded

17 with particularity) (citing Favila v. Katten Muchin Rosenman LLP (2010) 188 Cal.App.4th

18 189, 211); People v. Fratianno, 132 Cal. App. 2d 610, 625 (1955) (“conspiracies are almost

19 always proven by circumstantial and ‘piecemeal’ evidence”); Sedima, S.P.R.L. v. Imrex Co.,

20 Inc., (1985) 473 U.S. 479, 496 (stating pleading requirements for violations of RICO under18

21 U.S.C. §§ (c) and (d); River City Markets v. Fleming Foods West (9th Cir. 1992), 960 F.2d

22 1458, 1463 (“[RICO] conspiracies rarely are memorialized in writing and often must be

23 proven by circumstantial evidence”).

24 Good cause exists to allow amendment to add the RICO, conspiracy, and

25 fraudulent concealment claims exists, because they involve the same primary rights

26 implicated in Synergy’s Third Amended Complaint claims, and thus could be barred by res

27 judicata if not litigated in this action. See, Monterey Plaza Hotel Ltd. P’ship v. Local 483 of

28
NOTICE OF MOTION AND MOTION FOR 10 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 the Hotel Employees and Rest. Employees Union, AFL-CIO, 215 F.3d 923, 928 (9th Cir.

2 2000) (holding that RICO claim was barred by res judicata when the same harms and primary

3 rights were litigated and decided in the state court); Misischia v. St. John’s Mercy Health Sys.,

4 457 F.3d 800 (8th Cir. 2006) (affirming of dismissal of RICO claim based on res judicata

5 because plaintiff could have filed claim in prior proceeding); Fox v. Maulding, 112 F.3d 453,

6 457–58 (10th Cir. 1997) (holding that RICO claim was barred by res judicata where it should

7 have brought as compulsory counterclaim in Oklahoma foreclosure action).

8 2. Synergy’s claims against the City and Breed

9 The new disclosures support amendments to Synergy’s allegations pertaining to

10 its claims against the City and London Breed (along with Nuru and Kelly, as discussed

11 above), for interference with contract, breach of contract, substantive and procedural due

12 process, retaliation, de facto debarment, stigma-plus due process, and additional claims for

13 conspiracy to violate civil rights pursuant to 18 U.S.C. §1983.

14 Synergy’s proposed amended and new claims reflect the new facts learned

15 following revelation of the “friends of Nuru” pay-to-play scheme. Although Synergy has

16 appealed the federal court’s failure to rule on Synergy’s previous motion for leave to filed a

17 fourth amended complaint, that motion (and the record on appeal) did not include the facts

18 disclosed this year with revelation of the “City Family” pay-to-play scheme including Nuru’s

19 involvement in the Van Ness Project, and the fact Nuru and Kelly – and through them, the

20 City – accomplished Synergy’s termination and replacement by AzulWorks in furtherance of

21 that scheme.

22 These facts relate to Synergy’s originally-pled claims in multiple ways. First, they

23 reveal an additional arbitrary and unlawful animus for Synergy’s ouster from the Van Ness

24 Project – furtherance of Nuru and Kelly’s City Family pay-to-play scheme as disclosed in the

25 Nuru, Kelly and Hernandez charging documents, the City Attorney’s post-Nuru/DBI scandal

26 reports, and other subsequent disclosures. Thus, these facts demonstrate the involvement of

27 Nuru not only in Synergy’s termination from the Haight Street Project, but also from the Van

28
NOTICE OF MOTION AND MOTION FOR 11 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 Ness Project, in furtherance of his scheme with Kelly and AzulWorks, and support a new,

2 related claim, for conspiracy to violate civil rights. Second, they demonstrate the how

3 Synergy’s 2015 litigation against the City (at issue in Synergy’s retaliation claims) targeted

4 City practices that fostered an environment in which fraud and corruption thrived, and thus

5 targeted issues implicating the public interest, and how Synergy’s termination from the Haight

6 Street Project and Van Ness Project stemmed from Synergy’s failure to participate as

7 contributor to the scheme.

8 Finally, by pulling back the curtain on the “City Family” scheme, the Nuru and

9 Kelly prosecutions and related disclosures provide information necessary to understand how

10 and why Synergy’s injuries were accomplished. In this action, Synergy alleges that City

11 officials determined to prevent Synergy from obtaining or performing City projects because

12 London Breed deemed Synergy’s presence on City projects politically detrimental. Standing

13 alone, the notion that significant decisions about a complex, expensive construction projects

14 could turn on considerations as untoward and improper as this would seem improbable in a

15 major city. But Nuru and Kelly’s arrest, and the accompanying “City Family” disclosures

16 show how, as the City Attorney noted, from the “tone at the top” on down, City

17 administration and management of public contracts in San Francisco is permeated by a small

18 group of high-level officials with close, often intimate relations who encourage an atmosphere

19 of casual venality that makes Synergy’s claims not just plausible, but all-but inevitable.

20 3. Synergy’s Claims Against Ghilotti Bros., Inc.

21 Synergy also seeks to add Ghilotti Bros., Inc. as a defendant to its federal due

22 process claims, and to add a claim against GBI for unjust enrichment. GBI’s liability for

23 Synergy’s federal claims in removing and replacing Synergy from the Haight Street Project at

24 the City’s behest, GBI functioned as a “state actor”, for purposes of 28 U.S.C. § 1983

25 liability, under several of the the established tests for state action by a private party. As the

26 Ninth Circuit explained in Kirtley v. Rainey,

28
NOTICE OF MOTION AND MOTION FOR 12 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
What is fairly attributable [as state action] is a matter of normative judgment, and
1 the criteria lack rigid simplicity. . . . [N]o one fact can function as a necessary
condition across the board . . . nor is any set of circumstances absolutely
2 sufficient, for there may be some countervailing reason against attributing activity
to the government." Brentwood Acad. v. Tennessee Secondary Sch. Athletic Ass'n,
3 531 U.S. 288, 295-96, 121 S.Ct. 924, 148 L.Ed.2d 807 (2001). Nonetheless, we
recognize at least four different criteria, or tests, used to identify state action: "(1)
4 public function; (2) joint action; (3) governmental compulsion or coercion; and
(4) governmental nexus."Sutton,192 F.3d at 835-36; see also Lee v. Katz,276 F.3d
5 550, 554 (9th Cir. 2002). Satisfaction of any one test is sufficient to find state
action, so long as no countervailing factor exists. Lee, 276 F.3d at 554.
6

7
Kirtley v. Rainey, 326 F.3d 1088, 1091 (9th Cir. 2003) (citing Sutton v. Providence St. Joseph
8
Medical Center, 192 F.3d 826 (9th Cir. 1999). As set forth in Synergy’s proposed Fourth
9
Amended Complaint, GBI, in terminating and replacing Synergy at the City’s request, qualifies
10
as a state actor under the compulsion, joint action and nexus tests.
11
GBI has been aware of Synergy’s contention that GBI was a state actor, because Synergy
12
sought to add GBI as a defendant in its motion for leave to file a fourth amended complaint
13
brought to the federal district court. Synergy did not sit on these claims, but has appealed the
14
district court’s failure to rule on that motion to the federal court of appeal. 2
15
But the disclosures revealing Nuru and Kelly’s “City Family” fraud scheme – all of
16
which were revealed after that appeal was taken, create a predicament. The Ninth Circuit Court
17
of Appeal cannot consider these recent events and disclosures in accessing Synergy’s claims
18
against GBI and the other defendants. Thus, amendment is necessary to afford Synergy a forum
19
where the full known facts supporting its claims against GBI can be considered on the merits.
20
Synergy also seeks to add a claim against GBI for unjust enrichment, based on discovery
21
produced in this case after it returned to this Court on remand. See Knadler Decl., ¶4. This claim
22
relates to Synergy’s claims against GBI for breach of contract, and should be permitted.
23
C. Defendants Will Not be Prejudiced By The Proposed Amendments
24
[I]t is an abuse of discretion to deny leave to amend where the opposing party was
25
not misled or prejudiced by the amendment." Kittredge Sports Co. v. Superior Court, ( 1989);,
26

27 2
Oral argument on that appeal was scheduled for February 19, 2020. However, the City
and County of San Francisco has moved to continue oral argument, and the Court of Appeal has
28 postponed the argument, but not yet set a new date for argument to occur.
NOTICE OF MOTION AND MOTION FOR 13 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 213 Cal.App.3d 1045,1048 Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564, where no

2 prejudice is shown to the adverse party, the liberal rule of allowance prevails.) Furthermore,

3 "it is irrelevant that new legal theories are introduced as long as the proposed amendments

4 `relate to the same general set of facts.' [Citation.]" ( Kittredge, 213 Cal.App.3d at 1048.)

5 Here, leave to amend the complaint is authorized because Defendants and the Doe

6 Defendant Kelly will not be prejudiced by the proposed amendments. The amendments are

7 not barred by the statute of limitations. Synergy’s RICO causes of action are not barred by the

8 four-year statute of limitations provided for such claims, because the statute is tolled based on

9 Nuru and Kelly’s concealment of their scheme to defraud, and because these causes of action

10 relate back to the filing of the original Complaint. Synergy’s claims against Kelly relate back

11 as he is added as a Doe defendant, whose identity, and culpability for Synergy’s causes of

12 action was not known until his arrest in December 2020. Synergy’s claims against

13 Additionally, the proposed amendments will not unduly delay the trial.

14
1. The Fourth Amended Complaint Is Not Barred By The Statute Of
15 Limitations
16 Section 474 of the Code of Civil Procedure allows a plaintiff to designate a

17 defendant by a fictitious name when the plaintiff is ignorant of the true identity of the

18 defendant. Once the plaintiff discovers the name of the defendant, he must amend the

19 complaint accordingly. Code. Civ. Proc. §474. Plaintiff is "ignorant" within the meaning of

20 the statute even if he knows of the existence of the defendant sued by the fictitious name, but

21 lacks knowledge of that person's connection with the case or with his injuries. GM Corp. v.

22 Superior Court (1996) 48 Cal.App.4th 580, 593-94. Where a complaint sets forth, or attempts

23 to set forth, a cause of action against a defendant designated by a fictitious name and his true

24 name is thereafter discovered and substituted by amendment, he is considered a party to the

25 action from its commencement so that the statute of limitations stops running as of the date of

26 the earlier pleading. Austin v. Massachusetts Bonding and Insurance Co. (1961) 56 Cal.2d

27 596, 599.

28
NOTICE OF MOTION AND MOTION FOR 14 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 Here, Synergy was unaware of the facts necessary to allege its claims against

2 Kelly (or the Kelly-related claims and allegations against the other Defendants) until

3 disclosure of the documents revealed at the time of his arrest, in December 2020. These

4 documents, together with the documents disclosed earlier in 2020 based on the ongoing

5 federal investigation into City Family members’ fraud and kickback schemes, provided the

6 facts to establish (1) the agreement, between Nulu, Kelly, other officials and AzulWorks, and

7 (2) the predicate acts committed by them, sufficient to allege claims of conspiracy to violate

8 civil rights pursuant to 18 U.S.C. §1982, and racketeering pursuant to 18 U.S.C. §§ 1961.

9 The 2020 disclosures also reveal facts demonstrating the connection between the “City

10 Family” not only with Synergy’s termination from the Van Ness Project, but also from the

11 Haight Street Project.

12 Even when a plaintiff seeks to add new legal theories or causes of action, the

13 amended complaint relates back to the date of the filing of the original complaint and thus

14 avoids the bar of the statute of limitations so long as recovery sought in both pleadings is

15 based upon the same general set of facts. Smeltzley v. Nicholson Manufacturing Co. (1977) 18

16 Cal.3d 932, 939-940; See also Kittredge Sports Co., supra, 213 Cal.App.3d at 1048; Hirsa,

17 supra, 118 Cal.App.3d at 489.. "A defendant unaware of the suit against him by a fictitious

18 name is in no worse position if, in addition to substituting his true name, the amendment

19 makes other changes in the allegations on the basis of the same general set of facts." Austin, et

20 al., v. Massachusetts Bonding and Insurance Co., supra, 56 Cal.2d at 602.

21 In Smeltzley, for example, plaintiffs original complaint alleged injuries caused by

22 defendant's failure to provide him with a safe work place. After the statute of limitations had

23 run, plaintiff amended the complaint to add a previously unnamed defendant as a party and a

24 separate cause of action alleging that his injuries were also caused by a defective machine

25 manufactured by the previously unnamed defendant. The trial court sustained the newly added

26 defendant's demurrer finding that the statute of limitations barred the amendment. The Court

27 of Appeal reversed the trial court finding that because the injuries alleged stemmed from the

28
NOTICE OF MOTION AND MOTION FOR 15 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 same set off acts, plaintiffs' amended complaint related back to the original complaint and was

2 therefore not barred by the statute of limitations. The Court of Appeal found that the relation

3 back precedent rests on the fundamental policy that cases should be decided on their merits.

4 Smeltzley, 18 Cal.3d at 939.

5 In the present case, Synergy’s original Complaint was filed on July 10, 2017,

6 against the City and County of San Francisco, London Breed, Mohammed Nuru and 100

7 fictitiously named Doe Defendants. Plaintiff now seek to substitute the name of Harlan Kelly

8 for Doe Defendant 1 as an additional perpetrator related to the same course of conduct.

9 Synergy also seeks to add as well other related causes of actions as to all Defendants related

10 to the same course of conduct. Because the amendments pertain to the same course of conduct

11 originally pled in earlier Complaints, the Kelly is considered parties to the action from the

12 time of the filing of the original complaint, and the statute of limitations is no bar to adding

13 them. Likewise, the RICO claim against relates to the same general set of facts from the

14 original complaint - that Defendants damaged Synergy in connection with Synergy’s

15 termination from the Haight Street and Van Ness Projects. For this reason, and because the

16 four-year statute of limitations on the RICO claims has not run, these claims also are not

17 barred by the statute of limitations.

18 As for Defendants the City and County of San Francisco, Breed, and Nuru, the

19 statute of limitations has not run because all of Synergy’s claims relate back to the original

20 complaint. Although Synergy’s claims against these defendants were dismissed, that dismissal

21 was timely appealed. Since Synergy has not ceased prosecuting these claims, the statute of

22 limitations is tolled, and these claims relate back to the date the case was filed. See, 3 Witkin,

23 Cal. Proc. 5th Actions § 743 (2020) (Federal savings statute (28 U.S.C. § 1367 (d)) tolling

24 provision applies to the period during which the state claim is pending in a federal district court,

25 and to the period during which an appeal is pending in the Circuit Court of Appeals.)

26 2. The Fourth Amended Complaint Will Not Unduly Delay The Trial and Will
Further the Interests of Judicial Economy
27

28
NOTICE OF MOTION AND MOTION FOR 16 Case No. CGC-17-560034
LEAVE TO FILE FOURTH AMENDED
COMPLAINT
1 Courts apply a policy of great liberality in permitting amendments to the

2 complaint at any stage of the proceedings up to and including trial. See Mesler v. Bragg

3 Management Co. (1985) 39 Cal.3d 290, 296-97; see also Arthur L. Sachs, Inc. v. City of

4 Oceanside., 151 Cal.App.3d 315, 484-85 (finding amendment proper four years after filing of

5 original complaint and on the eve of trial where delay due to Defendants' untimely discovery

6 responses). Here, the heads of the City’s DPW and SFPUC departments concealed evidence

7 needed to support these amendments until December 2020, when they were revealed by

8 federal prosecutors.

9 In the present case, a jury trial is presently set for March 29, 2020. Although

10 allowing the amendment may necessitate a brief continuance of the trial date, such a

11 continuance is warranted under the circumstances and does not prejudice Defendant GBI, in

12 light of the external reasons trial is not likely to proceed on that date.

13 Synergy may need additional time to conduct discovery related to the recent

14 disclosures of the Nuru-Kelly pay-to-play “friends of” scheme. Synergy has issued subpoenas

15 for the depositions of Mohammed Nuru, Harlan Kelly, and others involved in the scheme, but

16 service of notice and scheduling of these depositions has been made particularly difficult. For

Case Info

Judge

Samuel K. Feng Track Judge’s New Case

Case No.

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Document Filed Date

January 22, 2021

Case Filing Date

July 10, 2017

County

Parties

BARUTH, ARI Attorneys for Defendants
BARUTH, ARI Attorney for the Defendant
BREED, LONDON Defendant
CITY AND COUNTY OF SAN FRANCISCO Claimant
CITY AND COUNTY OF SAN FRANCISCO Defendant
CITY AND COUNTY OF SAN FRANCISCO (CONSOLIDATED Claimant
DAAR, RANDOLPH ELLIOTT Attorneys for Plaintiffs
DAAR, RANDOLPH ELLIOTT Attorney for the Plaintiff
DELAYE, JAIME HULING Attorneys for Defendants
DELAYE, JAIME HULING Attorney for the Defendant
DIWIK, JAMES P Attorneys for Defendants
DIWIK, JAMES P Attorney for the Defendant
DIWIK, JAMES P Attorney for the Plaintiff
DOES 1-100 Defendant
DOES 1 TO 30 Defendant (consolidated Case)
DOES 2-100, ET AL. Defendant
FLYNN, RONALD Attorney
FLYNN, RONALD Attorney for the Defendant
GHILOTTI BROS., INC. Defendant
GHLOTTI BROS., INC., A CALIFORNIA CORPORATION Cross Defendant
GHLOTTI BROS., INC., A CALIFORNIA CORPORATION Plaintiff
GHLOTTI BROS., INC., A CALIFORNIA CORPORATION Plaintiff (consolidated Case)
KNADLER, JOHNNY D. Attorneys for Plaintiffs
KNADLER, JOHNNY D. Attorney for the Plaintiff
LEIGH, GILBERT WHITNEY Attorney
LEIGH, GILBERT WHITNEY Attorney for the Plaintiff
LEW, DEBRA DEE Attorney
LEW, DEBRA DEE Attorney for the Defendant
NURU, MOHAMMED Defendant
POPLAWSKI, KRISTINE Attorney
POPLAWSKI, KRISTINE Attorney for the Defendant
ROES 1 TO 20 (CONSOLIDATED ACTION CGC-19-576488) Cross Defendant
ROSENFELD, BEN Attorneys for Plaintiffs
ROSENFELD, BEN Attorney for the Plaintiff
SAN FRANCISCO DEPARTMENT OF PUBLIC WORKS Defendant
SAN FRANCISCO MUNICIPAL TRANSPORTATION AGENCY Defendant
SAN FRANCISCO PUBLIC UTILITIES COMMISSION Defendant
SYNERGY PROJECT MANAGEMENT, INC. Cross Defendant
SYNERGY PROJECT MANAGEMENT, INC. Plaintiff
SYNERGY PROJECT MANAGEMENT, INC., A CALIFORNIA Defendant (consolidated Case)
YAN, MATTHEW Attorneys for Plaintiffs
YAN, MATTHEW Attorney for the Plaintiff
David Chiu Attorneys for Defendants
Yvonne Mere Attorneys for Defendants
Ryan Lewis Attorneys for Defendants
Dennis Herrera Attorneys for Defendants
Kris Cox Attorney
Erin Reding Attorneys for Plaintiffs
Sally Johnson Attorneys for Defendants
Cara Ching-Senaha Attorneys for Plaintiffs
Roy Lewis Attorneys for Defendants
Benedict Rosenfeld Attorney
Kevin Holl Attorney

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Hearing: SYNERGY PROJECT MANAGEMENT, INC. VS. CITY AND COUNTY OF SAN FRANCISCO

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