Petition for Writ of Certiorari — Cullen v. Housing Authority

Supreme Court brief1993

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No. eeeeoee38ke2ee8 20080 @

IN THE

SUPREME COURT OF THE UNITED STATES

October, 1992, Term

HOUSING AUTHORITY, COUNTY OF SACRAMENTO

A PUBLIC BODY, Respondents

Vs.

CULLEN DEVELOPMENT COMPANY, A DISSOLVED

PARTNERSHIP, MARK T. CULLEN, AN INDIVIDUAL,

Petitioner.

PETITION FOR REVIEW

To The Supreme Court of the State of

California

PETITION FOR WRIT OF CERTIORARI

MARK T. CULLEN

P.O. Box 1215

Shingle Springs, CA 95682

(916) 933-3112

PETITIONER, IN PRO SE

QUESTIONS PRESENTED FOR REVIEW

A. Whether due process to have a fair

trial on the merits under the Fifth and

Fourteenth Amendments, as well as_ equal

protection under the Fourteenth Amendment is

deprived when an individual partner (not

licensed to practice law) is forced to

represent the partnership entity, in pro se, on

the eve of trail, in a complex litigation case

when counsel abandons the partnership and

individual partners.

B. Whether it is proper for the trial

court to deny due process when applying the

doctrines of Collateral Estoppel and Res

Judicata.

C. Whether an Administrative Law decision

decided first in time should have Collateral

Estoppel effect over a civil Superior Court

decision when both forums litigated the same

breach of contract issue and came _ to

diametrically opposed decisions violating the

one judgment rule.

TABLE OF CONTENTS

OPINIONS BELOW .... + +6 © «© «© «© © «© 1

JURISDICTION .. +. «© «© © © © © © © # © »@ 1

CONSTITUTIONAL PROVISIONS INVOLVED. . . 2

STATEMENT OF THE CASE .. + + + © © © © 3

REASONS FOR GRANTING WRIT . -.- + + «© «© « = 18

I. A PARTNERSHIP IS A LEGAL ENTITY AND SHOULD

ENJOY THE CONSTITUTIONAL RIGHTS TO, EQUAL

PROTECTION AND DUE PROCESS OF LAW, AS

SHOULD PETITIONER. . - -« © © © «© «© » 18

II. DUE PROCESS IS AN ELEMENT OF COLLATERAL

ESTOPPEL AND RES JUDICATA ..+ «+ + 34

III. AN ADMINISTRATIVE LAW DECISION DECIDED

FIRST IN TIME SHOULD HAVE A COLLATERAL

ESTOPPEL EFFECT OVER A SUBSEQUENT SUPERIOR

COURT DECISION. .. + «© «© «© © © « » a4

A. THE JUDGMENT OF JUNE 16, 1987 47

B. THE JUDGMENT OF JULY 25, 1990 47

C. THE JUDGMENT OF APRIL 4, 1991 48

CONCLUSION ... + «© © © © © © © © #© © * 64

APPENDIX:

A. DENIAL OF PETITION FOR REVIEW BY THE

CALIFORNIA SUPREME COURT FILED

FEBRUARY 10, 1993 A-1

B. OPINION OF THE COURT OF APPEAL, THIRD

APPELLATE DISTRICT, FILED

NOVEMBER 20, 1992 B-1

C. SECOND OPINION OF SACRAMENTO COUNTY

SUPERIOR COURT FILED ON

APRIL 4, 1991. C-1

D. OPINION OF THE CALIFORNIA

ADMINISTRATIVE LAW COURT FILED

ON JULY 25, 1990. D=-i

E. FIRST OPINION OF SACRAMENTO COUNTY

SUPERIOR COURT FILED ON

JUNE 21, 1987 E-1

iii

TABLE OF AUTHORITIES

CASES

Bank of America Nat’l Trust & Sav. Ass’n v.

Superior Court (1942) 20 C.2d 697 ..... 45

Benjamin v. Dalmo Mfg. Co., 31 Cal.2d 523 . 39

Berhard v. Bank of America (1942)

19 Cal.2d 811 a * * . e o 7. « . . s . 34

Blonder-Tongue v. University Foundation (1971)

402 U.S. 313, 329, 28 L Ed.2d 788,

799, 91S. Ct. 1434 .. 2. 2-2 2 ee - 34

Board of Regents v Roth, 408 US, at 570-571,

n8, 33 L. Ed2d 548, 92 S Ct 2701... 28

Campbell v. Zokelt (1969)

272 Cal. App.2d 315, 318 . . .-..+-- 45

Carrol v. Abbot Laboratories, Inc. (1982)

et oe) 2) rr ee ee ee ae ee

Clean Air Transport Systems v. San Mateo

County Transit Dist. (1988)

198 Cad « App. 3d 576 e . e . . e * o 24

Clemmer v. Hartford Insurance Co. (1978)

22 Gai.38 O65, 875 2.2. ss ev vn n s

Clifton v. Ulis (1976) 17 Cal.3d 99... . 32

County of Los Angeles v. Department of

Industrial Relations, (1989)

214 Cal. App.3d 1538, 1543-1544 .. . 52

Dillard v. McKnignt (1949) 34 Cal.2d 214,

215 oe om e ° - e . ae o e 7 — e SJ 7 es e 34

Endler v. Schutzbank (1968) 68 Cal.2d 162 . 29

Epstein v. Frank (1981) 125 Cal.App.3d 111 16

Evans v. Galardi (1976) 16 Cal.3d 300 . .. 22

Fazzi v. Peters (1968) 68 Cal.2d 590 ... 23

First Amendment Foundation v. Brookfield

(1983, ND ILL) 575 F. Supp. 1207... 24

Hallet v. Slaughter, 22 Cal.2d 552 ... . 40

Harris v. Spinali Auto Sales, Inc. (1966)

240 Cal. App.2d 447, 453 . ... +... 44

Kralyevich v. Magrini,

172 Cal. App.2d 784, 789 . ...... 46

L.D. Reeder Contractors v. Higgens Industries,

Inc. (1959, CA9 CAL) 265 F.2d 768 .. 34

Lerner v. Los Angeles City Board of Education

(1963) 59 Cal.2d 3862, 398 . . ~~ « « S57

Logan v. Zimmerman Brush Company (1982)

455 US 422, 433, 71 L.Ed2d 265,

hea @ Ge e668 8 «© +e we ee ee eel ele UR

Lynch v. Glass (1975)

44 Cal. App.3d 948 .....-.-.- 31, 56

Melancon v. Superior Court of Los Angeles

County (1954) 42 Cal.2d 698 ..... 33

Orange Empire National Bank v. Kirk (1968)

ao9 Cal. App.2G@ 347 . 2. «= 6 © @© «© © « §)

Overell v. Overell (1937)

a6 Cai. App.2€ 499 . 1 6 es we ew to ot 29

kreople v. Fisher (1984, 2d Dist)

Boe GCess BOO. 3G G26 .« we ee et we lth 68D

People v. Hy-land Enterprises, Inc. (1979)

De Geese BB OG 738 « st kt ee 6 4S

People v. La Motte (1979)

92 Cal. App.34 604... 1 2s 6 s ws BE

People v. Lawrence (1956, lst Dist)

140 Cal. App.2d 133 .....+e«-e«ee 34

People v. Sims (1982) 32 Cal.3d 468 51, 56, 61

People v. Sobiek (1973) 30 Cal.App.3d 458 . 22

Piorkowski v. Arabian American Oil Co.

(1955, DC NY) 131 F. Supp. 553 .... 27

Powell v. Alabama (1932) 287 US 45,

77 L. ED. 158, 53 S Ct. 55 . . . « « « 36

Promotus Enterprises, Inc. v. Jiminez (1971)

ai Cal.Agp.3d S60 ws we tan snes n ss

Rynsburger v. Dairyman’s Fertilizer Coop., Inc.

(1968) 266 Cal. App.2d 269, 277-278 . 35

Seaman’s Direct Buying Service, Inc. v. Standard

Oil Company of California (1984)

oo Gel. we 752, 706 1. ss « «© oe 2 oe se os 8B

Shell Chem. Co., Div. of Shell Oil Company v.

Teamsters L.U. No. 676 (D.N.T. 1973)

353 F. Supp. 480, 485 ..... . 53, 54

Spector v. Superior Court of San Mateo County

(2902) 33 Cal.2@ 630 2. 2. sw sv st se

Torrey Pines Bank v. Superior Court (1989)

iG Cal.dee.30 813 . 2s te see 48

Turner v. American Bar Asso. (1975, DC Tex)

eer 7. Gee. Bi. cw st wc sews wenn

United States v. A. & P. Trucking Co. (1959)

358 U.S. 121, 79 S.Ct. 203,

7 See SOO & Ga 8 6 a ew we ee we

United States v. Utah Construction and Mining

Company (1966) 384 US 394, 16 L Ed2d 642,

6 & Ct 1565 . « 2 « 2 a ee

University of Tennessee v. Elliot (1986)

478 US 788, 797, 92 L Ed2d 635,

ue & CE 2260 24 67s 6 8 _

Vann v. Shilleh (1975, 2nd Dist)

54 Cal. App.3d 192 . . «. « « « 24,

Weitz v. Yankosky, 63 Cal.2d 849

Zaragosa v. Craven (1949)

ae COisee Fioy o2h 4. 6s

CONSTITUTION

Cai. Comet. Ore. Vi, Gass eS +e we

Fifth Amendment to United States

COReGs sete 6 8 6 ne ate

Fourteenth Amendment to United States

COONS a's *s- 2S 3 3 & a; 205 Ons

STATUTES

Bt Uses OGL « 6 6 6 6 6 ee He He He 8

BA: UWcRsCs Bseals) «>» 6% os

eo hee > s Se a ae a a ee ee ee ee

be UscOcGs G20. «© 4 ew ke we ee

16 U.S.C.A. $6835 . 6 «© © © ss @ © © @

7 cee Ant |g dt ee ae we OS

30,

18,

vil

California:

B&PC §6125

CCP 170.6

CCP §283

CCP Section 473

Civil Procedure §657, subd. 6

Code of Civil Procedure Section 388

Corporations Code Section 15006

Evidence Code

Evide. Code, §354

Rules of Court:

Rule 3-700 (A) (2)

OTHER

6 Witkin, Summary of Cal. Law

(8th ed. 1974) Entity and Aggregate

Theories, §14, pp. 4264-

See 4 Se ee we ee eae

7 Witkens, (3rd ed.) Judgements

Section 288 (c) ‘2.

13 Cal Jur 3d (Rev) Part 1, Section 291,

page 727 . cls 4 6 ee ee & 8

oe! ae > & SP ear ee ee

Bankruptcy Form 4

Bankruptcy Rule 2009(e)

23,

viil

U.S. Code & Congressional and Administrative

News 5, 95th Congress, 2nd Session 1978,

eeme GiSG «3s sess esseeenees

Blacks Law Dictionary, (1990)

6th Ed, >, Gare ee ee 58

OPINIONS BELOW

The Supreme Court of California denied

Petition for Review February 10, 1993. A copy

is attached as Appendix A of Appendix.

The opinion of the Court of Appeal, Third

Appellate District, Case 3 Civil No. C0O11217

filed November 20, 1992. A copy is attached as

Appendix B of Appendix. A petition for

rehearing was denied on Dec. 15, 1992.

The second opinion of the Superior Court

filed on April 4, 1991. A copy is attached as

Appendix C of Appendix.

The opinion of the Administrative Law Court

filed July 25, 1990. A copy is attached as

Appendix D of Appendix.

The first opinion of the Superior Court

filed on June 21, 1987. A copy is attached as

Appendix E of Appendix.

JURISDICTION

This petition for writ of certiorari is

taken from a decision rendered on December 30,

1992, by the Supreme Court of California, a

court of last resort, in the case styled HOUSING

AUTHORITY, COUNTY OF SACRAMENTO, A PUBLIC BODY,

v. CULLEN DEVELOPMENT COMPANY, A DISSOLVED

PARTNERSHIP, MARK T. CULLEN, AN INDIVIDUAL, Case

No. S030563. This Court has jurisdiction

pursuant to the provisions of 28 U.S.C.S.

§1257(3) (Law. Co-op. 1988).

CONSTITUTIONAL PROVISIONS INVOLVED

No State shall make or enforce any law

which shall abridge the privileges or immunities

of citizens of the United States; nor shall any

State deprive any person of life, liberty, or

property, without due process of law; nor deny

to any person within its jurisdiction the equal

protection of the laws. U.S. Const. Amend. XIV,

§l.

"No person shall be . . . deprived of

property, without due process of law;" U.S.

Const. Amend. V.

STATEMENT OF THE CASE

Cullen Development Company was a California

General Partnership comprised of petitioner,

Richard Cullen, and James Cullen. The

partnership was formed for the sole purpose of

doing construction work. Petitioner was the

managing and qualifying partner with the

California State Contractors License Board.

Additionally, petitioner was responsible for

providing all of the financial backing for the

partnership, whereas, Richard Cullen and James

Cullen provided onsite field work.

In 1984, Cullen Development Company entered

into four Public Works Construction Contracts

with the Housing Authority, County of

Sacramento. Late that year problems and

disputes developed between the Housing Authority

and Cullen Development Company. On or about

April 22, 1985, Cullen Development Company filed

a Cessation of Work Notice on all four contracts

and stopped any, and all, further work with the

Housing Authority.’*

Thereafter, the Housing Authority sued

Cullen Development Company, a general

partnership, and petitioner individually, for

breach of Contract on the Rio Linda Project and

filed four complaints with the California State

Contractors License Board. On or about

September of 1985, Cullen Development Company,

as a partnership, and petitioner, as _an

individual, employed the Law Firm of Trainor,

Robertson, Smits and Wade (hereinafter referred

to as "Trainor"), to represent petitioner and

Cullen Development Company throughout the

litigation, including the filing of four Cross-

Complaints as to the four contracts.

On October 25, 1985, Trainor filed a

Demurrer to the Housing Authority First Amended

Complaint, which was overruled by the court, and

an Answer was ordered to be filed. Thereafter,

on December 9, 1985, Trainor filed an Answer to

A detailed discussion of the dispute

between the Housing Authority and petitioner may be

found in Administrative Law Judge Smith’s decision.

(Appendix D)

the First Amended Complaint. For reasons

unknown to petitioner, Trainor took no further

actions for almost 14 months.

On February 5, 1987, Trainor entered into

a stipulation (without petitioner’s knowledge or

approval) with Housing Authority attorney Bleier

for the filing of a single cause of action

Cross-Complaint on only one contract, the Rio

Linda Contract, just thirteen days before the

February 18, 1987 scheduled trial date.

On February 6, 1987, twelve (12) days

before the scheduled trial date, Trainor made a

Motion to Amend the Trial Setting Order and to

allow for further Law and Motion. This was a

direct result of Trainor’s complete failure to

prepare for trial. As an example of how

reprehensible and disgusting Trainor’s legal

representation was, see Declaration of Trainor

(dated February 6, 1987).? The trial court

2 Declaration of Cullen attorney Davis

[Trainor], in pertinent part:

"8. Defendants [Cullens] timely

propounded a request for Production of Documents

on Plaintiff’s [Housing Authority] Counsel. To

date defendant’s counsel has not reviewed said

denied said request by Trainor. The bottom

line is, that Trainor was faced with going to

trial on February 18, 1987, without any pre~

trial preparation or discovery.

On February 24, 1987, Trainor’ sent

petitioner a letter stating that the trial date

had been rescheduled to June 16, 1987.

On June 3, 1987, just thirteen days before

the second scheduled trial date of June 16,

1987, Trainor abandoned legal representation of

the partnership, Cullen Development Company, and

individual petitioner. Not only were the

records. At no point in time did plaintiff’s

counsel represent that said documents could not

be removed after the discovery cut-off date. In

order to adequately prepare this matter for

trial, it is necessary that these documents be

reviewed.

9. In addition, Defendant’s counsel

had no idea that Plaintiff’s counsel would be

objecting to the discovery cut-off date, given

the fact that Plaintiff was agreeing to

stipulate to the filing of a Cross-Complaint

within thirty (30) days of trial, and giving the

fact that the Cross-Defendants will be answering

the Cross-Complaint by February 10, 1987.

10. In order to adequately prepare

this matter for trial, it will be necessary to

depose approximately eight (8) to ten (10)

witnesses prior to trial.

ll. The above-stated discovery can be

completed without jeopardizing the case from

going to trial on February 18, 1987...”

individual partners forced to represent

themselves, In Pro Se, but the partnership

itself was forced into, In Pro Se. Trainor made

no explanation to the court as to who was going

to represent the partnership. The purpose of

said substitution of legal representation by

Trainor, was a last effort delay tactic by

Trainor to continue the June 16, 1987, trial

date. At this time petitioner was not aware

that Trainor had completely failed to prepare

petitioner’s case for trial.

On June 8, 1987, Trainor called petitioner,

who was residing in Arizona, stating that the

court would require a Declaration from

petitioner in order to hear a Motion to Continue

the scheduled trial date. Trainor dictated the

contents of said Motion (dated June 8, 1987)

that Trainor requested. Two critical statements

in the Declaration were that petitioner

allegedly owed Trainor legal fees, and that,

petitioner desired to be placed, In Pro Se.

Each of these statements were fabricated by

Trainor in order to delay the pending trial

date.

At the time of this Declaration, Trainor

knew that the firm was paid in full, with extra

monies still on retainer.

Then Trainor drafted the Motion to Continue

the June 16, 1987, trial date and on June ll,

1987, Trainor made a Special Appearance on

petitioner’s behalf, anticipating that the

Motion would be granted, but the court denied

said Continuance.

On the morning of June 16, 1987, petitioner

continued the morning trial by making a Calif.

CCP §170.6 Motion to recuse the first assigned

judge from the case. The case was then trailed

to an afternoon hearing on the same date.

Shortly thereafter on the advise of Trainor,

petitioner as an individual, filed a voluntary

Chapter II Bankruptcy Petition with the Federal

Bankruptcy Court (Eastern Dist.) before

appearing at the afternoon trial on June 16,

1987.

The sole purpose of petitioner’s Chapter II

filing was to initiate the automatic stay of

litigation of the Housing Authority case.

Petitioner, thought, and was led to believe by

Trainor, that the filing of the Chapter II

Petition would stay the Housing Authority trial

as it related to petitioner and Cullen

Development Company. Petitioner attended the

trial, on the afternoon of June 16, 1987, for

the sole purpose of having the Federal

Bankruptcy Automatic Stay Petition read into the

court record. Judge Morris promptly ordered

the Petition into the record.’

On June 16, 1987, before the trial against

unrepresented, individual and partner James

Cullen commenced, James Cullen stated he would

voluntarily default as he was not prepared, nor

capable of representing himself, much less the

partnership Cullen Development Company.

Petitioner did not actively participate in the

. Mark Cullen presented a copy of his

Bankruptcy Petition filed on June 16, 1987. The

court thereafter ordered no further action be taken

against Mark Cullen.

trial of June 16, 1987, as it related to

unrepresented Cullen Development Company and/or

himself. Petitioner did request to help

translate a few times for James Cullen who

suffers from a reading and speech impediment.‘

On June 16, 1987, after an approximately 15

minute trial, Judge Morris entered a Judgment

against James Cullen and Cullen Development

Company. However, the trial judge made _ very

clear that the judqment rendered was to have no

effect on Mark T. Cullen.°

On April 20, 1988, the California State

4*MARK CULLEN: Your Honor, my brother has a

little speech problem; do you mind if I speak for

him?

THE COURT: Well let me determine to what

extent you have this speech problem. Mr. James

Cullen, have you understood all we have said here?

MR. JAMES CULLEN: Not really. It’s all

above my head this level deal.”

THE COURT: After Mr. Cullen has had a chance

to examine the document.

MR. JAMES CULLEN: Can I get this read to me?

My reading is real bad.

. “MR. MARK CULLEN: Your Honor, I wouldn’t

agree that it was against me if I am still a part.

THE COURT: James Cullen and Cullen

Development Company.

MR. MARK CULLEN: I’d like the record

to state that clearly.

THE COURT: This record states that,

Contractors License Board caused the California

State Attorney General to file an Accusation

against Cullen Development Company, and the

three individual partners, under various

provisions of the California Business’ and

Professions Code. On May 16, 1988, petitioner

and Cullen Development Company filed a General

Denial to the Contractors State License Board

Accusation. The Contractors State License Board

Complaint was litigated, in a Judicial Trial

Format, for eighteen days in 1989. The

Contractors State License Board was represented

by Deputy Attorney General June Long, and

petitioner represented the partnership and

himself, In Pro Se. Testimony was presented by

more that eighteen witnesses and over 425

evidentiary documents were’ entered into

evidence. The Administrative Law decision

found, inter alia, that the Housing Authority

breached the Rio Linda Contract, that the

Housing Authority breached five Implied

Covenants, that the Housing Authority committed

Negligent Misrepresentation, and that’ the

Housing Authority committed Fraud in Labor

Compliance. On July 25, 1990, the Registrar of

Contractors, David R. Phillips, accepted

Administrative Law Judge Smith’s decision as a

Final Judqment. (See Appendix D) No appeal was

taken by either party. Therefore, after 30 days

it became a final order of the court.°

It is important to note that this was the

first decision as it relates to petitioner on

either the complaint or cross-complaint.

On August 14, 1990, petitioner filed a

Motion for Leave to File an Amended Cross-

Complaint (in the Housing Authority v. Cullen

case), accompanied by a Memorandum of Points and

Authorities in support thereof, in an effort to

remedy the alleged negligent and fraudulent

conduct of Trainor. On August 30, 1990, the

Housing Authority filed an Opposition to

6 The decision became effective 30 days

after it was mailed to the respondent [Cullen]

unless a reconsideration is ordered within that

time ...." Government Code, Title 2 Div. 2, §11519

(a).

petitioner’s Motion. Petitioner filed a Reply

on September 4, 1990. On September 7, 1990,

Superior Court Judge Gray denied petitioner’s

Motion for Leave to File an Amended Cross-

Complaint, on grounds of the court’s discretion.

Judge Gray referred to the prior stipulation

that was entered by the Cullen attorneys.’

On September 19, 1990, Trainor’ sent

petitioner a letter referencing a _ recent

Sacramento Bee newspaper article wherein

petitioner’s favorable Administrative Law

decision was written about. Trainor offered to

provide legal services to petitioner in the

“THE COURT: Well, Mr. Campbell, among

other reasons for exercising discretion against

allowing the amendment was the fact that it was

carefully stated in your moving papers how the

decision not to add this cross-complaint or to

litigate this matter was a tactical decision that

was made by the parties. And having made that

tactical decision, I think the parties should live

with it.

MR. CAMPBELL: Yes, your Henor. The

stipulation that was entered at a time just a

matter of days before the first trial date.

After argument by petitioner the court

further stated:

“THE COURT: I’m saying that you’ve made your

bed and you can lie in it.”

upcoming trial.’

On September 26, 1990, the Housing

Authority filed a Motion for Summary Judgement

on petitioner’s individual remaining Cross-

Complaint on the Rio Linda Contract. Petitioner

filed an Opposition to the Motion for Summary

Judgment on October 16, 1990. The Housing

Authority filed a Reply to petitioner’s

Opposition on October 25, 1990. Thereafter, on

October 30, 1990, Judge Gray granted Summary

Judgment against individual petitioner. The

result .of this judgment was that petitioner’s

remaining Cross-Complaint against the Housing

Authority was finally dismissed.

Soon thereafter, a trial date was scheduled

for February 11, 1991, for the Housing

Authority’s remaining Complaint against

. In pertinent part:

“I know you must be very happy to have turned

the tide and to accomplish this first large step in

vindicating the rights of you personally and Cullen

Development Company.

The article indicated that you have a

November trial date with Mr. Bleier. If you are

still in pro per in that litigation, I would be

pleased to respond to any inquiries you might have

with respect to appropriate litigation strategy.”

individual petitioner on the Rio Linda Contract.

The trial began February 11, 1991. One and

one-half days into trial, Judge Morris made a

ruling on a Motion in Limine (presented by

Housing Authority Attorney Campbell), wherein

petitioner was disallowed the opportunity to

allege his affirmative defenses against the

Housing Authority. In effect, petitioner was

finally denied the right to have the Housing

Authority v. Cullen case tried by the Superior

Court in an actual trial format.’ Before

concluding the trial, Judge Morris took under

consideration petitioner’s Oral Motion that the

prior Administrative Law Judgement should have

a Collateral Estoppel effect on the Housing

Authority’s complaint against individual

petitioner.

Judge Morris ruled for both the Housing

Authority and petitioner to present Post Trial

Briefs arguing the issue. On April 4, 1991,

’ Appellant was procedurally barred from

presenting his case-in-chief. Further, Appellant

was barred from the opportunity to even present a

defense.

Judge Morris ruled on the Collateral Estoppel

Issue in favor of the Housing Authority.

Appendix C of Appendix.

On April 4, 1991, the Housing Authority’s

individual judgment against petitioner was filed

into the record. Appendix C of Appendix.

On May 29, 1991, petitioner filed an Appeal

in the Housing Authority v. Cullen, et.al.,

case. Third District Court of Appeals: 3 Civil

No. C011217.

On November 20, 1992, Honorable Justice

Davis, with the Third District Court of Appeals,

rendered a 22 page decision (See Appendix B), on

the one hand, affirming petitioner’s denial of

a "trial on the merits" in the underlying

Superior Court action. But on the other hand,

Justice Davis stated:

“Indeed, in light of the

findings of the CSLB’s administrative

law judge, this is not a case where

the result bespeaks “justice” in an

abstract sense since SCHA is being

permitted to recover from a breach

occasioned by its own obstructionist

bureaucratic conduct." (See Appendix

pp. B-31-B32)

The resultant effect of the Housing Authority

case is as follows: petitioner has lost in

excess of 2.7 Million dollars (1985 value) and

has incurred judgements against him in excess of

$2 Million by certain sureties and others. In

addition the petitioner has incurred a judgment,

of $367,000 in favor of the Housing Authority,

against petitioner for Breach of Contract while

at the same time the Appellate Court states, it

believes the Housing Authority breached the

contract. Administrative Law Judge Smith (after

18 days of trial, over 18 witnesses, and in

excess of 425 documentary exhibits) found in his

decision, that the Housing Authority breached

the Rio Linda Contract. (Appendix D)

Succinctly stated, petitioner has been

denied the opportunity to present his evidence,

or a defense, in the trial court and a judgment

has been rendered against him. While at the

same time, the facts of the case have proven

that the Housing Authority was at fault.

REASONS FOR GRANTING WRIT

A PARTNERSHIP IS A LEGAL ENTITY AND SHOULD

ENJOY THE CONSTITUTIONAL RIGHTS, TO EQUAL

PROTECTION AND DUE PROCESS OF LAW, AS SHOULD

PETITIONER.

The trial court is a state actor, and is

mandated to enforce the constitutional rights of

each individual (including petitioner) that are

guaranteed under the United States Constitution

and a state Constitution. Trial courts must

afford petitioner, as well as a partnership

legal entity, the constitutional safeguards of

the due process clauses of the Fourteenth and

Fifth Amendments, as well as Equal Protection of

the laws under the Fourteenth Amendment.

A partner in a partnership, who is not

licensed to practice law should not be forced,

or even allowed, by the courts to represent the

partnership entity and the other individual

partners, In Pro Se. Any judgment therefrom

should be illegal. An illegal judgment against

a partnership should be void, ab initio, whether

the judgment was timely appealed or not. A

partnership, like a corporation, is a separate

legal entity. As such, a partnership, like a

corporation, cannot represent itself in superior

court, in pro se.

Partnerships are defined under

Calif. Corporations Code Section

15006: (1) A partnership is an

association of two or more persons to

carry on as co-owners a business for

profit.

California Code of Civil

Procedure Section 388, in pertinent

part states: (a) Any partnership or

unincorporated association, whether

organized for profit or not, may sue

and be sued in the name which it has

assumed or by which it is known.

In support of petitioner’s legal

conclusion, this Court has taken the

opportunity, in a criminal case, to previously

set forth guidance on this issue.

In the United States v. A. & P. Trucking

Co. (1959) 358 U.S. 121, 79 S.Ct. 203, 3 L.Ed.2d

165, this Court held:

". . .that a partnership can

violate each of the statutes here in

question guite apart from the

participation and knowledge of the

partners as individuals. The

corollary is, of course, that the

conviction of a partnership cannot be

used to punish the’ individual

partners, who might be completely

free from personal guilt. As in the

case of corporations, the conviction

of the entity can lead only to a fine

levied on the firms assets."

In the Trucking Co. case, two partnerships

were charged as entities, in separate

informations with violations of 18 U.S.C. §835,

18 U.S.C.A. §835, which makes it criminal

knowingly to violate Interstate Commerce

Commission regulations for the safe

transportation in interstate commerce of

"explosives and other dangerous articles." The

District Court dismissed, on motion, the

informations on the ground that a partnership

entity cannot be guilty of violating the

statutes involved. This Court found that

partnerships are entities and that judgments, or

fines, can be rendered against these entities

separate from the individual partners.

California case law and public policy, lend

Support to the emerging position that a

partnership is a separate legal entity. In

Epstein _v. Frank (1981) 125 Cal.App.3d 1il,

held:

: - a limited partnership is

regarded an entity separate and apart

from its partners when it is sued,

when it is served with process, and

when executing upon its assets. We

Can perceive of no compelling reason

why, in determining the applicability

of Code of Civil Procedure section

351, it should not be regarded as an

entity, which, like a corporation, is

considered ..." Id. p. 120

The Epstein case goes on further to state:

"A partnership, however, is not

always regarded as an aggregate of

individuals. The authorities are

replete with instances where the

partnership is considered an entity.

(See 6 Witkin, Summary of Cal. Law

(8th ed. 1974) Entity and Aggregate

Theories, §14, pp. 4264-4265.)" Id.

p. 119

“In the area of procedures, a

partnership is treated substantially

the same as a corporation [Fn 4

omitted], and an entity concept

predominates. Thus in order to

acquire jurisdiction over a

partnership the partnership entity

must be designated as the defendant,

and the naming of the individual

partner is not sufficient. [Citations

omitted ] The interest of an

individual partner in partnership

assets is not subject to attachment

or execution except on ae claim

against the partnership. [Citations

omitted})." Id. pp. 119-120

Petitioner’s position is further supported

by Evans v. Galardi (1976) 16 Cal.3d 300 wherein

the California Supreme Court held:

- « « we need only point out

that a limited partnership is viewed

as an entity separate and apart from

the limited partners for purposes of

suing and being sued. (Code of Civ.

Proc. §388. subd. (a); §15526.)[(Fn 16

omitted] The limited partner is not

a proper party to proceedings by or

against the limited partnership (§

15526), and the limited partnership

is not involved in suits against the

limited partners in their individual

Capacity." Id. p. 3l1l

In People v. Sobiek (1973) 30 Cal.App.3d

458 the court held:

"Under traditional legal

concepts the partnership is regarded

as an aggregate of individuals with

each partner acting as agent for all

other partners in the transaction of

the partnership business, and the

agents of the partnership acting as

agents for all of the partners.”

[Citation omitted] Id. p. 467

"Thus, given the recent trend in

the law in recognizing unincorporated

associations as separate legal

entities ..." Id. p. 468

In Promotus Enterprises, Inc. v. Jiminez

(1971) 21 Cal.App.3d 560, the court held:

"We are supported in our

conclusion by a recent partnership

decision of our Supreme Court, Fazzi

v. Peters, 68 Cal.2d 590, wherein a

copartnership was sued and service

was made on all of the partners

individually. As the action named

only the copartnership as a defendant

and did not name as defendants either

of the partners individually, the

court held that a judgment in

personam could not be entered against

one not a party to the action and

voided the judgment against’ the

individual partners." Id. p. 566

In Fazzi v. Peters (1968) 68 Cal.2d

590, this Court held:

. « « an individual judgment

may not be rendered against a partner

not joined as a defendant in an

action against the partnership of

which he is, or is alleged to be, a

member [Fn 7 Omitted]". Id. p. 597

In addition, there is other sound legal

support to conclude a partnership is a separate

legal entity, distinct from its individual

members.

First, by statute a partner, not licensed

to practice law, to a general partnership cannot

represent the partnership in legal matters, In

Pro Se. (See Calif. B&PC §6125°°)

- "No person shall practice law in this

State unless he is an active member of the State

Bar.” Deerings, B&PC §6125, Page 389.

"Corporations and partnerships

both of which are fictional legal

persons, obviously cannot appear for

themselves personally. With regard

to these two types of business

associations, the longstanding and

consistent court interpretation of

§1654 is that they must be

represented by licensed counsel."

[Turner v. American Bar Asso. (1975,

DC Tex) 407 F. Supp. 451, 476)

"Corporations must be represented in

court by attorneys admitted to

practice, and may not apply through

an officer or other lay

representative." "The same rule

applies to partnerships and other

unincorporated associations." [First

Amendment Foundation v. Brookfield

(1983, ND ILL) 575 F. Supp. 1207.]

Partnerships and corporations are

independent legal entities. In Vann

v. Shilleh (1975) 54 Cal. App.3d 192,

the holding is that a corporation

cannot appear in pro per. [Clean Air

Transport Systems v. San Mateo County

Transit Dist. (1988) 198 Cal. App.3d

576] holding that “an unincorporated

association must be represented by a

licensed attorney." (id. 576).

Secondly, the Federal Bankruptcy Courts,

have continually allowed partnerships to file

for bankruptcy protection, notwithstanding the

fact that the individual partners do not have to

file unless they become insolvent, or vise

versa. (See generally 11 U.S.C. §303(3), 11

U.S.C. §723, Bankruptcy Rule 2009(e), and

Bankruptcy Form 4)

"There is no requirement that

any partner in a case under Title II

file under the same chapter as the

partnership or vise versa." U.S.

Code & Congressional and

Administrative News 5, 95th Congress,

2nd Session 1978, page 6158.

In addition:

"A partner may file a voluntary

case under II U.S.C. 301 whether or

not the partnership is a debtor under

a case under Title II." U.S. Code &

Congressional and Administrative News

5, 95th Congress, 2nd Session 1978,

page 6158.

Third, and finally, the underlying trial

court determined that petitioner had individual

claims separate from the partnership Cullen

Development Company. On June 16, 1987, Judge

Morris stated:

"Mark Thomas Cullen has just

filed with the court a voluntary

petition in bankruptcy under chapter

eleven, which was ordered filed in

the federal bankruptcy court at 1:20

P.M. this day, and Mr. Mark Cullen,

who’s present together with James

Cullen, has lodged that with the

court, and I [the court] will order

it filed as a record of this case.

That precludes any further

proceedings against defendant Mark

Thomas Cullen."

At that point, Judge Morris’ protected

petitioner’s individual rights as to the

complaint, against petitioner, and petitioner’s

cross-complaint against the Housing Authority.

Honorable Justice Davis made _ this same

conclusion.”

This should lead to the correct legal

conclusion that "A partnership or _ other

unincorporated association capable of suing or

being sued as an entity in the State in which an

action is brought should be deemed a citizen of

the State where it has its principal place of

business, whether such action is brought by or

against such partnership or other unincorporated

association or by or against any person as an

agent or representative thereof.

If the court knew that the general

partnership, Cullen Development Company, could

not represent itself, In Pro Se, the court

intentionally abused its discretion by placing

=e On June 16, 1987, no action was taken

against Mark T. Cullen on the complaint or on the

cross-complaint. Appendix B p. B-8

pu i ice il

the partnership, In Pro Se, on the eve of trial.

If the court did not realize that a partner

could not represent the partnership, In Pro Se,

the court clearly erred.

"Party ordinarily has a right to

change his attorney if he wishes to

do so, but for the court to approve

substitution, it is necessary that it

be satisfied the substituted

attorneys are qualified by rules of

the court to act as attorneys of

record in the case." [Piorkowski v.

Arabian American Oil Co. (1955, DC

NY) 131 F. Supp. 553.]

Since a partner, not licensed to practice

law, cannot represent the partnership, In Pro

Se, the judgment against the partnership entity,

of June 16, 1987, should be void, ab initio, as

against the law. It should not matter whether,

or not, a timely appeal was filed as an illegal

act does not become legal 60 days later.

This Court has not sanctioned the denial of due

process of law. As this Court has stated:

"As our decisions have

emphasized time and again, the Due

Process Clause grants the aggrieved

party the opportunity to present his

case and have its merits fairly

judged. Thus it has become a truism

the “some form of hearing" is

required before the owner is finally

deprived of a protected property

interest. Board of Regents v Roth,

408 US, at 570-571, n8, 33 L. Ed2d

548, 92 S Ct 2701 (emphasis in

original)." Logan v. Zimmerman Brush

Company (1982) 455 US 422, 433, 71

L.Ed2d 265, 102 S Ct 1148.

"The Court traditionally has

held that the Due Process Clauses

protect civil litigants who seek

recourse in the courts, either as

defendants hoping to protect their

property or as plaintiffs attempting

to redress grievances. Id. p. 429

In the Logan case, Justice

Powell, with whom Justice Renquist

joins, concurring in the judgment,

stated: "It is necessary for this

Court to decide cases during almost

every Term on due process and equal

protection grounds. Our opinion in

these areas are often criticized,

with justice, as lacking consistency

and clarity. Because these issues

arise in various settings, and

opinions are written by each of nine

Justices, consistency of language is

an ideal unlikely to be achieved."

Id. p. 443 Fn.

In addition, petitioner’s due process

right to have a fair trial on the merits has

been violated.

Petitioner has been deprived of having the

underlying case heard by a "trial on the merits"

in the trial court. The appellate court’s

decision sustains that denial of due process.

"The right to a hearing is one

of the rudiments of fair play assured

by the Fourteenth Amendment, and

there can be no compromise on the

footing of convenience or expediency

when that minimal requirement has

been neglected or ignored." [Endler

v. Schutzbank (1968) 68 Cal.2d 162]

The trial, on June 16, 1987, that took

place against James Cullen, whom is illiterate

and speech impaired should have been stopped by

the trial court. A litigant who can not read

and understand the complaint against him is not

capable of representing his own interests much

less the interest of the partnership entity and

petitioner. At the same time, this judgment has

been used to keep petitioner from having a trial

on the merits in the trial court.

Petitioner has been procedurally barred

from having his day in court.

"Privileges granted by statute

are embraced within the

constitutional right to a day in

court, those powers of the courts

being limited not alone as to what

they may do, but also as to the

manner in which they may do it."

{[Overell v. Overell (1937) 18 Cal.

App.2d 499).

The Housing Authority would suffer no harm

if petitioner were allowed to have a trial on

the merits other than having to prove their own

claims. Instead, the Housing Authority has used

errors of the trial court to prevent

presentation of a “case in chief" by petitioner.

"Errors at a trial that deprives

a litigant of the opportunity to

present his version of the case are

ordinarily reversible, since there is

no way of evaluating whether or not

they effected the judgment. A

conviction under such circumstances

is a miscarriage of justice within

the meaning of Cal.-—Const. Art. VI,

$13.° People _v. Fisher (1984, 2d

Dist) 153 Cal. App.3d 826.

Petitioner did not expect to be bound by

the June 16, 1987, judgment. In fact, to be

sure he wasn’t, petitioner asked the trial judge

at the end of the hearing if this judgment would

have any effect on petitioner and the trial

judge clearly stated that it would not. (See Fn.

5, supra)

"Nevertheless, due process

requirements must be met. The non

party must have had an identity or

community of interest with, and

adequate representation by, the

losing party in the first action; and

the circumstances must have been such

that the nonparty expected to be

bound by the prior adjudication."

Lynch v. Glass (1975) 44 Cal. App.3d

948, (7 Witkens, (3rd ed. )

Judgements Section 288 (c)).

James Cullen could not adequately represent

himself, much less the partnership entity and

petitioner. The June 16, 1987, judgment against

James Cullen has prevented petitioner from

having a trial on the merits against the Housing

Authority.

By the trial court not allowing Mark Cullen

to litigate the underlying case there has

occurred a grave miscarriage of justice and a

flagrant violation of petitioner’s due process

rights. The administrative law decision

clearly speaks to which party breached the Rio

Linda contract. (Appendix D) If petitioner is

allowed a fair trial in the trial court, it is

reasonably probable a result more favorable to

petitioner will be reached. The court has held:

"A “miscarriage of justice"

constituting grounds for reversal of

a judgment under Cal. Const. Art. VI,

§13, Evide. Code, §354, should be

declared only when the reviewing

court, after an examination of the

entire case, including the evidence,

is of the opinion that is reasonably

probable that a result more favorable

to the appealing party would have

been reached in the absence of

error." Clifton v. Ulis (1976) 17

Cal.3d 99.

The due process clauses of the Fifth and

Fourteenth Amendments essentially provide, that

no person may be deprived of "life, liberty, or

property, without due process of law."

The courts presently engage a balancing of

compelling interests of the individual and

government in arriving at the nature and scope

of due process protection applicable to any

particular deprivation. However, the appellate

court did no balancing at all, it simply stated:

" . . « it comes too late in the day . . ." for

Appellant to attack the underlying judgment as

violating his due process, notwithstanding the

assurances to Appellant by the trial court judge

that this judgment would have no effect on

petitioner. (See Fn. 5)

The Housing Authority has twice been

granted a favorable judgement without the trial

court hearing the evidence against them. First,

on June 16, 1987, and second, on April 4, 1991.

"In almost every setting where

important decisions turn on questions

of fact, due process requires an

opportunity to confront and cross-

examine adverse witnesses. A persons

right of cross-examination and

confrontation of witnesses against

him or her in noncriminal proceedings

is a part of the procedural due

process guaranteed by both the Fifth

and Fourteenth Amendments where there

is involved the threat of life,

liberty, or property." [13 Cal Jur 3d

(Rev) Part 1, Section 291, page 727,

728.)

Petitioner is asking for no _more than a

hearing “on the merits". Simply put, an

opportunity to present evidence and cross-~-

examine witnesses. Certainly this is a request

that this Court will reconsider.

“A hearing before judgment, with

full opportunity to present all of

the evidence and arguments which the

party deems important, is all that

can be adjudged vital under the

guarantee of due process of law."

[Melancon v. Superior Court of Los

Angeles County (1954) 42 Cal.2d 698}

It is clear error for the court to allow

petitioner to be bound by a judgment without an

opportunity for a fair hearing.

i His telat AMADA at ARE i LENA RAE oe o*

"One of the essential elements

of procedural due process is an

opportunity for hearing." es F

Reeder Contractors Vv. Hiqgens

Industries, Inc. (1959, CA9 CAL) 265

F.2d 768). "It ais a cardinal

principal of due process that no one

may be bound or concluded by a

judgment, either in respect to his or

her person or property, unless that

person has had his or her day in

court." [Spector v. Superior Court

of San Mateo County (1961) 55 Cal.2d

839; People v. Lawrence (1956, lst

Dist) 140 Cal. App.2d 133].

Petitioner respectfully requests that this

Court find that Cullen Development Company’s and

petitioner’s right to due process, and equal

protection under the law, to have a fair trial

on the merits has been violated and accept this

case for review.

Il.

DUE PROCESS IS AN ELEMENT OF COLLATERAL

ESTOPPEL AND RES JUDICATA.

Collateral Estoppel may be applied only if

the requirements of due process are _ met.

(Blonder-Tongue v. University Foundation (1971)

402 U.S. 313, 329 [28 L Ed.2d 788, 799, 91 S.

Ct. 1434]; Bernhard v. Bank of America (1942) 19

Cal.2d 811; Dillard v. McKnignt 34 Cal.2d 214,

215. Due process requires that the non-party

have had an identity or community of interest

with, and adequate representation by, the losing

party in the first action. (Emphasis added by

appellant) (Zaragosa v. Craven (1949) 33 Cal.2d

315, 321; Rynsburger v. Dairyman’s Fertilizer

Coop., Inc. (1968) 266 Cal. App.2d 269, 277-278.

AOB P. 58

Both Cullen Development Company ~= and

petitioner had the right to counsel on June 16,

1987. Notwithstanding that, the court chose to

allow Trainor to wrongfully abandon Cullen

Development Company and petitioner on the eve of

trial. Thereafter, the trial court denied

Cullen a continuance of the June 16, 1987, trial

date. Then the trial court wrongfully allowed

partner James Cullen to represent the

partnership entity, Cullen Development Company,

in pro se. An illegal act occurred when James

was forced to represent a legal entity when he

was not licensed to practice law.

"The right to a hearing includes

the right to appear by counsel, and

Sr a is at MERON DR Pre en a hee Oe OD

an arbitrary refusal of such a right

constitutes a deprivation of due

process." [Powell v. Alabama (1932)

287 US, 77 L. ED. 158, 53 S Ct. 55).

"A constitutional basis for a right

to be represented by counsel in non

criminal proceedings is found in the

due proceed clauses of both the Fifth

and Fourteenth Amendments, as well as

in the equal protection clause of the

Fourteenth Amendment. It applies in

a civil administrative hearing, and,

in its narrowest definition, it is

the right to appear by counsel in all

adversary proceeding in which the

adversary party has the benefit of or

the right to counsel." [Vann _ v.

Shilleh (1975, 2nd Dist) 54 Cal.

App.3d 192).

The appellate court found petitioner in

privity with the partnership on June 16, 1987,

but failed to recognize that a partner to a

general partnership cannot represent’ the

partnership, In Pro. Se. Petitioner cited the

appellate court to B&PC §6125**, and the court

has side stepped this issue. The court stated:

"The short answer to this category of argument

is that it comes too late in the day--. . ."

(Appendix B, p. B-4)

"No person shall practice law in this

State unless he is an active member of the State

Bar." Deerings, B&PC §6125, Page 389.

The appellate court then said:

"As such, it was his decision

(whether voluntarily or as a victim

of circumstance) to restrict himself

[Appellant] to merely sitting in the

court and failing to present any

affirmative defenses on the

partnership’s cross-complaint,

allowing judgment to be entered

against it, and failing to appeal the

adverse decision." (Appendix B, p. B-

22)

This position is too simplistic and ignores

the underlying facts. The trial court clearly

held that the judgment would have no effect on

petitioner. Petitioner detrimentally relied on

the statements of the trial judge that the trial

judgment of June 16, 1987, would have no effect

on petitioner. (See Fn. 5)

Our American judicial system is comprised

of merged courts of law and equity. While the

appellate court rendered its legal duties, the

appellate court lost sight of its equitable

responsibilities.

By failing to address controlling case law

and focussing instead on ostensibly Calif. CCP

Section 473, the appellate court failed to use

its inherent equity power to overturn the trial

court judgment of June 16, 1987, upon which the

trial court used, with the appellate court’s

approval, to bar petitioner from having a trial

on the merits.

To that end, the appellate court held: ".

and counsel’s alleged inexcusable behavior

cannot be a basis for relief under the trial

court’s inherent equitable powers." (Appendix

B, p- B-23, Fn. 32)

The appellate court’s holding is the

general rule our case law holds.

"The general rule expressly

recognized is that incompetent

counsel or negligence of a party’s

own attorney is ordinarily no ground

for relief from judgment in a civil

action." Carrol Vv. Abbot

Laboratories, Inc. (1982) 32 Cal.3d

892.

Notwithstanding this rule, petitioner cited

two controlling exceptions which the appellate

court failed to give consideration. First,

“In Carrol v. Abbot Laboratories,

Inc., (1982) 32 Cal.3d 892, the court

recognized a judicially created

exception to the general rule that

the negligence of the attorney is

Des ie ila ec ints

imputed to the client unless shown to

be excusable, in cases where the

attorney’s neglect amounts to

positive misconduct by which the

client is effectively and unknowingly

deprived of representation, and the

client himself is relatively free

from negligence." 64 ALR4th 323,

351. AOB P. 31, 47

Secondly, "With respect to

setting aside a default judgment, it

is the policy of the law to favor,

whenever possible, a hearing on the

merits, and appellate courts are much

more disposed to affirm an _ order

where the result is to compel a trial

on the merits than they are when the

judgment by default is allowed to

stand and it appears that a

substantial defense could be made.

(Benjamin _v. Dalmo Mfg. Co., 31

Cal.2d 523, 525) Stated in another

fashion, it is the policy of the law

to have every litigated case tried

upon the merits, and it looks with

disfavor upon a party who, regardless

of the merits of the case, attempts

to take advantage of the mistake,

surprise, inadvertence, or neglect of

his adversary. (Weitz v. Yankosky, 63

Cal.2d 849, 855). [3] Where, as in

the case under review, defendant’s

motion is made more than six months

after entry of default, the motion is

not directed to the court’s statutory

power to grant relief for mistake or

excusable neglect (Code Civ. Proc., §

473), but is rather submitted to the

court’s inherent equity power under

which, apart from its statutory

authority, the court has the power to

grant relief from a default judgment

where there has been extrinsic fraud

or mistake. (Hallet v. Slaughter, 22

Caine. S52, 357-* Orange Empire

National Bank v. Kirk, 259 Cal.

App.2d 347, 352-353. AOB P. 46, 54,

The appellate court has failed to recognize

the consequences of the alleged negligence and

malpractice of Trainor as it effects petitioner

in the underlying judgments.’

Trainor’s withdrawal of legal

representation on the eve of trial in a complex

litigation case was an "improper abandonment of

their client Cullen" in violation of the

ethical rule governing withdrawal (Rule 3-

700} .™

. The Cullen attorneys: (1) failed to

file the required Government Tort Claims, (2) they

failed to timely file Cullen’s cross-complaint, (3)

the cross-complaint was filed by stipulation 13

days before the Feb. 19, 1987 scheduled trial

date, (4) they failed to complete any discovery,

(5) they failed to do legal research, and, (6) they

substituted out representation of the eve of trial.

In effect, the Cullen attorneys failed to provide

legal representation for Cullen in the Housing

Authority v. Cullen case.

14 Rule 3-700(A) (2): “In general a member

shall not withdraw from employment until the member

has taken reasonable steps to avoid reasonably

foreseeable prejudice to the rights of the client,

including giving due notice to the client, allowing

time for employment of other counsel, complying

with rule 3-700(D), and complying with applicable

iS ii i a ie ca

Petitioner was an innocent client, not

trained in the law, and as such the trial court

should have protected petitioner from the

positive misconduct and over reaching of

Trainor.

"It is the duty of the trial court to

protect the innocent client from the

consequences of breach of ethics."

(Vann _v. Skilleh (1975) 54 Cal.

App.3d 192, 197. AOB P. 16

As the appellate court has_ readily

admitted, its decision does not serve justice to

petitioner. All appellant is asking for is a

trial, whereupon, petitioner will be allowed to

litigate his case. Petitioner will do the rest.

"Although the law ordinarily

charges a client with the inexcusable

neglect of his attorney, and gives

him redress against his counsel,

there are exceptional cases in which

the client who is relatively free

from personal neglect will be

relieved from a default or dismissal

attributable to the inaction or

procrastination of his counsel,

particularly where the attorneys

failure to represent the client

amounts to positive misconduct."

Orange Empire National Bank v. Kirk

laws and rules." Deering’s Calif.Codes Annotated

Rules (1988), 1993 Supplement.

(1968) 259 Cal. App.2d 347.

California case law has held:

"Clients should not be forced to

act as hawk-like inquisitors of their

own counsel, suspicious of every step

and quick to switch lawyers. The

legal profession knows no worse

headache than the client who

mistrusts his attorney." Orange

Empire National Bank v. Kirk, 259

Cal. App.2d 347, 355

This same legal doctrine should apply to

the trial courts. When the trial court stated

that the underlying judgment of June 16, 1987,

would have no effect on petitioner, petitioner

should not be expected to second guess the court

as to what that decision meant.

Further, Trainor used a stipulation to

extinguish petitioner’s rights on three

contracts. The elements of Res Judicata, more

modernly claim preclusion, are not satisfied-by

a stipulation. The claims on those three

contracts were different than the claims on the

Rio Linda Contract.

Petitioner is not asking for a _ second

action on these three contracts, petitioner is

asking for his first action.

The issues to the three contracts were not

fully and fairly litigated’> in the underlying

case. The claims were wrongfully stipulated

away by Trainor and the court has inherent

equitable power to undo that injustice.

Petitioner, as a lay person untrained and

unskilled in the law, would have no idea his

prior attorneys were stipulating away his right

to a trial on three of the underlying contracts.

"CCP §283, providing that an

attorney may bind his client in any

of the steps of an action of

proceeding, does not give the

attorney the right to stipulate away

his client’s rights without’ the

knowledge or consent of the client."

People v. Hy-Lond Enterprises, Inc.

(1979) 93 Cal. App.3d 734.

"The rights growing out of

stipulation are similar to those

arising from a contract, and the word

“contract” is often employed loosely

to denominate the rights created by a

stipulation. However, when a

stipulation is accepted by the court,

as it was in this case, there is an

additional party or element involved,

namely, the court. And it becomes

15 Knickerbacker v. City of Stockton (1988)

199 Cal. App. 3d 235, 242.

necessary, if contrary evidence is to

be admitted or considered, for the

trial judge to give permission, upon

proper request, to a setting aside of

the stipulation." Harris v. Spinali

Auto Sales, Inc. (1966) 240 Cal.

App.2d 447, 453.

Petitioner has not been afforded due

process, while at the same time Collateral

Estoppel was used to prevent petitioner from

putting on any defense to the complaint by the

Housing Authority in the underlying action, on

April 4, 1991. Further, the trial court

affirmed a stipulation as_ satisfying the

elements required for the Doctrine of Res

Judicata.

Petitioner respectfully requests this court

find a lack of due process and grant review of

this case.

III.

AN ADMINISTRATIVE LAW DECISION DECIDED

FIRST IN TIME SHOULD HAVE A COLLATERAL

ESTOPPEL EFFECT OVER A SUBSEQUENT SUPERIOR

COURT DECISION.

As referenced in Appendix B and Appendix E,

no judgment was rendered against petitioner on

June 16, 1987, on either the underlying

complaint or cross-complaint. In July 1990,

Administrative Law Judge Smith found that the

Housing Authority breached the Rio Linda

Contract. This decision should have prevented

the Housing Authority from relitigating the

breach of contract issue. Since the doctrine of

Collateral Estoppel was not correctly applied by

the trial court there now exists conflicting

judgments on the record. These judgments have

led to a grave miscarriage of justice against

petitioner, while at the same time, allowing a

windfall profit to the Housing Authority.

The Calif. Supreme Court held:

California Courts have long

agreed that there can be “but one

final judgment in an action, and that

is one which in effect ends the suit

in the court in which it was entered,

and finally determines the rights of

the parties in relation to the matter

in controversy." Bank of America

Nat‘’l Trust & Sav. Ass’n v. Superior

Court (1942) 20 C.2d 697.

This premise and its variations are often

referred to as the "“One-Final-Judqment Rule."

In Campbell v. Zokelt (1969) 272

Cal. App.2d 315, 318, held "A

decision can be said to be “against

law" within the meaning of Code of

Civil Procedure §657, subd. 6, where

findings are irreconcilable

(Kralyevich v. Magrini, 172 Cal.

App.2d 784, 789". ARB P. 68

The appellate court decision wrongfully

affirms the presence of conflicting judgments

into the record, by reaching, with skirting

language, to support its conclusion on the

burdens of proof being different in the two

proceedings. In fact, the appellate court goes

on to state: "Although there is no precedence

specifically involving the present circumstances

° « the CSLB’s failure to establish a breach

of contract in a proceeding where it had a

burden of clear and convincing evidence has no

effect in a subsequent proceeding where SCHA

need only prove the breach by a preponderance."

(Appendix B p. B-21) Petitioner submits a

default caused by petitioner’s attorneys was not

proof by a preponderance of the evidence. It

was no evidence at all.

The proceedings to date, in the Housing

Authority v. Cullen case, clearly find three

court decisions in stark contrast.

A. THE JUDGMENT OF JUNE 16, 1987.

This trial lasted approximately fifteen

minutes against, unrepresented, James Cullen and

Cullen Development Company. Plaintiff called a

single witness, who testified, and was not

cross-examined by defendants. Plaintiff called

defendant James Cullen, whom is illiterate and

speech impaired. Accordingly, no evidence was

presented by the defendants. Nor could it be

since the partners could not represent the

general partnership, In Pro Se, and more

importantly, Cullen’s attorneys remained in

possession of all of Cullen’s documents. Mark

Cullen did not appeal this judgment because the

trial judge stated very clearly that this

judgment would have no effect on him. (See Fn.

5) This trial, without any defense put on by

Cullen, found that Cullen Development Company

breached the Rio Linda Contract.

B. THE JUDGMENT OF JULY 25, 1990.

This judgment was rendered after a judicial

trial lasting 18 days, which included

approximately 18 witnesses providing testimony,

and over 425 Documentary exhibits, entered into

evidence. This decision found, inter alia,

that the Housing Authority breached the Rio

Linda Contract.

C. THE JUDGMENT OF APRIL 4, 1991.

After approximately one and one-half days

of trial, wherein the Housing Authority was

given the opportunity to present its case-in-

chief and petitioner was given the opportunity

to commence cross-examination of the single

witness called, petitioner was then barred from

presenting his case-in-chief, by the trial court

relying on Torrey Pines Bank v. Superior Court

(1989) 216 Cal.App.3d 813. Petitioner argued

that this case was developed around a fact

pattern much different than petitioners.

Notwithstanding that, this decision found that

Mark Cullen breached the Rio Linda Contract.

These three judgments are inconsistent.

The Housing Authority cannot be allowed to

eee aaa

escape the consequences of its actions, as

suggested by the appellate court, by such a

simplistic legal maneuver as failure to appeal

an illegal judgment, when the underlying record,

as a whole, is taken into consideration. These

conflicting decisions violate the ONE FINAL

JUDGMENT RULE, and as such the appellate court’s

decision affirms a judgment that is against the

law.

On the one hand, the appellate court’s

decision has decided that the Housing Authority

breached the underlying contract (based on the

administrative law decision), but on the other

hand, the appellate court has decided that

petitioner must bear the consequences of said

breach. Then, the appellate court held its own

decision does not "bespeak "Justice"".

The breach of contract issue was not

litigated by the Housing Authority against

petitioner on June 16, 1987. Applying the

Doctrine of Collateral Estoppel, it should

follow that the Housing Authority should have

ia ect e con

been denied the opportunity to again litigate

the Breach of contract issue that had been

previously decided, by Administrative Law Judge

Smith. The trial court erred by not following

and applying the established case authority, as

it relates to Administrative Law Decisions,

under the legal Doctrine of Collateral Estoppel.

Instead, the trial court set out to fashion its

own interpretation of the Doctrine as it relates

to Administrative Law Decisions.’® Although

16 The trial court stated:

"(1) While the issues in the administrative

hearing and present trial were sufficiently similar

(breach of contract and legal excuse therefore),

the remedies were sufficiently dissimilar

(suspension or revocation of contractors’ license

and money damages for breach of contract) to

preclude a finding of privity between this

plaintiff and the complainant, Contractors’ State

License Board.

(2) The plaintiff herein and the complainant

in the administrative action had sufficiently

diverse interest to militate against a finding of

privity between them.

(3) The standards of proof in the two

actions were distinct. Complainant’s failure of

proof by clear and convincing evidence of a breach

of contract in the administrative hearing does not

preclude proof of such by a preponderance of the

evidence in the instant case.

(4) Defendant herein has additionally failed

to allege and prove the finality of the

administrative law decision.

(5) This court will not give collateral

estoppel effect to an administrative determination

that was rendered subsequent in time to the prior

determination in this same case in which this Court

has previously determined that principles of

the trial court found the issue "Breach of

Contract" to be sufficiently similar, it found

the Housing Authority not to be in privity with

the Attorney General and Contractors License

Board. Reported case authority is in contrast

to the court’s reasoning on the issue _ of

privity.

"Traditionally, collateral

estoppel has been applied to bar

relitigation of an issue decided in a

prior court proceeding. In order for

the doctrine to apply, the issues in

the two proceedings must be the same,

the prior proceeding must _ have

resulted in a final judgment on the

merits, and the same parties or their

privies must be involved. (People v.

Sims (1982) 32 Cal.3d 468, 484 [].)

"The doctrine was extended in

Sims to apply to a final adjudication

of an administrative agency of

statutory creation so as to preclude

relitigation of the same issue in a

subsequent criminal case. Our

Supreme Court held that Collateral

Estoppel applies to such prior

adjudications where these

requirements are met: (1) the

administrative agency acted in a

judicial Capacity; (2) resolved

disputed issues properly before it;

and (3) all parties were provided

collateral estoppel operate against this

defendant.” (Appendix C)

‘

with the opportunity to fully and

fairly litigate their claims. (id.,

at p. 479)." County of Los Angeles v.

Department of Industrial Relations,

214 Cal. App.3d 1538, 1543-1544.

Which ever decision was correctly decided

first in time should preclude the other under

the doctrine of collateral estoppel. It is

important to, again make clear, that no decision

was entered against petitioner on June 16, 1987.

The first decision was the Administrative Law

decision on July 25, 1990.

- Administrative Law Judge Smith’s decision,

in pertinent part, found that:

"Cullens abandonment of the Rio

Linda Project was with Legal Excuse.

SHRD’s’’ breaches of covenants and

implied warranties, infra, coupled

with selfish and incompetent project

administration, constituted a

material failure of consideration and

rendered Cullen’s continued

performance on the Rio Linda project

impracticable due to excessive and

unreasonable difficulty and expense.

SHRA’s administrators significantly

interfered with Cullen on the job

Site and with Cullen’s relationships

with its bonding companies’ and

win SHRD is also known as the Housing

Authority; aka Sacramento Housing and Redevelopment

Agency.

SS aaa

private line of credit, substantially

hampering Cullen’s ability to

successfully perform." Appendix D.,

pp. D-9-D-10

"The totality of SHRD’s conduct

toward Cullen operated to deny Cullen

the benefit of its bargain made with

SHRD in signing the contract. The

material failure of consideration and

the impracticability due to

excessive and unreasonable difficulty

and expense extinguished Cullen’s

obligation to further perform under

the contract and provided Cullen the

right to rescind. Cullen exercised

that right by filing the Stop

Notice." Appendix D., p. D-10

"SHRD’s conduct, acts and

omissions, as set forth in this

finding and its subparts, breached

the implied covenant of good faith

and fair dealing implied in all

contracts executed in California,

including the Rio Linda _ project

contract. Seaman’s Direct Buying

Service, Inc. v. Standard Oil Company

of California (1984) 36 Cal.3d 752,

768." Appendix D, p. D-43

The trial court correctly found that, the

issue of breach of the Rio Linda Contract, is

the same issue in the instant case.

The test relied on as to whether an

administrative hearing judge acted in a

"Judicial character" can be found in the case of

Shell Chem. Co., Div. of Shell Oil Company v.

Teamsters L.U. No. 676 (D.N.T. 1973) 353 F.

Supp. 480, 485. The hearing was a judicial-like

adversary proceeding. Deputy Attorney General

June Laverne Long, represented the California

Contractors State License Board and Mark Cullen

represented himself, in Pro Se. Opening

statements were made by both counsel, 18

witnesses were called to testify at the trial

that lasted 18 days. Direct and _cross-

examination, redirect and recross-examination,

were available to each counsel, while each

witness was under oath. Evidence was introduced

and/or excluded according to the rules of the

California Evidence Code. The court maintained

a complete transcript of the trial (by

reporters), along with a copy of all evidence

documents. Finally, a written decision with

supporting facts was presented at the conclusion

of the trial. This trial met with each of the

tests required in the Shell Chem. Company case

for a judicial proceeding. Therefore, the prior

Administrative Law Trial was a trial on the

merits.

All of the parties were presented with the

opportunity to fully and fairly litigate their

claims. The actual parties listed -within the

four corners of the accusation document, against

Cullen, filed by the California State Attorney

General’s office were: Contractors State

License Board [Petitioner in that case], and

Cullen Development Company [Respondent in that

case]. However, the "parties in interest” for

Contractors State License Board included the

Housing Authority of Sacramento County (aka

Sacramento Housing and Redevelopment Agency) and

the California State Attorney General’s Office.

Petitioner, in the underlying February 1991

trial, asserted that there was an identity of

parties between the Housing Authority,

Contractors State License Board, and the

California State Attorney General’s Office. In

contrast, the trial court found this not to be

the case.

The California Supreme Court has previously

rendered an opinion about this type of privity

issue.

In People v. Sims (1982) 32

Cal.3d 468, a similar privity problem

arose. Up until the Sims case, the

courts relied on a decision in People

v. La Motte (1979) 92 Cal. App.3d

604, which essentially held that a

fair hearing decision absolving the

accused for welfare fraud did not bar

the district attorney from

prosecuting for the same misconduct

since the county welfare department

was not a party to the criminal

proceedings. (Id., at op. 608).

People v. Sims, (supra) held that:

"La Motte’s analysis of the privity

requirement is too simplistic.

"Privity is essentially a shorthand

statement that Collateral Estoppel is

to be applied in a given case; there

is no universally applicable

definition of privity." (Lynch _ v.

Glass (1975) 44 Cal. App.3d 943,

947). The concept refers to a

relationship between the party to be

estopped and the unsuccessful party

in the prior litigation which is

‘sufficiently close’ so as to justify

application of the doctrine of

Collateral Estoppel" (Clemmer_v.

Hartford Insurance Co. (1978) 22

Cal.3d 865, 875." (Id., People _v.

Sims (1982) 32 Cal.3d 468, 486-487.)

The Sims case (id., p. 487) went on

to say: “Here the district

attorney’s office, which represents

the party to be estopped, and the

county, the unsuccessfully party in

the prior litigation, are

“sufficiently close" to warrant

applying Collateral Estoppel. Both

SSS

entities are county agencies that

represented the interests of the.

State of California at the respective

proceedings. The district attorney’s

office represents the State of

California in the name of the

"people" at criminal prosecutions.

(See Pen. Code, §684). At fair

hearings the County Welfare

Department acts as the agent of the

state. "[{T]he courts have held that

agents of the same government are in

privity with each other since they

represent not their own rights but

the right of the government. [Fn.

omitted. ]" (Lerner _v. Los Angeles

City Board of Education (1963) 59

Cal.2d 382, 398."

In the underlying Administrative case, the

Housing Authority was a party in interest to the

Administrative Law decision. The Housing

Authority elected the option to file complaints

with the California State Contractors License

Board, after Cullen Development Company filed a

valid Cessation of Work Notice, as well as a

Complaint in the Superior Court for money

damages for Breach of Contract. The facts

substantiate that the Housing Authority filed

both complaints. Once the Housing Authority

filed a complaint against Cullen with the

Contractors License Board the Housing Authority

became a party in interest (ie., they were in

privity with the Contractors State License Board

and Attorney General). The Contractors State

License Board would not have caused an

accusation to be filed against Cullen but for

the false information the Housing Authority

provided to the Contractors License Board

investigators and the State Attorney General’s

Office.

By its own admission the Housing Authority

is a "Public Body-Corporate and Politic" (1.e.,

the Housing Authority’s Complaint Caption).

Blacks Law Dictionary, (1990)

6th Ed, P. 1229, defines a Public

Entity as: "Public entity includes a

nation, state, county, city and

county, or any other political

subdivision or public corporation,

whether foreign or domestic. Calif.

Evid. Code." p. 1228, Public

Corporations are defined as _= an

artificial person (e.g. municipality

or a governmental corporation)

created for the administration of

public affairs." "A public

corporation is an instrumentality of

the state, founded and owned in the

public interest, supported by public

funds and governed by those deriving

their authority from the state."

The Housing Authority is in privity with

the County of Sacramento and the State of

California. The Contractors License Board is an

agency of the State of California. The

California Attorney General’s Office is an

agency of the State of California. The Housing

Authority is a Public Corporation by its own

admission, for the County of Sacramento. All

county governmental entities located within the

State of California report to and are governed

by the State of California. Therefore, all

three of these agencies are in privity with each

other. Each is responsible to the people of the

State of California.

"In addition to the above

analysis, Collateral Estoppel may be

applied only if the requirements of

due process are met. Due process

requires that the nonparty (Housing

Authority) have had an identity or

community of interest with, and

adequate representation by the losing

party in the first acticn." JZarazosa

v. Craven (1949) 33 Cal.2d 315, 321.

The California Attorney General’s Office

adequately represented the interests of the

People-State of California, the Contractors

License Board, and the Housing Authority. Most

certainly, the Housing Authority cannot assert

that the California Attorney General’s Office

was incapable of providing adequate legal

representation for them. The Attorney General’s

case was built upon information and evidentiary

documents supplied to them by the Housing

Authority and the Contractors License Board.

Under the rational of the Sims case, if the

Housing Authority had other information to prove

Cullen breached the Rio Linda Contract they

should have supplied it to the investigators for

the Contractors License Board, and/or to the

Attorney General.

There are three cases that do lend guidance

for the sound conclusion that Administrative Law

decisions should have Collateral Estoppel effect

over civil trial court decisions. Two are this

Court’s decisions and the third is a California

Supreme Court decision.

In United States _v- Utah

Construction and __ Mining Company

(1966) 384 US 394, 16 L Ed2d 642, 86

S Ct 1545, the court held (id., 384

US 421) “although the decision here

rests upon the agreement of the

parties as modified by the Wunderlich

Act, we note that the result we reach

is harmonious with general principals

of Collateral Estoppel. Occasionally

courts have used language to the

effect that res judicata principals

do not apply to administrative

proceedings, but such language is

certainly two. broad. When an

administrative agency is acting in a

judicial capacity and resolves

disputed issues of fact properly

before it which the parties have had

an adequate opportunity to litigate,

the courts have not hesitated to

apply res judicata to enforce

repose."

In People v. Sims (1982) 32

Cal.3d 468, the court held “that the

administrative decision could

properly be accorded Collateral

Estoppel effect for purposes of

subsequent criminal prosecutions,

provided the traditional requirements

and policy reasons for applying

Collateral Estoppel were also

satisfied, since the administrative

hearing was a judicial like adversary

proceeding, since the administrative

agency resolved disputed issues of

fact properly before it, and since

the hearing procedure provided both

parties with and adequate opportunity

to fully litigate their claims."

In the case of University of

Tennessee v. Elliot (1986) 478 US

788, 797, 92 L Ed2d 635, 106 S Ct

3220, held “We have previously

recognized that it is sound policy to

apply principals of issue preclusion

to the factfinding of administrative

bodies acting in a judicial

Capacity."

Administrative Law Judge Smith, ruled on

the merits in Cullen Development Company’s

favor. He decided, the factual and legal issues

relating to the "Breach of Contract" issue,

sought to be Collaterally Estopped by the Mark

Cullen.

The trial and appellate courts relied on,

inter alia, the Administrative Law court’s

"Standards of Proof" as not being similar to

what the trial court would require. First of

all, this reliance does not appear to be an

element of any of the reported cases. Secondly,

since Judge Smith did not indicate in his

decision what standard of proof was used, and no

precedence is established, this is a question

that remains unanswered.

Next, the trial court relied on the

finality of the Administrative Law decision not

being pleaded. It is true Mark Cullen did not

include that point in his post trial brief,

however, such should not be fatal. Even relying

on the trial court’s more liberal 60 days after

a judgment to file an appeal, the actual time

period that had passed was some eight months.

The reported cases, and elements of proof do

rely on the finality. In no uncertain terms do

any of the authorities say the point must_be

pleaded, just that the decision be final.

In addition, the trial court relied on the

remedies of the two cases, as being different.

Once again, this does not appear to be an

element of any reported cases.

Finally, the trial court relied on the

Judgment of June 16, 1987, as being the first

judgment on record. No judgment was entered

against petitioner on June 16, 1987. The

judgment against Cullen Development Company, on

June 16, 1987, should be void, ab initio, since

it is illegal, for lack of due process and equal

protection of the laws, under the United States

Constitution.

Petitioner respectfully requests this Court

grant review of this case in order to determine

whether an Administrative Law decision decided

first in time will have a Collateral Estoppel

effect over subsequent litigation.

CONCLUSION

No individual, whether it be a partnership,

legal entity or petitioner should be denied due

process and equal protection of the law under

the United States Constitution, made applicable

to each state through the Fourteenth Amendment.

At first breadth, the eventual bankruptcy of

petitioner may seem unimportant, however, this

Court should consider the many other partnership

entities that go bankrupt long before reaching

this level of litigation.

As signified by the words over the steps to

the main entrance to this Court, petitioner is

seeking no more than:

EQUAL JUSTICE UNDER THE LAW

Petitioner respectfully prays that this

Court consider the qrave effects when due

process is denied upon the public, other general

partnerships and Cullen, grant this writ, acccrd

Cullen the process deserved, and order the

California Supreme Court to reverse the Court of

Appeal, Third Appellate District, to overturn

the lower court’s denial of Cullen’s procedural

DUE PROCESS right to receive a fair trial on the

merits.

DATED: April 26, 1993

Respectfully submitted,

— ul (Ls

Mark T. Cullen —~—

P.O. Box 1215

Shingle Springs, CA 95682

PETITIONER, IN PRO SE

A-1

APPENDIX A

Third Appellate District No. C011217

S030563

IN THE SUPREME COURT OF CALIFORNIA

IN BANK

— oe wee ST LT LT OL a re rs rs rere rs rs rs re, res re rs es re re re re es ee ee ee ees ee oe oe oe

OS SS SS SS SS SS SS SS SS SS SS SS ot << So Sa a So So So a ooo

HOUSING AUTHORITY OF THE COUNTY OF SACRAMENTO,

RESPONDENT

Ve FILED: FEB. 10, 1993

Robert Wandruff Clerk

MARK T. CULLEN, APPELLANT

_>---——— — ee a a eee ee ee.

= SE FS Ee ee eee EEE ES Se

Appellant’s petition for review DENIED.

LUCAS

Chief Justice

B-1

APPENDIX B

NOT TO BE PUBLISHED

COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(SACRAMENTO )

FILED: NOVEMBER 20, 1992

HOUSING AUTHORITY OF THE )

COUNTY OF SACRAMENTO, )

) 3 Civ.C011217

Plaintiff and Respondent, )

) (Super.Ct.No.

) CV331596)

Vv. )

MARK T. CULLEN, )

Defendant and Appellant. )

)

INTRODUCTION

Although what is past is always prologue,

in this appeal we must get a particularly long

running start to comprehend the nature of the

appellate contentions. Plaintiff Housing

Authority of Sacramento County (SCHA) filed this

action in 1985 for breach of contract against

Mark fT. Cullen.?® The Cullens and the

Also named defendants in the amended

complaint were James and Richard Cullen and the

business in which the three Cullens were partners,

Cullen Development Company (hereafter, “the

partnership"). Any subsequent undesignated “mr.

Cullen" references will be to Mark Cullen.

B-2

partnership filed a cross-complaint for breach

of contract in February 1987. At the eventual

start of trial in June 1987, Mr. Cullen produced

a copy of a petition for voluntary bankruptcy

(pursuant to title 11 of the United States Code)

that he had just filed in federal court, which

the trial court stated "“preclude[d] any further

proceedings against Defendant Mark Thomas

Cullen." Ultimately, the court entered judgment

against James and Richard Cullen and the

partnership on both the complaint and cross-

complaint in 1987.

Following Mr. Cullen’s voluntary dismissal

of his bankruptcy petition in December 1989,

SCHA resumed proceedings against him. In August

1990, Mr. Cullen sought to amend his surviving

portion of the cross-complaint (on which the

trial court had taken no action) to add causes

of action based on his successful defense of his

contractor’s license in a 1989-1990 disciplinary

administrative proceeding instigated by SCHA.

The trial court denied the motion without

B-3

comment. SCHA then moved for summary judgment

on the cross-complaint on the ground of issue-

preclusion, based on the fact it had prevailed

on the cross-complaint against the other cross-

Claimants. The trial court granted the motion.

Immediately prior to the February 1991 trial

against Mr. Cullen, SCHA successfully moved in

limine to exclude the introduction of any

evidence in support of affirmative defenses

which were related to the now-defunct cross-

complaint. At the conclusion of trial, the

court ruled in favor of SCHA but stayed entry of

judgment pending additional argument on any

issue-preclusive effect of the administrative

proceeding. Ruling (after supplementary

briefing) that there was no preclusive effect,

the trial court entered judgment against Mr.

Cullen in April 1991.

This brings us to Mr. Cullen’s pro. per.

appellate contentions. He asserts the 1987

judgments entered against the partnership and

his partners are invalid because the Cullens

B-4

were abandoned by the attorneys representing

them and because his bankruptcy stay should have

been extended to his co-defendants. He also

claims the trial court should never have allowed

the attorneys to substitute out of the action,

and should have allowed a continuance once they

did. The short answer to this category of

argument is that it comes too late in the day--

the 1987 judgments against the partnership and

the other Cullens, never having been appealed,

are now final and may not be attacked here by

Mr. Cullen either directly or collaterally. Mr.

Cullen also challenges the denial of his motion

to amend his cross-complaint, the grant of

summary judgment on the cross-complaint, the

preclusive effect on his affirmative defense

accorded to the summary judgment ruling, and the

failure to accord the administrative proceeding

any preclusive effect in the present action. We

shall affirm.

FACTS

To focus (at least initially) on the

B-5

transaction which is the subject of the original

complaint and cross-complaint, SCHA and the

Cullen partnership executed a written contract

in August 1984 for construction of a 20-unit

low/moderate-income housing project in Rio Linda

at 6029 Dry Creek Road. The project was to

begin in August 1984 and be substantially

completed by March 1985. The partnership

stopped work on the project in April 1985,

having completed 46 percent of it, and ignored

SCHA’s demands to finish the job. SCHA took

charge of the project and rebid it to another

contractor. After deducting a number of

credits, the cost to SCHA of completion was

approximately $366,000.

In a curious maneuver, SCHA filed both a

complaint and an amended complaint for breach of

this contract on July 22, 1985. James, Richard,

and Mark Cullen filed an unverified answer

individually and as Cullen Development Company;

they included the affirmative defense of a

breach of contract on the part of SCHA, as well

B-6

as misrepresentation and fraud by SCHA in the

inducement of the contract. For some reason,

Tom Cullen also answered, aithough not named in

the amended complaint.”

On February 5, 1987, the parties filed a

stipulation for an order permitting defendants

Cullen and the partnership to file a cross-

complaint (despite the pending February 18 trial

date) "containing a cause of action for Breach

of Contract only." This pleading alleged that

SCHA had frustrated the ability of the

partnership to complete the project by altering

terms and failing to pay for work completed in

a timely fashion. On February 19, the case was

reset for trial in June 1987 because there were

no available courtrooms.

On June 3, 1987, James, Richard, and Mark

” The original complaint included Tom

Cullen as a defendant; the amended complaint

deleted hin. There is no explanation of the

change. There were indications at the second trial

in this matter that Tom Cullen was not a member of

the partnership (although he is a brother of Mr.

Cullen). As he is not a significant character in

the lawsuits (other than as the executor of

numerous proofs of service), we will not further

concern ourselves with him.

B-7

Cullen filed a substitution of themselves in

propria persona for their retained counsel

(Trainor, Robertson & Smits); Mark Cullen signed

a substitution on behalf of the partnership.

Trainor, Robertson & Smits nonetheless appeared

"specially" to argue for a continuance of trial,

arguing they had substituted out because they

had not been paid and their former clients would

not be able to find alternative counsel in time

for trial. Mark Cullen represented that he and

his fellow litigants would be able to come up

with the money for new counsel within the next

60 days. The court denied that motion.

On the morning of June 16, Richard Cullen

failed to appear for trial and a default

judgment was entered against him. Mark Cullen

filed a peremptory challenge against the

assigned judge, and the matter was reassigned to

a different judge for trial that afternoon.

When the matter was called for trial at 1:30

p.-m., Mark Cullen presented the court with his

bankruptcy petition, which had been filed 10

B-8

minutes earlier. He remained present at the

hearing. After perfunctory questioning of James

Cullen and a witness testifying to SCHA’s

damages, the court ruled against James Cullen

and the partnership on SCHA’s complaint and on

the cross-complaint. No action was’ taken

against Mark Cullen on the complaint or on the

cross-complaint. The court initially entered

judgment in favor of SCHA only on the complaint

against Richard and James Cullen and the

partnership; it later amended the judgment to

include the cross-complaint. The judgment

recited that the partnership had appeared "Pro

per by JAMES CULLEN."

In April 1988, the Contractors’ State

License Board (CSLB) filed an accusation against

Mark Cullen’s contractor’s license. MThis was

based on consumer complaints filed by SCHA in

June 1985 alleging the partnership had abandoned

the Rio Linda Project and three other projects

in April 1985 for which SCHA held contracts with

the partnership. In a decision rendered May 22,

B-9

1990 (and adopted by the CSLB on June 43,

1990),*° the administrative law judge found no

basis for discipline for abandonment of these

four projects because SCHA’s conduct rendered

performance by the partnership impracticable due

to excessive and unreasonable expense and

difficulty.?? The CSLB did impose a 30-day

Suspension of the license for failure to account

™ Mr. Cullen had requested the trial

court to take judicial notice of the complaint,

accusation, and decision; SCHA raised no

objection. We therefore take judicial notice of

this decision as an official act of the executive

branch. (Evid. Code, §452, subd. (c).) We may

take judicial notice of the truth of its findings

of fact. (Bach v. McNelis (1989) 207 Cal.App.3d

852, 865.)

ais To quote a representative passage of

the decision, “[SCHA]’s breaches of covenants and

implied warranties, infra, coupled with selfish and

incompetent project administration, constituted a

material failure of consideration and rendered

Cullen’s continued performance on the Rio Linda

project impracticable due to excessive and

unreasonable difficulty and expense [SCHA]‘s

administrators significantly interfered with cullen

on the job site and with cullen’s relationships

with its bonding companies and private line of

credit, substantially hampering Cullen’s ability to

(perform successfully}. The totality of [SCHA]}‘s

conduct toward Cullen operated to deny Cullen the

benefit of its bargain made with (SCHA} in signing

the contract. The material failure of

consideration and the ji practicability due to

excessive and unreasonable difficulty and expense

extinguished Cullen’s obligation to further perform

under the contract and provided Cullen the right to

rescind."

B-10

properly for funds received on the Rio Linda

project.

In September 1990, Mr. Cullen moved for

leave to file an amended cross-complaint.

According to his notice of motion, these new

allegations “were discovered in a_ recent

Administrative Law Case hearing the same legal

issues," which was final as to the CSLB. He

asserted any delay was reasonable because of his

bankruptcy filing. He also claimed he had

wished to await the resolution of the CSLB

proceeding, since it presented the same factual

and legal issues. The proposed cross-complaint

now encompassed all four contracts with SCHA and

contained causes of action for breach of

contract and miscellaneous torts. SCHA opposed

the amendment on several grounds: unreasonable

delay and concomitant prejudice to SCHA; issue

preclusion; failure to comply with procedural

prerequisites for filing tort claims against

governmental agencies; and the statute of

limitations with respect to any new cross-

B-il

defendants brought into the action. SCHA’s

counsel also averred he had stipulated to

permitting a cross-complaint to be filed on the

eve of the 1987 trial only if it were saieed to

the single breach-of-contract cause of action.

At the hearing on the motion, the court stated

it felt the scope of the cross-complaint in 1987

was a tactical compromise by which Mr. Cullen

shonid be _ bound.? The court was also

disturbed by expanding the number of contracts

at issue from one to four and adding tort claims

(although Mr. Cullen expressed his willingness

to abandon the tort claims). The court denied

the motion "in its discretion."

Shortly after obtaining the order

denying this motion to amend, SCHA filed a

motion for summary judgment on the original

cross-complaint. It argued the issue of whether

it had breached the contract with Mr. Cullen

2 The trial court thus accepted the truth of

SCHA’‘s declaration on this point, which we may not

gainsay. (Beckett v. Kaynar Mfg. Co., Inc. (1958)

49 Cal.2d 695, 699; Philippine Export & Foreign

Loan Guarantee Corp. v. Chuidian (1990) 218

Cal.App.3d 1058, 1077.)

B-12

had previously been adjudicated when the trial

court had entered judgment against the other

cross-complainants (i.e., the partnership and

James and Richard Cullen) on the _ cross-~-

complaint. The court granted the motion "for

the reasons stated in the moving party’s points

and authorities."

In its final procedural salvo against

Mr. Cullen, SCHA filed a motion in limine to

exclude evidence of damages arising out of facts

related to the dismissed cross-complaint. In

arguing the motion, SCHA expanded the scope to

any “legal excuse to not... performon.. .

the contract." The court at first denied the

motion. After reexamining SCHA’s authority, the

court ruled that Mr. Cullen was precluded from

introducing any evidence of the conduct on which

the cross-complaint was based as an affirmative

defense.

During trial, Mr. Cullen raised the CSLB

proceedings as a defense, claiming SCHA was

precluded from relitigating the question of his

B-i3

breach of contract. The court told him he would

have the opportunity to brief the issue before

it rendered a written judgment. After receiving

the parties’ supplementary briefing, the trial

court ruled it would not give an effect to the

CSLB decision (giving five bases in its written

order). This appeal followed.

DISCUSSION

Mr. Cullen’s bankruptcy petition

has no relevance to these proceedings

Woven throughout Mr. Cullen’s brief on

appeal are references to the effect of his

bankruptcy filing on the validity of the 1987

judgments. We must first purge this spectre

from the discussion.

It is true his interest in the partnership

is considered part of his bankruptcy estate (In

re Manning (10th Cir. 1987) 831 F.2d 205, 207)

and therefore any proceeding by a creditor

against that interest would be subject to the

B-14

automatic stay that is the "fundamental

protection provided by the bankruptcy laws" (11

U.S.C. §362, subd. (a) (1); 1 Collier,

Bankruptcy Manual (3d ed. 1992) §362.01, p.

362-3; §362.03[1], pp- 362-11 to 362-14).*

Any action taken in violation of the automatic

stay is void and without effect. (In re 48th

Street Steakhouse, Inc. (2d Cir. 1987) 835 F.2d

427, 431.) |

However, as noted above, SCHA never

relied on the preclusive effect of the judgments

against the other Cullens and the partnership in

connection with its own complaint; eather, it

relied on the judgments against the other cross~

claimants on the cross-complaint. The automatic

stay of the bankruptcy laws do not apply to

actions brought by debtors. (1 Collier, op.

cit. supra, §362.03, p. 362-15.) Even Mr.

Moreover, even if the partnership were

somehow considered separate from Mr. Cullen’s

estate, the automatic stay could be applied to it

if any judgment against it would in effect be a

judgment against the debtor. (A. H. Robins Co.,

nl v. Piccinin (4th Cir. 1986) 788 F.2d 994,

99.)

B-15

Cullen admits in one part of his brief that the

bankruptcy stay had no effect on the cross-

complaint. The trial court refrained from any

adjudication of his portion of the cross-

complaint not because of the bankruptcy stay but

because his cause of action vested in the

bankruptcy trustee so Mr. Cullen could not

continue to prosecute his action personally,

absent an order of the bankruptcy court. (See

Lauriton v. Carnation Co. (1989) 215 Cal.App.3d

161, 164-165.)** Thus, even assuming the

judgment against the partnership on SCHA’s

complaint is void on its face and thus subject

to collateral attack (8 Witkin, Cal. Procedure

(3d ed. 1985) Attack on Judgment in Trail Court,

$6, pp. 410-411; §12, pp. 414-415),7> it is

merely an academic question in the present

-” Presumably, the partnership was under no

such disability in prosecuting the cross-complaint

in its own name. However, the parties have not

provided any argument or authority on the point,

and we are not inclined to pursue it further.

25. There is no suggestion by Mr. Cullen that

the partnership is somehow directly attacking the

prior judgment against it on the complaint. (8

Witkin, op. cit. supra, Judgment, §2, pp. 405-406

[listing various methods of direct attack].)

B-16

proceeding--the judgement on the complaint is

not being used in any preclusive fashion against

Mr. Cullen, and the judgment on the cross-~

complaint does not suffer a similar disability.

We consequently will not consider the bankruptcy

stay--or the prior judgment on the complaint--in

any subsequent part of the discussion.

The trial court correctly disallowed

the motion to amend the cross-complaint

The amendment of pleadings is governed

by Code of Civil Procedure section 473, which

provides in pertinent part, "The court may, in

furtherance of justice, and on such terms as may

be proper, allow a party to amend any pleading

. .. . " While there is a policy of liberality

in permitting amendment, the question of whether

a particular amendment should be allowed is

within the discretion of the trial court. (Moss

Estate Co. v. Adler (1953) 41 Cal.2d 581, 585-

586 [no abuse in denying leave to amend answer

B-17

on eve of trial to assert new defense based on

different facts].)

On appeal, the plaintiff attacks the

trial court’s reliance on the- earlier

Stipulation filed by Trainor, Roberston & Smits

that limited the cross-claim to one cause of

action. He claims he should not be bound by the

actions of counsel which he characterizes as

"alleged negligence and malpractice."

All the facts underlying the new

contractual causes of action in the proposed

amendment to the cross-complaint were within the

knowledge of Mr. Cullen and his attorneys at the

time of the stipulated cross-complaint in

February 1987 (as they related entirely to

conduct on the part of SCHA prior to the

partnership ceasing work on the four projects in

April 1985).§ In exchange for avoiding the

risk of losing the motion for leave to amend on

eve of trial (a denial more likely to occur and

26 We will take Mr. cullen at his word that

he was willing to waive all other causes of action,

thus avoiding the need to address the additional

objections by SCHA to them.

B-18

be upheld (e.g., Moss Estate Co., supra, 41

Cal.2d at pp. 585-586)), Mr. Cullen’s counsel

agreed to file a cross-claim limited to the one

cause of action for breach of the Rio Linda

contract. Mr. Cullen is consequently bound by

that stipulation, and the trial court correctly

refused to allow amendment in light of it.

It is true a party may seek relief from

the effect of a stipulation pursuant to Code of

Civil Procedure section 473. (In re Marriage of

Carter (1971) 19 Cal.App.3d 479, 489.) However,

even if we characterize Mr. Cullen’s motion to

amend his cross-complaint as incorporating a

“pre-motion" to be relieved from the earlier

stipulation on the basis of “unknowing[ ]

depriv[ation] of effective representation"

(Daley v. County of Butte (1964) 227 Cal.App.2d

380, 392),?’? and even assuming the conduct of

Trainor, Robertson & Smits rose to a level

27 we have our doubts his papers would satisfy

the formalities required for such a motion pursuant

to the statute. (See 8 Witkin, op. cit. supra,

Attack on Judgment in Trial Court, §167, p. 571.)

We need not decide the question, however.

B-19

satisfying this standard,”® the “pre-motion" is

untimely under the six-month jurisdictional

limitation of the statute. (8 Witkin, op. cit.

Supra, Attack on Judgment in Trial Court, §169,

o 372.)" If indeed Mr. Cullen was badly

served by his former’ counsel making this

Stipulation, his remedy is not reversal of the

trial court’s decision denying his motion. (By

the same measure, he may not challenge the trial

court’s failure to prevent Trainor, Robertson &

Smits from “abandoning its clients" cross-

complaint, its allowing the partnership to

proceed in pro.per., or its failure to allow a

continuance after counsel substituted out of the

7° In light of this assumption, we have not

set out any of the facts on which Mr. Cullen bases

his claim.

29 Nor would it be of any succor to construe

Mr. Cullen’s motion to amend as incorporating a

motion to invoke the court’s inherent equitable

power to relieve him of the effect of the

stipulation (8 Witkin, Op. Cit. supra, §2(5), p.

406; §200, p. 598), assuming argquendo that a

Stipulation rather than a judgment can be the

subject of such a motion. Being a narrower basis

of relief than the statutory remedy, one cannot

rely on counsel’s inexcusable neglect. (Carroll v.

Abbott Laboratories, Inc. (1982) 32 Cal.3d 892,

901, f£n.8.)

B-20

action, since the time for challenging any of

these actions had long expired by the time of

his motion to amend.)

II!I

The cause of action in the cross-complaint

is precluded by the prior judgment

The doctrine of "res judicata" both bars

a second suit between the same parties on the

same cause of action ("claim preclusion," in the

modern terminology) and estops a party against

whom a judgment has_ been obtained from

relitigating in a second proceeding any issues

fully and fairly litigated in the first

(denominated “issue preclusion").

(Knickerbocker v. City of Stockton (1988) 199

Cal.App.3d 235, 242; Rest.2d Judgments,

Introduction to Chapter l, p. 1.) The elements

for application of issue preclusion are (1)

whether the issue decided in the first

proceeding is identical to the one raised in the

second, (2) whether the first proceeding

culminated in a final judgment on the merits,

B-21

and (3) whether the party against whom issue

preclusion is raised was a party or in privity

with a party against whom the issue was decided

in the first proceeding. (Knickerbocker, supra,

199 Cal.App.3d at p. 244.)

To recapitulate, SCHA’s motion for

summary judgment on the cross-complaint was

based solely on the ground of issue preclusion,

SCHA asserting the 1987 judgment against the

other cross-claimants on the cross-complaint

resolved the issue of whether it had breached

the contract on which Mr. Cullen’s unamended

cross-complaint was based. In essence, Mr.

Cullen argues on appeal that application of

issue preclusion here is a violation of his due

process rights because of the lack of privity

between himself and James Cullen, or between

James Cullen and the partnership.*® Be this as

it may, it is entirely beside the point.

30 He adverts in passing to the absence of a

final judgment on the merits, but as he advances

neither argument nor authority on this point, it is

deemed waived. (People v. Hardy (1992) 2 cal.4th

86, 150-151.)

B-22

As he admits here, and admitted in the

trial court, he was the “managing general

partner" of the partnership, was "in complete

control of all partnership assets, including the

instant litigation" (on the cross-complaint),

and had full authority for management of the

partnership affairs (his fellow partners Richard

and James averring they simply supervised the

actual construction work). As such, it was his

decision (whether voluntarily or as a victim of

circumstance) to restrict himself to merely

sitting in court and failing to present any

affirmative case of the partnership’s cross-~

complaint, allowing judgment to be entered

against it, and failing to appeal the adverse

decision. As the person controlling the

partnership with financial interest in the

partnership, the issue-preclusive consequences

of the failure to present any case on behalf of

the partnership--which is no less "conduct of

the action" than affirmatively presenting a

Case--may permissibly be applied against Mr.

B-23

Cullen, since he was in privity with the

partnership. "’A seein Salis is not a party to an

action but who controls the action is bound by

the judgment where he has a proprietary or

financial interest in the judgment or in the

determination of question of fact or law with

reference to the same subject matter or

transaction.’" (7 Witkin, Cal. Procedure (1985)

Judgment, §295, p. 733; accord Stafford v.

Russell (1953) 117 Cal.App.2d 319, 320

{principal stockholder of previously

unsuccessful plaintiff corporation bound by

judgment against corporation because he had

controlled conduct of earlier litigation].)*

Therefore, there was no obstacle to granting

33 Mr. Cullen argued in the trial court that

he was denied a full and fair Opportunity to

litigate the issue of SCHA’s breach of contract in

the prior action. He does not specifically renew

this as a ground for reversal of the trial court’s

ruling. However, as with his attempt to avoid the

effect of the stipulation on his attempt to amend

his cross-complaint, any direct attack upon the

prior judgment against the partnership on the

cross-complaint by means of a motion under Code of

Civil Procedure section 473 is untimely, and

counsel’s alleged inexcusable behavior cannot be a

basis for relief under the trial court’s inherent

equitable powers.

B-24

summary judgment on the cross-complaint on the

basis of issue preclusion.

The trail court properly granted the motion

excluding all evidence tied to the cross~

complaint

In granting the motion in limine brought

by SCHA, the trial court expressly relied on

Torrey Pines Bank v. Superior Court (1989) 216

Cal.App.3d 813. In an extremely abbreviated

argument, Mr. Cullen argues against application

of this decision on two bases. First, he claims

the bankruptcy stay distinguishes the present

situation from Torrey Pines. Second, he claims

the trial court expressly stated the 1987

judgment "would have no effect on [him]."

In Torrey Pines, the petitioner bank

filed an action against a guarantor of a debtor

business which had defaulted. The debtor then

filed an action against the bank for breaches of

fiduciary duty and the covenant of good faith

and fair dealing, for negligent

B-25

misrepresentation, and for negligence. The

guarantor subsequently filed an amended

complaint in the debtor’s action naming himself

as a plaintiff both individually and as the

debtor’s guarantor. Ultimately, the guarantor

filed a dismissal with prejudice of his action.

(216 Cal.App.3d at pp. 816-817.) In granting a

writ directing entry of summary judgment against

the guarantor, the Torrey Pines court held the

guarantor’s affirmative defenses were barred by

the issue-preclusive effect of the dismissal

with prejudice (termed a "retraxit") of his own

action against the bank, since they were based

on the same facts. (Id. at pp. 819-822.) The

court relied on Hamilton v. Carpenter (1940) 15

Cal.2d 130, 132-133, in which the Supreme Court

had held that the defendants were properly

prevented from introducing evidence of fraud as

a defense where they had previously brought an

action for the identical fraud and had not

prevailed.

Given the myriad of ways in which issue

B-26

preclusion may occur, the Torrey Pines decision

is sufficiently analogous to be controlling

here. The gist of Mr. Cullen’s cross-complaint

was the behavior of SCHA in insisting on

performance that varied so substantially from

the terms of the written agreement that it

constituted a breach. The affirmative defenses

to the complaint--breach of contract,

misrepresentation, and fraud--depend on the same

facts. It is of no import that Torrey Pines

involved a separate action rather than a

dismissed cross-complaint. It is also of no

import that Mr. Cullen (and possibly the

partnership) had the benefit of an automatic

stay because of his bankruptcy petition; at the

risk of endless iterations, it is the issue-

preclusive effect of the judgment against the

partnership on the cross-complaint--which was

not subject to the stay--which bars’ the

introduction of this evidence. Finally, to the

extent Mr. Cullen could rely on the trial

court’s pronouncements at the 1987 "trial," the

B-27

quotations to which he refers are directed only

to the question of the effect of the 1987

proceedings on the action against him; there is

no "promise" that there will be no effect on his

cross-complaint. Thus, the trial court properly

excluded evidence relating to the cross-

complaint.

No preclusion results from the CSLB’s

resolution

Finally, Mr. Cullen challenges’ the

various bases for the trial court’s failure to

accord any preclusive effect to the CSLB’s

determination. Since it is sufficient to rely

On any one of the trial court’s rationales in

affirming its ruling, we limit our discussion to

the simplest--i.e., the different burden of

proof in the two proceedings.”

*2@ To recount this portion of the court’s

ruling, “The standards of proof in the two

actions were distinct. Complainant’s failure of

proof by clear and convincing evidence of a breach

of contract in the administrative hearing does not

preclude proof of such by a preponderance of the

evidence in the instant case."

B-28

Although Mr. Cullen devotes a portion of

his argument to the proposition, it is not

disputed by SCHA that "a valid and final

adjudicative determination by an administrative

tribunal has the same effects under the rules of

res judicata, subject to the same exceptions and

qualifications, as a judgment of a court.”

(Rest.2d Judgments, §83, subd. (1) [emphasis

added}; accord County of Los Angeles v.

Department of Industrial Relations (1989) 214

Cal.App.3d 1538, 1544.)** We have already set

out the necessary elements for invocation of

issue preclusion, which we will assume arguendo

are satisfied here (including privity).*

However, even where these elements are

satisfied, “relitigation of the issue in a

33 therefore, we will eschew any explanation

of the requisites and limitations connected with

according issue-preclusive effect to an

administrative determination. (See Rest.2d

Judgments, Introduction to Chapter 6; §83, subds.

(2) - (4)-)

We note, however, that the presence of

privity between the CSLB and the SCHA (which was

not a party to the CSLB proceedings and had no

control over the litigation) is problematic. (See

Rest.2d Judgments, §36, comment f {discussing

intragovernmental privity].-)

B-29

subsequent action... is not precluded...

(4) [where t]he party against whom preclusion is

sought had a significantly heavier burden of

persuasion with respect to the issue in the

initial action than in the subsequent action .

ee te: (Rest.2d Judgments, §28.) As the

Restatement explains, "To apply issue preclusion

in the cases described in Subsection (4) would

be to hold, in effect, that the losing party in

the first action would also have lost had a

Significantly different burden been imposed . .

- This is a major reason for the general rule

that, even when the parties are the same, an

acquittal in a criminal proceeding is not

conclusive in a subsequent civil action arising

out of the same event." (Id., comment f£.)

We have held in past that failure to

establish guilt beyond a reasonable doubt in a

criminal proceeding has no preclusive effect in

a subsequent probation-revocation proceeding

between the same parties where an issue need

only be established by preponderance of the

B-30

evidence. (In re Anderson (1951) 107 Cal.App.2d

670, 672 [cited with approval in Teitelbaum

Furs, Inc. v. Dominion Ins. Co., Ltd. (1962) 58

Cal.2d 601, 605].) By a parity of reasoning,

that an issue has been established by only a

mere preponderance in a dependency proceeding is

not determinative in a subsequent proceeding

between the same parties to terminate parental

rights, where the issue must be established by

clear and convincing evidence. (In re Nathaniel

P. (1989) 211 Cal.App.3d 660, 670-672.)”

The burden of proof in an administrative

hearing involving the discipline of licensees is

clear and convincing evidence. (Realty

Projects, Inc. v. Smith (1973) 32 Cal.App.3d

204, 212; Evid. Code, §115.) In the absence of

any affirmative showing to the contrary, we

presume this is the standard applied in the

administrative proceedings under review, even if

35 on the other hand, a party’s failure to

establish a fact even by a mere preponderance is

preclusive in a subsequent proceeding with a higher

burden of proof. (People v. Sims (1982) 32 Cal.3d

468, 485.)

B-31

not specifically recited in the decision. (Feist

v- Rowe (1970) 3 Cal.App.3d 404, 422; Evid.

Code, §664.) On the other hand, the burden of

proof in the present proceedings under review is

merely preponderance of the evidence. (Evid.

Code, §115.) Although there is no precedent

specifically involving the present

circumstances, the principle of the Anderson and

Nathaniel P. cases mandates that even if the

SCHA can be considered to be in privity with the

CSLB, the CSLB’s failure to establish a breach

of contract in a proceeding where it had a

burden of clear and convincing evidence has no

effect in a subsequent proceeding where SCHA

need only prove the breach by a preponderance.

Consequently, the court correctly refused to

accord the CSLB decision any preclusive effect

in the present action.

Mr. Cullen claims the totality of the

trial court’s action resulted in the denial of

his due process rights. Indeed, in light of the

B-32

findings of the CSLB’s administrative law judge,

this is not a case where the result bespeaks

"justice" in an abstract sense since SCHA is

being permitted to recover for a _ breach

occasioned by its own obstructionist

bureaucratic conduct. However, SCHA has been

placed in the catbird seat not by the actions of

the trial court but by the de facto default of

the Cullens and the partnership in 1987 (Mr.

Cullen’s bankruptcy merely forestalling the

inevitable with respect to him).

DISPOSITION

The judgment is affirmed. Neither party

shall recover costs.

DAVIS a >

We concur:

IMS , Acting P.J.

SCOTLAND , Je

APPENDIX C

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SACRAMENTO

FILED: APRIL 4, 1991

HOUSING AUTHORITY OF THE )} NO. 331596

COUNTY OF SACRAMENTO, a public ) Dept. 6

body corporate and politic, )

)

Plaintiff, )

)

vs. ORDER AFTER HEARING

RE COLLATERAL ESTOPPEL

MARK T. CULLEN, doing business

as CULLEN DEVELOPMENT COMPANY

and DOES 1 to 10,

Defendants.

)

By post-trial briefing with points and

authorities argued by both plaintiff and

defendant, Mark T. Cullen, defendant argues that

principals of collateral estoppel should

preclude plaintiff from re-litigating the issue

of defendant’s breach of contract.

The relevant facts on this issue are as

follows:

l. Plaintiff obtained a verdict after

trial by the court against all defendants with

C-2

the exception of Mark T. Cullen on its breach of

contract complaint of June 16, 1987. The

complaint as to Mark T. Cullen was stayed by

virtue of that defendant’s bankruptcy action

filed in federal court.

2. Mark T. Cullen obtained a favorable

result at an administrative hearing brought

against him by the Contractors’ State License

Board wherein he was found by the administrative

law judge not to have breached this contract

with this plaintiff. Said decision was rendered

on June 25, 1990, to become effective on July

25, 1990.

3. Trial in the instant matter was held on

February 11 and 13, 1991, wherein this Court

ruled in plaintiff’s favor on the motion in

limine precluding defendant from asserting any

affirmative defense under the doctrine of

collateral estoppel by virtue of the privity of

this defendant with the other defendants in the

verdict entered on June 16, 1987.

4. This Court rendered a verdict in favor

C-3

of plaintiff and against this defendant on the

breach of contract complaint as stated on the

record and stayed judgment pending briefing and

decision on defendant’s collateral estoppel

arguments.

The Court finds for plaintiff and against

defendant on defendant’s collateral estoppel

claims as stated hereinafter.

l. While the issues in the

administrative hearing and present trial were

sufficiently similar (breach of contract and

legal excuse therefore), the remedies were

sufficiently dissimilar (suspension or

revocation of contractors’ license and money

damages for breach of contract) to preclude a

finding of privity between this plaintiff and

the complainant, Contractors’ State License

Board.

2. The plaintiff herein and the

complainant in the administrative action had

sufficiently diverse interests to militate

against a finding of privity between them.

c-4

3. The standards of proof in the two

actions were distinct. Complainant’s failure of

proof by clear and convincing evidence of a

breach of contract in the administrative hearing

does not preclude proof of such by a

preponderance of the evidence in the instant

case.

4. Defendant herein has additionally

failed to allege and prove the finality of the

administrative decision.

5. This Court will not give collateral

estoppel effect to an administrative

determination that was rendered subsequent in

time to the prior determination in this same

case in which this Court had previously

determined that principles of collateral

estoppel operate against this defendant.

The verdict rendered herein is confirmed

and the stay is lifted. Plaintiff is directed

to prepare the judgment.

DATED: April 4, 1991

C-5

JAMES I. MORRIS

JUDGE OF THE SUPERIOR COURT

C-6

LAW OFFICES OF BRENTON A. BLEIER

1001 "G" Street, Suite 101 |

Sacramento, CA 95814

Telephone: (916) 444-5994

Attorneys for HOUSING AUTHORITY

OF THE COUNTY OF SACRAMENTO

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SACRAMENTO

-000- FILED: APRIL 4, 1991

HOUSING AUTHORITY OF NO. 331596

THE COUNTY OF SACRAMENTO,

JUDGMENT AS TO

DEFENDANT MARK T.

MARK T. CULLEN

Plaintiff,

Vv.

JAMES CULLEN, et al.,

Defendants.

)

This cause came on regularly for trial on

February 11, 1991 in Department 6 of the above

entitled court, Honorable James I. Morris

presiding, sitting without jury, a jury having

been duly waived. Plaintiff HOUSING AUTHORITY

OF THE COUNTY OF SACRAMENTO appeared by Alan C.

Campbell, its attorney, and Defendant MARK T.

C-7

CULLEN appeared in pro per. Evidence, both oral

and documentary, having been presented by the

parties, the cause having been argued and

submitted for decision,

IT IS ADJUDGED, ORDERED, AND DECREED that

judgment be, and hereby is, entered in favor of

Plaintiff HOUSING AUTHORITY OF THE COUNTY OF

SACRAMENTO and against Defendant MARK T. CULLEN

in the amount of Three Hundred Sixty-Two

Thousand Six Hundred One Dollars ($362,601), and

that Defendant MARK T. CULLEN takes nothing by

his cross-complaint. Plaintiff to recover

costs. $1,545.43

Dated: April 4, 1991

JAMES I. MORRIS

Judge of the Superior Court

D-1

APPENDIX D

BEFORE THE

REGISTRAR OF CONTRACTORS

CONTRACTORS STATE LICENSE BOARD

DEPARTMENT OF CONSUMER AFFAIRS

STATE OF CALIFORNIA

FILED: JUNE 25, 1990

In the Matter of the Accusation) NORTHERN REGION

)

Against: ) CASE NO. N-87-513

)

CULLEN DEVELOPMENT COMPANY ) OAH NO. N-31620

P.O. Box 1215

Shingle Springs, CA 95682

License No. 448299, B

Mark T. Cullen, QP

Richard N. Cullen, PT

James P. Cullen, PT

Respondent

— eee eee eee ee ee eee

DECISION

The attached Proposed Decision of the

Administrative Law Judge is hereby adopted by

the Registrar of Contractors as his Decision in

the above-entitled matter.

IT IS FURTHER ORDERED that respondent,

CULLEN DEVELOPMENT COMPANY, License No. 448299,

on or after August 24, 1990 shall file a bond or

post a cash deposit in the amount of $15,000.00

D-2

pursuant to and in accordance with’ the

provisions of Section 7071.8 of the Business and

Professions Code, and that respondent is hereby

notified that practice under the license herein

concerned may not be restored until satisfactory

evidence of such bond or cash deposit is on file

with the Registrar of Contractors.

This Decision shall become effective on the

25th day of July, 1990.

IT IS SO ORDERED June 25, 1990 .

DAVID R. PHILLIPS

REGISTRAR OF CONTRACTORS

D-3

BEFORE THE

REGISTRAR OF CONTRACTORS

CONTRACTORS STATE LICENSE BOARD

DEPARTMENT OF CONSUMER AFFAIRS

STATE OF CALIFORNIA

In the Matter of the Accusation) NORTHERN REGION

)

Against: ) CASE NO. N-87-513

)

CULLEN DEVELOPMENT COMPANY ) OAH NO. N-31620

P.O. Box 1215

Shingle Springs, CA 95682

License No. 448299, B

Mark T. Cullen, QP

Richard N. Cullen, PT

James P. Cullen, PT

Respondent

PROPOSED DECISION

Between June 13, 1989 and December 22,

1989, on eighteen days which are of record, in

Sacramento, California, Stephen J. Smith,

Administrative Law Judge, Office of

Administrative Hearings, State of California,

heard this matter.

June LaVerne Long, Deputy Attorney General,

represented complainant.

Mark T. Cullen qualifying partner, Cullen

Development Company, appeared in person and

D-4

represented himself and Cullen Development

Company. James P. Cullen and Richard N. Cullen

did not appear.

Evidence was received and the record

remained open for the receipt of closing written

argument and briefs. Complainant’s opening

brief and argument was received on February 7,

1990. Respondent’s closing brief and argument

was received on February 26, 1990.

Complainant’s reply brief was received on March

14, 1990. The record was closed and the matter

was submitted.

FINDINGS OF FACT

JURISDICTION AND PRELIMINARY MATTERS

A.T. Lennan, Assistant Regional Deputy,

Contractors’ State License Board ("the Board"),

State of California, made charges and

allegations contained in the Accusation in his

official capacity pursuant to the authority of

Business and Professions Code sections 7090 and

7106.5.

D-5

LICENSE HISTORY

On November 3, 1983, the Board issued

contractor’s license number 448299,

classification B, general building contractor,

to Cullen Development Company ("Cullen"), a

general partnership. The partnership listed

Mark Cullen as qualifying partner, James Cullen

and Richard Cullen as partners. On September

21, 1985, the license was suspended pursuant to

the mandate of Code of Civil Procedure section

996.340, for failure to post an adequate

contractor’s bond. The license expired still

suspended on November 30, 1985.

Iit

CONTRACTS WITH SACRAMENTO HOUSING AND

REDEVELOPMENT AGENCY

On December 18, 1984, Cullen Development

Company entered into a contract in writing with

the Sacramento Housing and Redevelopment Agency

("SHRA") to construct a 20 unit low income

housing apartment complex with a separate

D-6

laundry building at 6601 Pomegranate Avenue in

South Sacramento, California ("the Pomegranate

project"). The project was to be constructed

for the sum of $684,968.00. Work commenced on

the South Sacramento project on March 6, 1984.

Work stopped on April 22, 1985 when Cullen filed

a Stop Notice pursuant to Civil Code section

3103. At that time, Cullen had been paid the

sum of $677,137.00 by SHRA. The work was

substantially complete and the apartments were

occupied by residents when the Stop Notice was

filed, but exterior and interior punch lists

were not completed.

On July 23, 1984, Cullen entered into a

contract in writing with SHRA for’ the

construction of a 20 unit low income housing

apartment complex at 5519 Date Avenue, North

Highlands, California (“the Date Avenue

project"). The project was to be constructed

for the sum of $496,600.00. Work commenced on

July 26, 1984, and ceased on April 22, 1985 with

the filing by Cullen of a Stop Notice pursuant

D-7

to Civil Code section 3103. At that time,

Cullen had been paid the sum of $404,664.00 by

SHRA.

On August 16, 1984, Cullen entered into a

contract in writing with SHRA for’ the

construction of a 20 unit low income housing

apartment complex with a separate laundry room

at 3025-3031 Dry Creek Road, Rio Linda,

California ("the Rio Linda project"). The

project was to be constructed for the sum of

$744,900. Work commenced on August 20, 1984,

and ceased on April 22, 1985 with the filing by

Cullen of a Stop Notice pursuant to Civil Code

section 3103. At that time, Cullen had been

paid the sum of $309.002.00

On December 18, 1984, Cullen contracted in

writing with SHRA for the construction of a 16

unit low income housing apartment complex

located at 9205 Elk Grove Boulevard, Elk Grove,

California ("the Elk Grove project"). The

project was to be constructed for a total cost

of $649,990.00 Work commenced on a date not

D-8

established and ceased on April 22, 1985 with

the filing of a Stop Notice by Cullen pursuant

to Civil Code section 3103. At the time work

was stopped, Cullen had been paid the sum of

$19,575.00 by SHRA.

Each of the four above-referenced

construction contracts were entirely federally

funded by the U.S. Department of Housing and

Urban Development ("HUD"). SHRA was the local

administrator of the projects, oversaw the

construction in accordance with federal

guidelines, and disbursed the construction funds

obtained from HUD. Every aspect of the projects

required advance HUD approval. SHRA had no

local budget or funds of its own to assist in

the construction of the projects. Each of the

four contracts incorporated by reference the

general conditions, which were HUD standard form

and identical for each contract, special

conditions and the architectural drawings. The

special conditions and drawings were unique to

each contract. Administration of the contracts

D-9

by SHRA was to be governed by the uniform HUD

general conditions.

ABANDONMENT

It was not contested that Cullen abandoned

the Rio Linda construction project with the work

46% completed. The list of work set forth at

Paragraph 5 of the Accusation was not completed

by Cullen at the time the Stop Notices were

filed. At the time Cullen filed the Stop

Notices, SHRA had paid Cullen $309,002.00. This

Sum was 41% of the contract price, unadjusted

for extra work required as the work progressed.

Cullen’s abandonment of the Rio Linda

project work was with legal excuse. SHRA’s

breaches of covenants and implied warranties,

infra, coupled with selfish and incompetent

project administration, constituted a material

failure of consideration and rendered Cullen’s

continued performance on the Rio Linda project

impracticable due to excessive and unreasonable

difficulty and expense. SHRA’s administrators

D-10

significantly interfered with Cullen on the job

site and with Cullen’s relationships with its

bonding companies and private line of credit,

substantially hampering Cullen’s ability to

successfully perform. The totality of SHRA’s

conduct toward Cullen operated to deny Cullen

the benefit of its bargain made with SHRA in

signing the contract. The material failure of

consideration and the impracticability due to

excessive and unreasonable difficulty and

expense extinguished Cullen’s obligation to

further perform under the contract and provided

Cullen the right to rescind. Cullen exercised

that right by filing the Stop Notice.

At the time Cullen filed the Stop Notice,

it was bankrupt as an entity and its principals

were personally bankrupt as well. Although

bankruptcy was not necessarily a prerequisite to

proof of impracticability of further

performance, it was demonstrative of the effects

of the material failure of consideration and the

excessive and unreasonable difficulty and

D-11

expense Cullen encountered. The bankruptcy was

in stark contrast to Cullen’s stated net worth

of $2.7 million at the commencement of work with

SHRA 21 months earlier, and included the

evaporation of a $1 million line of credit

Cullen obtained to assist in performing under

the contracts with SHRA. SHRA’s architect

acknowledged that Cullen bid the Rio Linda

project competently and actually in excess of

the architect’s own estimate of the cost of

construction.

BREACH OF IMPLIED COVENANTS

The HUD General Conditions, incorporated in

the Rio Linda contract, are generally silent

regarding the express duties of the Local

Housing Authority (SHRA) with respect to the

administration of the contracts. However,

implied covenants exist in fact and in law that

govern SHRA’s conduct in its administrative

duties. These implied covenants are that SHRA

must reasonably and expeditiously process

D-12

requests by the contractor for change orders,

compensation for extra work and time delays,

that SHRA could and would competently and fairly

administer the contract, that SHRA would refrain

from conduct that could or would deny Cullen the

benefit of its bargain or impair Cullen’s

ability to perform, and that SHRA would conduct

itself in accordance with the implied-in-law

covenant of good faith and fair dealing. SHRA

breached each of these implied covenants in the

Rio Linda project contract.

1. IMPLIED COVENANT TO PROCESS CHANGE ORDERS

EXPEDITIOUSLY

SHRA’s representatives acknowledged that it

"held" requests for change orders by the

contractor that it considered "too small" to

process immediately. These small requests for

changes, typically $2,000.00 or less, were

accumulated until "enough" such requests had

been accumulated to justify the SHRA

administrative time required to process then.

It was well known that processing was very slow

D-13

without such additional delay because HUD was

slow to approve such requests. It was known to

SHRA that such delays were costly to the

contractor in that delays in obtaining

authorization for changes delayed the work,

denied the contractor prompt compensation for

extra work, and frequently required the

contractor to reorganize the work. SHRA also

knew that it was obligated under the Rio Linda

contract to expeditiously process each request

for change order received from the contractor,

regardless of amount. SHRA representatives

acknowledged at the hearing that, despite

awareness of this obligation, it refused to

promptly process small change order requests

until SHRA decided it was administratively

reasonable for it to do so.

SHRA breached the implied covenant to

process change order requests expeditiously and

fairly for Cullen on the Rio Linda project.

Although Cullen submitted at least three such

requests, one "small" but two of which requested

D-14

authorization, compensation and delay time for

significant changes to the contract work, SHRA

fully processed none of these requests. Only

one of these requests made by Cullen was

submitted to HUD for approval, and then, only in

response to threats from Cullen’s attorneys.

This request was never approved by HUD or

returned to SHRA, and had been delayed for

months by SHRA’s neglect before the receipt of

the threat from Cullen’s attorneys. Cullen

received no expeditious review of change order

requests and no support in making such requests,

despite SHRA’s knowledge that such delays were

difficult and costly for the contractor. SHRA

conducted itself unreasonably in stalling or

refusing to process Cullen’s change order

requests.

A course of SHRA conduct in disregarding

its obligation to reasonably and expeditiously

process change orders submitted by Cullen was

already fully developed by the time Cullen

submitted his first request for changes on the

D-15

Rio Linda project. By the time the Rio Linda

project had developed Significant construction

activity, the Pomegranate project had been under

construction for nine months and the Date Avenue

project for more than three months. Cullen

constructed each of the three projects with

staggered starts so that the same subcontractors

and office support staff could be used. At the

time Cullen submitted its first request for a

Change order on the Rio Linda project, Cullen

had experienced a continuing pattern of

frustration and refusal to process its requests

for changes on the Pomegranate and Date

projects. This pattern had led to a

deterioration in the relationship between Cullen

and SHRA as Cullen became increasingly vocal in

it insistence that SHRA abide by its contract

obligations to fairly and expeditiously process

its requests. The failure of SHRA to meet these

obligations had become very costly to Cullen,

and the cumulative effect of SHRA’s conduct on

the Pomegranate and Date projects became a

D-16

Significant impairment to Cullen’s ability to

perform on the Rio Linda project.

For example, Cullen filed five requests for

change orders on the Pomegranate project,

covering fifteen different changes resulting in

additional costs of over $5,000.00, not

including administrative time required to fiie

and document the submissions. Two of the five

were processed, but resulted, after lengthy

delays, in reductions of the amounts due Cullen

under the contract of over $2,000.00. The other

three were neither fully processed or paid, even

though one had been pending for approximately

eight months by the time the Stop Notice was

filed. On the Date Avenue project, Cullen filed

at least one request for a change, for the

installation of back water valves, at a cost of

approximately $13,000.00. No change order

request was fully processed and paid by SHRA on

the Date Avenue project before the Stop Notice

was filed. Cullen proved that there were a

significant number of costly and delay-producing

D-17

changes requiring extra work on both projects.

Delay in processing the change order requests

did not relieve Cullen of the cost and necessity

of proceeding with the work, even where the work

contractually could not proceed without the

change order. Cullen was required by SHRA’s

conduct to absorb the costs of the changes, all

of which were the result of errors and omissions

on the construction drawings or the encounter of

unanticipated problems at the job sites. By the

time the first request for change was submitted

on the Rio Linda project, Cullen had already

absorbed nearly $20,000.00 in additional costs

required by changes to the work of the first two

projects, non of which were Cullen’s fault.

Although there were numerous errors and

omissions on the construction drawings for the

Rio Linda project, necessitating significant

extra work, no request for a change order

submitted by Cullen was ever fully processed and

paid by SHRA. Cullen had little choice but to

continue construction without approval of the

D-18

change orders, facing SHRA threats of the

assessment of liquidated damages and breaches of

covenants to keep the work progressing and to

deliver a completed project on time. In

January, 1985, the relationship had detericrated

so significantly that SHRA acknowledged it had

withdrawn all cooperation from Cullen, refusing

to “hand-hold an inexperienced contractor", and

alleging Cullen was not a "team player" for its

insistence that SHRA abide by its contractual

obligations and compensate it for significant

extra work. SHRA’s expressed attitude toward

Cullen was that two could “play hardball".

Cullen’s task to obtain change order approval

for extra work and compensation was unreasonably

difficult before January, 1985. It was

impossible after that time.

The general specifications of the contract

recognize only two means of authorization for

extra work, a change order in advance of work,

or a notice to proceed with a stipulated maximum

compensation for the work. Both the advance

D-19

change and notice to proceed must be in writing

to be enforceable by the contractor. Oral

promises to pay for changes or extra work were

not enforceable, a fact Cullen knew from the

outset. SHRA knew that the process for

obtaining a change order in advance of the work

was very time consuming and thus impractical on

time sensitive work such as the Rio Linda

project. The process for obtaining a notice to

proceed was more expeditious, but unless the

notice specified a promise to pay for extra work

up to a stated maximum, it was unenforceable.

SHRA had abandoned the use of notices to proceed

to deal with extra work and changes by the time

the Rio Linda project commenced. The general

specifications required tthe contractor to

furnish a complete work within a_ specified

number of consecutive days, or suffer the

assessment of significant liquidated damages.

The general conditions contained a covenant

requiring the contractor to exercise all

necessary efforts to keep the work progressing

D-20

and making progress toward completion.

SHRA used the change order request process,

the covenant requiring the contractor to

continue to make progress on the work, and the

threat of the assessment of liquidated damages

to shift the burden of the costs of errors and

omissions in the construction drawings and the

cost of extra work necessitated by unforeseen

problems on the job site to Cullen. Cullen was

unaware that SHRA had no additional funds

available to pay for costs over and above the

contract price, or to pay for changes or extra

work. In order to obtain such funds, SHRA would

have to make an embarrassing plea to HUD or

local funding agencies, all of whom looked upon

such costs overrun requests disdainfully and

indicative of SHRA’s lack of administrative

competence. SHRA used the contract provisions

to shift the cost burden of these changes and

extras to the contractor, thus avoiding the need

to obtain additional funds from HUD or local

agencies.

D-21

Early on n the Pomegranate project, each

time Cullen identified an error, omission or

problem that required extra work, the SHRA field

administrator would aggressively challenge the

need and request Cullen continue with the work

in order to avoid the need for a change order.

Frequently, in response to such aggressive

challenges, the cost of small items of extra

work would be absorbed by Cullen and disappear

into the contractor’s overhead and profit in the

interest of being a "team player". If it became

apparent the item was larger and required a

formal change, SHRA had Cullen prepare the

submission and then diligently searched for an

offsetting reduction at some other place in the

work. In this matter, Cullen’s first two

requests for changes, requesting additional

compensation for extra work in the amount of

nearly $5,000.00, became a deficit of nearly

$2,000.00. However, the work Cullen was

required to do did not necessarily decrease with

the reduction. For example, after trenching for

D-22

the water line and delivering materials on site,

Cullen was preciuded by the utility from making

the water main connection, which had to be made

by a contractor chosen by the utility. SERA not

only reduced Cullen’s compensation by the amount

of the tie-in, billed to them by the utility,

but denied Cullen compensation for the work done

up to the tie-in, including the trenching.

SHRA unreasonably delayed or refused to

process completely all requests submitted by

Cullen for extra compensation or delays on all

projects submitted after these first two

requests. All of these submittals were the

result of Cullen being required to perform extra

work on the projects due to errors and omissions

on the drawings and unanticipated construction

problems. Although Cullen’s work was not error-

free, as evidenced by the reversal of the

plumbing in the slabs at Pomegranate, Cullen

readily offered to correct errors of its own

doing at its own cost. There was no evidence

that extra costs associated with correction of

D-23

errors caused by Cullen itself materially

contributed to Cullen’s inability to go forward

with the work later. The plumbing reversals

were corrected at a minimum additional cost by

reversing the structures to match.

SHRA typically blamed HUD for’ the

extraordinary delays in processing of Cullen’s

submissions for extra work change orders,

compensation for extra work and time extensions.

SHRA also faulted Cullen for failure to timely

for submit change orders and failure to properly

document the submittals it did make. Thus, SHRA

contends that Cullen’s failure to receive

compensation for the extra work necessitated on

the projects was in part or wholly its own

fault. All of these contentions are rejected as

wholly without credibility. Any failures on

Cullen’s part to submit requests for changes

were the result of Cullen’s reasonable belief

that SHRA would not process or pay them. SHRA

used changing standards for documentation to

stymie Cullen’s ability to submit requests for

D-24

changes and shift blame for its own delays.

The processing delays blamed upon HUD were

sometimes HUD’s fault, but many of the requests

submitted in evidence never were submitted to

HUD by SHRA, or contained unilateral reductions

disadvantageous to Cullen made after Cullen had

submitted them. The submittals that actually

arrived at HUD for processing were never pursued

by SHRA on behalf of Cullen. SHRA was content

to allow the submittals to remain at HUD

indefinitely without following up to assist in

expediting the process. The delayed processing

of Cullen’s submittals for change orders

requesting authorization for time extensions and

compensation for extra work were to SHRA‘s

advantage. As evidenced by the experience of

IBA Construction, the contractor that completed

the Rio Linda project, delayed processing of

such changes gave SHRA an opportunity to

negotiate away some or all of the compensation

due the contractor for extra work at the close

out of the project, in exchange for a waiver of

D-25

the threat of assessing liquidated damages

against the contractor’s retention. By

employing this negotiating technique combined

with its own delays in processing requests for

compensation for extra work, SHRA attempted to

transfer some of the costs of the extra work to

the contractor. SHRA was well aware that the

contractor was anxious to obtain the retention

and avoid the threat of the assessment of

liquidated damages. Very few SHRA projects were

completed within the contract’s time limits,

which made the issue of liquidated damages for

failure to timely complete the work always an

issue. The contractor was at a serious

disadvantage in such negotiations.

By January, 1985, Cullen became aware that

it was being seriously hampered in it

performance by SHRA’s failure to compensate

Cullen for any extra work performed on any of

the three projects. Rather than the advance

change order or notice to proceed procedure, the

SHRA administrator on the Rio Linda project used

D-26

a "field change" procedure for extra work or

changes. This procedure consisted of the SHRA

administrator’s promise to pay Cullen for the

extra work if Cullen would keep the work

proceeding. If Cullen balked at this obviously

unenforceable promise, the SHRA administrator

reminded Cullen that it was not conducting

itself as a “team player", that Cullen was

obligated to continue progress toward a whole

and complete project, and that if Cullen delayed

the work to wait for written change order or

notice to proceed, Cullen would most certainly

by assessed liquidated damages when the contract

period expired. Faced with such an impossible

dilemma, both SHRA and Cullen knew that

continuing with construction upon the oral and

unenforceable promise to pay was Cullen’s only

option. SHRA later reneged upon all such oral

promises to pay for the extra work, and held the

remainder of the incompletely processed change

orders to offset their own anticipated costs

when Cullen filed the Stop Notices. Cullen

D-27

received no additional compensation for

significant extra work on the Rio Linda project,

even though none of the problems necessitating

the extra work were Cullen’s fault.

2. IMPLIED COVENANT NOT TO HAMPER CULLEN’S

ABILITY TO PERFORM

SHRA’s architect acknowledged SHRA was very

difficult to work for, characterizing a working

relationship with SHRA as "chaotic". According

to the architect, SHRA projects were unusually

difficult for the contractor, more so than the

extra degree of difficulty to be expected in

public contracting. The Rio Linda project

required an "unusual" number of changes and SHRA

made obtaining authorization for compensation

for extra work required by those changes very

difficult to impossible. SHRA demanded work

continue on jobs without a written change order,

then reneged upon promises to pay for the work

that were made to induce the contractor to

continue. SHRA attempted to shift blame for

errors and omissions on the drawings and

D-28

responsibility for the unanticipated job site

problems to Cullen. The architect acknowledged

SHRA’s field administrative staff did not do

their jobs effectively.

In addition to SHRA‘’s refusal to

expeditiously and fairly handle the change

order/extra work issues on the Rio Linda

project, SHRA engaged in additional conduct that

excessively and unreasonably increased the

burden of construction on Cullen, well beyond

the burdens anticipated by the contract. This

conduct included unreasonable, unfair and

incompetent field administration of the

contract, the withdrawal of cooperation and

assistance from Cullen coupled with the

imposition of different and much more strict

administrative requirements, the interference

with Cullen’s private credit and_ bond

relationships, and the retention of all payments

due Cullen on the Rio Linda project for alleged

labor compliance violations on the Date Avenue

project, in advance of the resolution of those

D-29

allegations adverse to Cullen.

At the outset of the relationship between

Cullen and SHRA, SHRA tried to assist Cullen in

the construction of the projects, to the extent

such assistance did not cost SHRA any money.

The assistance of SHRA was critical to the

ability of Cullen to successfully perform the

contracts and achieve the benefit of the bargain

it made, and both Cullen and SHRA were well

aware of this fact. Almost every aspect of the

construction could be made significantly more

difficult by SHRA, or smoothed and facilitated,

depending upon the approach SHRA took toward the

contractor. Particularly for a small contractor

inexperienced in public contracting, as Cullen

was, SHRA knew that its cooperation and

assistance or lack thereof was the point upon

which successful performance turned. SHRA’s

purposeful withdrawal of cooperation and

assistance from Cullen in January, 1985 caused

an excessive and unreasonable increase in the

difficulty of Cullen’s work and led to Cullen’s

D-30

collapse and inability to complete the work.

The knowing removal of SHRD’s assistance and

cooperation was SHRA’s response to Cullen’s

complaints that SHRA was unreasonably hampering

its ability to perform and was acting unfairly

toward Cullen. SHRA representatives stated it

did not have the time to "hand-hold" an

"inexperienced contractor with shallow office

support" and that is was "not in the business of

training inexperienced contractors in public

contracting". SHRA’s expressed contempt for

Cullen in these disparaging statements was

matched by SHRA’s disregard for its contractual

ebligations toward Cullen during the

construction of the Rio Linda project.

In addition to making the obtaining of

written change orders unreasonably difficult,

which prevented Cullen from obtaining a legally

enforceable right to receive compensation for

extra work performed, SHRA’s job site

administrator on the Rio Linda _ project

Significantly hampered Cullen’s ability to

D-31

perform. This administrator was known to SHRA

to be a "nit-picker". On behalf of "having the

best interests of the Agency at heart", this

administrator added a substantial overlay of

undisclosed additional requirements to Cullen’s

burdens, with the approval of SHRA. The demands

he made upon Cullen were unreasonable, as were

his inspections. He demanded a level of quality

in the work that was well in excess of what SHRA

had bargained for or was required by the

specifications and drawings. He demanded the

retention of the right to dictate the manner and

means of construction, in disregard of industry

practice that reserved such decisions to the

discretion of the contractor. These practices,

coupled with an intensely hostile and

adversarial relationship with Cullen added

substantially to Cullen’s costs of construction

at a time when cost overruns of the earlier two

projects were impairing Cullen’s ability to

continue. The administrator invariably

attempted to shift blame for errors’ and

D-32

omissions on the drawings and unanticipated

problems to Cullen, and demanded Cullen remedy

the problems at Cullen’s cost. By attempting to

force Cullen to remedy the errors and omissions

without providing an enforceable right to

compensation for the extra work, the

administrator forced Cullen to become = an

unwilling financial participant in the

construction.

The contracts called for the contractor to

be able to furnish a reasonable amount of

administrative support and oversight to enable

the solution of administrative problems required

by HUD-funded projects. Cullen’s organization

was not inadequate or incapable of meeting

reasonable demands. The conduct of SHRA in

administering the Rio Linda contract, combined

with the circumstances of its administration of

the earlier two contracts was incompetent,

unfair and unreasonable. Due to SHRA’s conduct,

performance became much more difficult than

anticipated on the Rio Linda contract. Larger

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contractors testifying at the hearing made clear

the fact that SHRA’s administrative practices

were a well-developed style of doing business

that severely prejudiced the contractor’s

ability to make overhead costs and any profit at

all. Disgusted with SHRA, these larger

contractors had enough of their own assets to

Carry the projects they constructed for SHRA

while the same administrative practices were

applied to them. Each, however, found some of

their expected profit and overhead disappeared

into the projects, to the benefit of SHRA.

Cullen was not so lucky. Overextended with

three such projects being constructed

simultaneously and struggling with an

uncooperative SHRA, the removal of cooperation

and assistance by SHRA in January, 1985,

rendered Cullen unable to continue, following

exhaustion of all reserves.

SHRA’s removal of cooperation and

assistance on the Rio Linda project involved a

Significant change in SHRA’s rules governing the

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documentation necessary to obtain payment for

extra work and to obtain delays in the contract

time. In attempting to assist Cullen on the

Pomegranate and Date projects, SHRA‘’s field

administrator relaxed to some extent the general

specifications governing submittals for change

orders and time delays, together with supporting

documentation. In January, 1985, during a

particularly wet winter, SHRA recanted the

acceptability of the procedures employed for

earlier submittals, which had been in effect for

about one year, without warning to Cullen. SHRA

demanded strict compliance with the general

conditions from that point. In changing the

procedures, Cullen was denied nearly a month’s

inclement weather delay time, and SHRA set up

Cullen’s failure to comply with the strict

requirements of the general specification as

justification for SHRA’s failure to promptly and

expeditiously process Cullen’s request for

' change orders. The timing of the procedural

change came at a particularly difficult time for

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Cullen, as the cumulative effects of the cost

overruns on the first two projects were being

felt.

In the late summer or early fall of 1984-

1985, the Sacramento County labor compliance

officer, under contract to SHRA to oversee labor

compliance on the Date Avenue project, had a

conversation with Cullen. This untrained and

entirely inexperienced officer told Cullen that

it could require its carpenters to provide their

Own power tools and extension cords. He was

also aware that Cullen did not pay these

carpenters for their setup and rollup time at

the beginning and the end of the day, but made

no mention to Cullen that the practice was a

violation. In the winter of 1985, this same

labor compliance officer cited Cullen, without

prior warning, for labor compliance violations

for failure to pay the carpenters for setup and

rollup time, and alleged the requiring of

carpenters to furnish their own power tools and

extension cords violated the federal labor law.

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Cullen complied immediately with all changes the

citation demanded, but the citation also sought

large fines and penalties for the violations.

In response to the citation, immediately

SHRA froze over $82,000.00 due Cullen under the

Rio Linda contract, to provide an asset base

from which the fines could be recovered in the

event they were sustained. The contracts did

not require SHRA to take this step and no notice

of lien or other asset-freezing action was taken

by the County to seize payments due Cullen prior

to a hearing of the matter. SHRA froze the

payments due on the Rio Linda project even

though the incidents alleged occurred on the

Date Avenue project. SHRA’s position was that

"there’s law" that permits them to. seize

payments due on one project to pay for incidents

that occurred on another. SHRA further

suspended all processing of Cullen requests for

change order payments for extra work and held

these funds, alleging such action was necessary

to insure labor compliance.

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Ironically, Cullen proved at the hearing

that at least one of the labor compliance claims

made against it was an Outright fraud, and

others may have been. While SHRA held all

Payments, Cullen was informed by the labor

compliance officials that although it had a

right to a hearing on the matters, such could

take at least two years. Cullen was threatened

that if it was considering the exercise of this

right, Cullen could be subjected to collateral

IRS, Treasury and Attorney General

investigations as well, which could be very

expensive to defend. With all construction

funds being held and experiencing a serious cash

deficit, Cullen relented and settled the matter,

despite having evidence that at least a portion

of the underlying claim was fraudulent. The

fines were deducted from Cullen’s Rio Linda

funds being held. More than two months and

Significant attorney’s fees were required for

Cullen to extricate itself from allegations that

resulted from the labor compliance officer’s

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failure to competently perform his duties.

SHRA’s unilateral freezing of Cullen’s rights to

payments on an unrelated project severely

prejudiced Cullen’s already impaired progress in

construction and contributed significantly to

his inability to complete the project.

The relationship between Cullen and SHRA

deteriorated completely in March and April,

1985. In early March, 1985, construction was

still progressing on the Rio Linda project, but

very slowly. Cullen was very hard pressed for

funds and a few of his subcontractors had

already filed Stop Notices against the work.

SHRA was incensed that Cullen’s subcontractors

were filing liens against the project, and was

very unhappy that construction had nearly

stopped. At this time, Cullen’s attorneys had

served upon SHRA a demand that SHRA release

funds due Cullen, immediately process and pay

all change orders and promises of compensation

for extra work. The letter accused SHRA of bad

faith and incompetence in the administration of

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the contracts to Cullen’s damage. In response,

SHRA demanded that Cullen make more progress in

construction, and advised Cullen that no more

progress payments would be made to Cullen on the

Rio Linda project until Cullen cleared all Stop

Notices filed against any SHRA project Cullen

was constructing and until Cullen obtained

unconditional lien releases fromall outstanding

accounts on all of the projects Cullen as

constructing for the Agency. This demand was

made just after SHRA released the February

progress payment to Cullen in early March, 1985,

The demand to obtain unconditional lien releases

from all outstanding accounts and to clear all

Stop Notices as a pre-condition to the release

of any further progress payments on the Rio

Linda project was unreasonable. SHRA knew

Cullen was experiencing a severe cash flow

deficit at the time, and that nO subcontractor

with his wits still about him would sign an

unconditional release as SHRA demanded.

Conditioning Cullen’s ability to receive

D-40

progress payments due on the Rio Linda project

upon these unreasonable conditions further

hampered Cullen in his ability to perform on

that project at a critical period, where each

additional impediment to performance was greatly

magnified by the dire straits Cullen

encountered.

In September, 1984, Cullen assigned all of

its rights to payments on each of the four

contracts with SHRA to the Bank of America in

exchange for a $1 million line of credit. SHRA

was notified of the assignment, and complied

with it, making all further payments directly to

the bank rather than to Cullen. On March 13,

1985, SHRA advised Cullen’s bonding company on

the Rio Linda project, in writing, that a

"problem may exist" with construction progress,

and that the bonding company should take

“whatever action necessary" to ensure continued

construction progress. At the time, SHRA was

aware that Cullen was experiencing a severe cash

flow problem that had slowed construction to

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nearly a standstill, and that SHRA had decided

to hold all funds due Cullen on all projects

until its demands were met. SHRA thus knew that

Cullen’s financial condition was highly unlikely

to improve, as Cullen’s only other source of

funds to continue construction was the line of

credit at Bank of America. Since this line of

credit depended upon the receipt of payments due

Cullen from SHRA, and SHRA intended to retain

those payments, SHRA knew this source of funding

would not last much longer, especially if the

bank was aware that the assigned payments would

not be forthcoming.

Faced with imminent collapse, Cullen,

through its attorneys, arranged with its bonding

companies a plan by which the bonding companies

would advance the funds to enable Cullen to

complete the projects. The plan was dependent

upon persuading the Bank of America to

subordinate their primary claim to payments due

from SHRA on the projects to the bonding

companies. The plan failed when SHRA advised

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the bank of its threat to assess liquidated

damages in excess of $20,000.00 on each of the

projects, which would evaporate the remaining

funds over p

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