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[Exempt From Filing Fee
Government Code § 6103]
FAGEN FRIEDMAN & FULFROST, LLP F ILED
David R. Mishook, SBN 273555 ALAMEDA COUNTY
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dmishook@f3law.com
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70 Washington Street, Suite 205
Oakland, California 94607
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Phone: 510-550-8200
Fax: 510-550-8211
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Attorneys for American Indian Model Schools
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF ALAMEDA, HAYWARD HALL OF JUSTICE
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BEN CHAVIS, an individual, CASE NO. RG-21099652
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Fagen Friedman & Fulfrost, LLP
Main 510-550-8200 * Fax 510-550-8211
Plaintiff, ASSIGNED FOR ALL PRE-TRIAL
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70 Washington Street, Suite 205
PURPOSES TO
Oakland, California 94607
vs. JUDGE STEPHEN M. PULIDO
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DEPARTMENT 517
AMERICAN INDIAN MODEL SCHOOLS, a
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California not for profit corporation, and DEFENDANT AMERICAN INDIAN
DOES 1 through 50, inclusive, MODEL SCHOOLS’ REPLY IN
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SUPPORT OF ITS DEMURRER TO
Defendants. PLAINTIFF’S FIRST AMENDED
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COMPLAINT
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Judge: Hon. Stephen M. Pulido
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Action Filed: May 19, 2021
Trial Date: None Set
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Date: January 4, 2022
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Time: 3:00 p.m.
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Dept.: 517
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Reservation: R-2295350
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Case No. RG-21099652
DEFENDANT AMERICAN INDIAN MODEL SCHOOLS’ NOTICE OF REPLY IN SUPPORT OF DEMURRER
TO AMENDED COMPLAINT
Defendant American Indian Model Schools (“AIMS”) hereby submits this reply in support
of its Demurrer to Plaintiff Ben Chavis’s First Amended Complaint (“FAC”).
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I. INTRODUCTION
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Following an indictment in March 2017 on three counts mail fraud and three counts money
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laundering, on January 15, 2019, Plaintiff Ben Chavis pleaded guilty to a superseding criminal
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information charging him with one count of conspiracy—a felony. To be clear, Plaintiff was not
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acquitted of any of the prior charges. There was no official exoneration of Plaintiff. Rather than go
to trial, as part of a plea deal, Plaintiff alleges he admitted that he specifically intended to commit
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the crime of criminal conspiracy.
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The question posed by AIMS’s demurrer to Plaintiff's FAC is whether, under the legal
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precedent provided by AIMS, Plaintiffs Director’s Contract which provided that AIMS would
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Fagen Friedman & Fulfrost, LLP
Main 510-550-8200 © Fax 510-550-8211
“cover” legal fees in any action brought against Plaintiff “relating to the school” could be legally
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70 Washington Street, Suite 205
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Oakland, California 94607
interpreted to apply to reimbursement for Plaintiffs legal costs related to his criminal conviction.
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Plaintiff alleges that his legal fees must be reimbursed both under his interpretation of the “plain
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language” of the Director’s Contract and must otherwise be reimbursed under Labor Code section
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2802. Plaintiff goes so far as to imply that his criminal conviction was a victory that vindicated
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actions he alleges were taken solely for the benefit of AIMS.
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In opposing AIMS’s demurrer, Plaintiff attempts to distract this Court from two simply legal
principles cited by AIMS. First, a private indemnity or defense agreement, like the one in the
Director’s Contract—interpreted strictly against the indemnitee in accordance with public policy—
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must clearly and explicitly provide for indemnification and defense above and beyond third-party
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civil actions. Here, in the absence of clear and explicit language to the contrary, the Director’s
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Contract’s defense cost provision cannot apply to Plaintiff's criminal prosecution. Second, section
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2802 precludes indemnity for actions which the employee knew were unlawful.at the time the
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employee took those actions. Here, because Plaintiff admitted in federal court that he knowingly
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and intentionally conspired to commit an unlawful act, section 2802 does not apply.
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While Plaintiff seeks to raise factual a about the intent and interpretation of the
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Director’s Contract, the simple facts that, one, Plaintiff was convicted in criminal court after a plea
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2 Case No. RG-21099652
DEFENDANT AMERICAN INDIAN MODEL SCHOOLS’ NOTICE OF REPLY IN SUPPORT OF DEMURRER
TO AMENDED COMPLAINT
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of guilty to a specific intent crime and, two, the Director’s Contract does not clearly and explicitly
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provide for payment of criminal defense costs, means that AIMS’s demurrer must be granted and
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Plaintiff's causes of action must be dismissed against AIMS with prejudice.
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Il. ARGUMENT
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A. Plaintiff Inappropriately Seeks to Narrow the Legal Holding of City of Bell
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In his opposition, Plaintiff alleges that AIMS’s citation to City of Bell v. Superior Court,
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(2013) 220 Cal.App.4th 236, for its argument that the Director’s Contract cannot be interpreted to
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apply to criminal defense costs is “grossly misleading.” (Opp. at 5:9.) According to Plaintiff, City
of Bell spoke only to the application of an employment contract to first-party indemnity (i.e.,
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indemnity in actions between the contracting parties) and not to any analogous situation. (Opp. at
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7:8-10.) Plaintiff continues that the “unambiguously broad” language of the Director’s Contract
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Fagen Friedman & Fulfrost, LLP
© Fax 510-550-8211
applies to criminal prosecution as equally as to third-party civil actions and that the “course of
70 Washington Street, Suite 205
Oakland, California 94607
performance” of AIMS in paying for Plaintiff's defense costs for a time “reinforces the construction
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urged by Plaintiff.” (Opp. at 8:3-9.)
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Main 510-550-8200
While City of Bell did address, in part, first-party indemnity, Plaintiff appears to ignore that
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the section cited by AIMS directly addresses the applicable contract interpretation that should be
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applied to claims of criminal defense obligations arising from an indemnity and defense clause.
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Specifically, the Court of Appeal in City of Bell explained that a noninsurance indemnity provision
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(and, by extension, a noninsurance defense provision) must be “clear and explicit” to protect
“beyond those [protections] afforded by the doctrines of implied or equitable indemnity.” (City of
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Bell, supra, 220 Cal.App.4th at p. 250.) These implied or equitable protections extend only to third-
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party civil claims, and an indemnification clause that does not explicitly provide otherwise cannot
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be construed to be more expansive. (Ibid., citing Queen Villas Homeowners Assn. v. TCB Property
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Management (2007) 149 Cal.App.4th 1, 6.
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Applying these principles to the employment agreement underlying the case, the Court of
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Appeal did not rely solely on the specific language in that agreement. In holding that the indemnity
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agreement at issue did not extend to criminal defense costs, the Court first observed that the daty to
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defend is (absent language to the contrary) coextensive with the duty to indemnify. (City of Bell,
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3 Case No. RG-21099652
DEFENDANT AMERICAN INDIAN MODEL SCHOOLS’ NOTICE OF REPLY IN SUPPORT OF DEMURRER
TO AMENDED COMPLAINT
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supra, 220 Cal.App.4th at p. 251.) The Court then observed that with regard to first-person claims,
“In order for an indemnity agreement to encompass claims between the parties to the agreement . . .
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there must be clear and explicit language to that effect.” (Jd. at p. 252.) “We believe the same
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conclusion applies to the issue of whether a defense is owned for criminal actions.” (Jd. at p. 253.)
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Plaintiff spends considerable time arguing that the contract in City of Bell contained language
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contrary to an interpretation that it applied to criminal defense costs. However, the Court’s
application of indemnity principles was based, first and foremost, on the Jack of clear and explicit
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language in the indemnity provision that applied either to first-party indemnification or criminal
defense. (Id. at p. 252 [No such language is present in the agreement before us.”].) That the
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indemnification agreement in that case also contained language inconsistent with the ex-employee’s
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interpretation simply reinforced the Court’s holding. (bid. [“Indeed, there is language indicating a
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Fagen Friedman & Fulfrost, LLP
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contrary intent.”].)
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70 Washington Street, Suite 205
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Oakland, California 94607
In the instant case, it is not true that AIMS seeks to introduce parole evidence to defeat
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Plaintiff’ s contract action at the pleading stage. Rather, if anything, Plaintiff seeks to obfuscate from
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Main 510-550-8200
the lack of clear and explicit language on the face of the Director’s Contract that would, under City
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of Bell, be required for Plaintiff's interpretation of the agreement to prevail. Plaintiff insists that the
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language of the Director’s Contract controls. AIMS seeks solely to apply contract interpretation
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principles to demonstrate that, as a matter of law, Plaintiffs first cause of action must fail.
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Finally, the implication that AIMS’s “course of performance” proves the veracity of
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Plaintiff's interpretation is the sort of introduction of parole evidence Plaintiff otherwise argues has
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no place in interpreting the Director’s Contract. (Opp. at 8:6-7.) Regardless, even on its face,
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Plaintiff's proposed course of performance does not address the proper interpretation
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of the
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Director’s Contract for the simple fact that, as Plaintiff readily alleges in his FAC, his defense costs
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were paid by AIMS’s insurance. When that insurance reached its limits, payment for Plaintiff's
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defense costs ceased. There are no allegations that AIMS’s insurance paid Plaintiff's criminal
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defense costs because of:an employment contract to which the insurance carrier was not a party. It
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is rather much more straightforward and logical to conclude that insurance paid for Plaintiff's
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defense costs because the insurance policy called for it to do so.
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4 Case No. RG-21099652
DEFENDANT AMERICAN INDIAN MODEL SCHOOLS’ NOTICE OF REPLY IN SUPPORT OF DEMURRER
TO AMENDED COMPLAINT
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“[PJublic policy concerns influence” how noninsurance indemnity, and by extension
defense, agreements are construed. (City of Bell, supra, 220 Cal.App.4th at p. 250.) “As such, if a
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party seeks, in a noninsurance agreement, to be indemnified for protections beyond those afforded
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by the doctrines of implied or equitable indemnity . . . the language on the point must be particularly
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clear and explicit and will be construed strictly against the indemnitee.” (Jbid., citing Crawford v.
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Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 552.) Here, the Director’s Contract neither
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explicitly nor clearly applies to criminal defense costs. For these reasons, construed strictly against
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Plaintiff, Plaintiffs first cause of action must be dismissed.
B. Plaintiff's Plea of Guilty to a Specific Intent Crime Precludes Application of
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Labor Code section 2802.
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Plaintiff's opposition claims that his cause of action under Labor Code section 2802 must
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Fagen Friedman & Fulfrost, LLP
¢ Fax 510-550-8211
survive demurrer by implying that section 2802 is absolute in an employer’s responsibility to
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70 Washington Street, Suite 205
Oakland, California 94607
indemnify its employees. This is, however, not true. While section 2802 requires indemnification of
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an employee for the direct consequences of the discharge of his or her duties “even if unlawful,”
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Main 510-550-8200
section 2802 explicitly excludes actions that an employee takes when that employee believes the
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actions to be unlawful. Plaintiff was subject to a criminal prosecution that resulted in a conviction
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for the specific intent crime of conspiracy. That conviction, here by plea, is by its very nature a
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judicial admission that Plaintiff engaged in actions he knew were unlawful. (Dowie v. Fleishman-
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Hillard Inc. (9th Cir. 2011) 422 Fed.Appx. 627, 629.)
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Plaintiff, conspicuously, cannot provide this Court with any authority that section 2802