[box type=”shadow”]Read the regular (non-hyperlinked) version of this story here.[/box]
Well-known San Diego environmental attorney Cory Briggs was in court Friday wrapping up a long-fought legal battle against the city’s plan to finance a convention center expansion when he ended up with an earful from the judge.
In July 2012, Briggs entered into a lawsuit over the convention center financing on behalf of a nonprofit corporation called San Diegans for Open Government. But the group was suspended by the state at the time, and the Briggs law firm knew that. According to state law, anyone who attempts to exercise the “powers, rights, and privileges” of a suspended corporation is punishable by a fine and/or imprisonment.
“And as I count it,” he said, referring to a list of actions taken by the nonprofit during its suspension, “it looks like there’s at least four others, maybe more, that were filed during this period of suspension.”
A few hours later, Briggs sought to dismiss a separate case he had filed for San Diegans for Open Government in 2013. This case was being heard by the same judge but challenged a fee charged to certain business owners for neighborhood improvements and activities.
Briggs’ request to scuttle the business fee lawsuit came a day after inewsource published an investigation of the more than 30 nonprofits — including San Diegans for Open Government — that Briggs is affiliated with. Twenty-two have been suspended or revoked by state or federal agencies.
[box type=”shadow”]To see a comprehensive spreadsheet of the entire network of nonprofits, including each group’s name, status, officers, legal standing and more, click here.[/box]
Next month, Pollack is scheduled to decide on the city’s motion that San Diegans for Open Government is not a legitimate plaintiff. The city contends the nonprofit is an “alter ego” of the Briggs Law Corp., a group controlled by the Briggs’ firm and used to litigate “for profit.” Now that the case has been dropped, that ruling won’t happen.
Briggs did not respond to an interview request from inewsource. His court document seeking to dismiss the business fee case also did not say why he chose to drop it. The City Attorney’s Office, through its spokesman, declined to comment for this story.
The convention center case
In November 2011, the San Diego City Council authorized the formation of a convention center facilities district. The district encompassed the entire city, divided into three zones, where hotel owners in each zone would be taxed different rates to help finance the expansion of the San Diego Convention Center.
Two months later, the council proposed that the newly-formed district authorize the city to issue up to $575 million in bonds for the expansion, to be repaid with the new taxes. Ninety-two percent of the hotel landowners who cast ballots voted in favor of the new tax and the bond financing.
In May 2012, the San Diego City Attorney’s Office filed a lawsuit against “all persons interested” in the validity of a new district and tax used to finance the San Diego Convention Center. The city was basically asking a judge to find that it had complied with the law when it established the funding mechanism and invited anyone opposed to enter into the lawsuit.
Briggs and local activist Mel Shapiro challenged the new tax, arguing it was invalid under the California Constitution and City Charter because it hadn’t been approved by San Diego’s “registered, natural-person voters.” The city countered that only certain landowners would have to pay the tax, therefore it did not warrant a vote by the public, the majority of whom would not have to pay the special tax.
In a lengthy opinion, the appellate court reversed the lower court’s ruling, siding with Briggs’ and Shapiro’s argument that the tax should have gone before the city’s “registered voters” for approval.
The case was back in Superior Court, and a hearing on Friday was scheduled to work out the issue of attorney fees — how much Briggs would be awarded from the city for representing his plaintiff, San Diegans for Open Government.
That’s when the judge put Briggs on notice.
A suspended corporation
The group was notified of its suspension in a letter from the state Franchise Tax Board on April 2, 2012. The agency wrote, “We took this action because you did not pay an amount, or you did not file tax returns…” After the nonprofit filed its paperwork, the state agency lifted the suspension on Nov. 20, 2012.
During the seven months in between, while the corporation was suspended, court records show Briggs entered into at least six cases on behalf of the nonprofit against the city, the county, the state and a construction management company. The convention center case was one of them.
[box type=”shadow”]”I’m not for a minute suggesting that the Court is unconcerned by what happened here… Mr. Briggs may be in a whole heap of trouble with, not only the State bar, but potential criminal prosecution.” — Judge Pollack[/box]
Pollack said he would not address the potential for criminal action because the issue at hand on Friday was a civil matter, but said he would not award Briggs attorney fees for work performed during the group’s suspension.
“Just knowing,” Pollack said, that the Briggs law firm was aware it was filing court papers on behalf of a suspended corporation made it “game over on attorneys’ fees for that period when the corporation was suspended.”
Dropping the BID lawsuit
At 3:30 p.m. the same day, Briggs submitted paperwork requesting a dismissal of the lawsuit challenging the fiscal 2014 Business Improvement District (BID) assessments. On behalf of San Diegans for Open Government, he argued the City Council approved an “illegal tax scheme.”
Briggs’ motion does not give a reason for dismissing the suit, one he’s been fighting since June 2013. He asked that it be dismissed without prejudice, meaning he could file a similar suit again in the future.
BIDs are a collection of 18 locations where the business owners generally pay from $40 to $500 a year into a fund for improvements and activities — such as block parties, farmers markets, street festivals and promotions — that benefit the businesses in that area. Districts include areas of La Jolla, Ocean Beach, Pacific Beach, Little Italy and North Park, among others.
Scott Kessler, executive director of the Adams Avenue Business Association, told inewsource his organization’s 600 members — a mix of storefront businesses, apartment owners and home-based businesses — pay on average $60 a year to fund the association. That money is spent on street fairs, festivals and tours and generates seven to eight times that amount, Kessler said.
“Then we plow that money back into what we do,” Kessler said, which is marketing and revitalizing the commercial corridor.
In its motion, San Diegans for Open Government argued the city did not put the fees before voters as required by the California Constitution. Briggs asked a judge to declare the assessments violated the law and to refund all the fees back to the business owners who paid them.
As in the convention center case, the city countered that a public vote was not necessary because the fees affect only business owners. The city also claimed San Diegans for Open Government lacked standing in the case because it could not name a member affected by the fee in each of the 18 districts. The suit exceeds the nonprofit’s “corporate purpose,” which is advocacy and education “regarding responsible and equitable environmental development,” the city claims.
It also said the nonprofit is an “alter ego” of the Briggs law firm and supported the claim with more than 1,200 pages of depositions, corporate filings and other records related to the group.
What is San Diegans for Open Government?
San Diegans for Open Government is one of Briggs’ most frequent clients and has filed more than two dozen suits against city and state agencies. It was formed in 2008, according to its filings with the California Attorney General’s Office, to promote social welfare through advocacy and education.
Its officers have stated under oath that Briggs Law Corp. oversees and pays for nearly every aspect of the group’s operation:
According to depositions and other court filings, Briggs and his firm hold and maintain all the group’s corporate records; file and pay for its lawsuits, its annual registration fees and filings with the state and federal governments; control its Facebook and Twitter accounts; and collect all settlements and judgments when the group prevails in court.[/one_half]
[one_half_last][box type=”shadow”]San Diegans for Open Government sued inewsource after it published 10 stories about Briggs. San Diego State University (where inewsource is located) and other university-related entities also are defendants in the case, which alleges conflict-of-interest violations and problems with inewsource’s lease terms at the school. For the first time in the history of San Diegans for Open Government, court records show, it is not being represented by Briggs, but rather an Orange County environmental lawyer who has sued with Briggs before. As of publication, inewsource had not been served with the lawsuit.[/box][/one_half_last]
San Diegans for Open Government doesn’t have any money — nor has it recorded any revenue or expenses with the federal or state agencies, according to government records. Its CEO, Richard Lawrence, said under oath that the organization doesn’t intend to seek funds because it wants “to operate as simply and cleanly as possible.”
Yet last month, after being ordered by the court to pay the city $6,000 to amend its complaint in the BID case, the Briggs law firm filed a notice with the court claiming the nonprofit couldn’t afford the costs and the firm wasn’t aware of that fact.