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.
“Mr. Briggs may be in a whole heap of trouble,” said Superior Court Judge Gregory Pollack, “with, not only the State Bar, but potential criminal prosecution.”
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.
“So this is very serious,” the judge said.
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.
The nonprofit’s board of directors has denied those claims.
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.
In July 2012, Briggs answered that call.
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.
Briggs and Shapiro lost the case in Superior Court, which ruled in favor of the city and validated the tax in April 2013. A few weeks later, the two appealed to a higher court.
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.
That’s when the judge put Briggs on notice.
“You’re smiling,” Pollack said.
“You might not be if you get criminally prosecuted,” the judge replied.
A suspended corporation
The inewsource investigation published last week detailed the network of nonprofits connected to Briggs and the history of San Diegans for Open Government.
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.
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.
The judge was to rule on the city’s argument in July.
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.
It is one of 19 Briggs-associated nonprofits that use the identical mission statement in corporate filings.
Its high-profile cases have fought taxes and demanded access to public records such as government officials’ emails.
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][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]
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.”
To clarify this issue of being suspended, it’s important to understand the annual filings required of California nonprofit corporations and how often suspensions occur with respect to nonprofit corporations. I handle filings for one California nonprofit and am president of another whose treasurer handles the filings. It takes some organizations skills and self-reminders to stay on top of the filings, even though they cost nothing or next to nothing.
There are actually four filings required to four separate entities and it can be a bit complicated to make sure you stay in compliance. You must file with the IRS, but if your income is below $50,000 you can file an “e-postcard” which essentially simply declares that you are still in business and earned under the limit required for a full filing. You must also file with the Franchise Tax Board. The system is essentially the same as for the IRS if you earned under $25,000. You must file a one page report with the Attorney General’s Registry of Charitable Trusts no later than four months and fifteen days after the end of the organization’s accounting period.
In addition to these three annual filings, every two years you must file a Statement of Information with the Secretary of State. This one is particularly easy to overlook because it is every other year and to my recollection they don’t provide a reminder notice. Moreover, oddly, the applicable filing period for a corporation is the calendar month during which the initial Articles of Incorporation were filed and the immediately preceding five calendar months. In other words it is not just X days after the first of the year, for example. The filing costs just $20. If you forget to file, they eventually send you a notice and suspend you. Typically they lift the suspension as soon as you file.
It would appear that in this case someone forgot to file the form with the Secretary of State (or perhaps with the FTB). In my experience with nonprofits, this is a routine error and the Secretary of State reinstates you once you file, as apparently happened here. To my knowledge the reinstatement is retrospective. That is, until now I had not heard of any nonprofit being held accountable for doing business as usual during the period of suspension after they were reinstated. Whether the judge in this case understands all this I do not know. It would be interesting to see if a fairly mundane paperwork error actually causes some sort of serious legal repercussion in this case. I doubt that a Superior Court judge will ultimately be making that determination.
Thanks, B.C., for providing information on how the processes work for small non-profits. I assume you mean retroactive, not retrospective?
Fixed that. Thanks!
The issue isn’t the nonprofit continuing business under suspension, it’s Briggs continuing with legal proceedings being well aware of the suspension, which is illegal. Inewsource linked a document from a paralegal in Brigg’s office who knew of the suspension and was trying to get it corrected while Briggs proceeded with the court proceedings instead of informing the court or asking for a delay so they could bring the non profit into compliance. It may not be the crime of the century, but it’s pretty sloppy for a lawyer to do this. Major cases get thrown out on technicalities all the time.
JUDGE POLLACK. Ordered alimony.
SAN DIEGO — First, Crystal Harris was sexually assaulted by her husband — and now she’s being attacked once again by a California court.
Because of a bizarre legal loophole, Harris, 39, was ordered to pay $1,000 a month in spousal support to her now-ex, Shawn Harris.
“As soon as he gets out of prison for raping me, I have to start writing him checks! What a thing to choke on!” Harris told The Post in her first extended interview.
New York Post: http://nypost.com/2011/12/04/aault‐in‐her‐wounds/
I wonder if this Judge is conflicted or biased in favor of the City of San Diego? Was he ever a City Attorney or associated with the City ?
I understand that the founder of this Non Profit Mr. Mel Shapiro, a very respected senior advocate for Open Government, is now very aged and challenged by the passage of time from the initial suit and long appeal. We need to honor and respect our champions who have so long fought for a better San Diego and a Government of the People for the People.
Innewssource should review the recent history of the City of San Diego, which has had Mayor’s, City Managers, City Attorney’s, and Councilmen indicted, investigated, and convicted almost every year for the past 5 decades. If anyone at the City gets up on their high horse about anything ; we should all think about the kettle calling the pot black..
It is an old trick when you can’t fault a person’s logic, then sully his reputation and divert the attention away form the real issues (in this case taxation without a vote and the greedy schemes of the 1%ers). I would expect that the next attack on Dr. Briggs will be based on personal hygiene, his sexual preferences, or his Jewish heritage. Our Government was founded on the basic principle that the actions of government may freely be challenged to preserve our freedoms from a ruling faction of tyrants – Federalist 10.
Judges have a tough job. Nobody should be suggesting anything bad about Judge Pollack’s conduct in my hearing with him last Friday. I don’t know what happened in any other case, and thus I am not defending or condemning anything in any other case and certainly would not comment on any other case.
But I was there last Friday and can comment on what I experienced. My impression is that the judge saw very clearly that the city attorney’s office was using the threat of criminal prosecution to gain an advantage over me in a civil proceeding, which is a huge no-no. The judge was asked repeatedly to make findings of criminal conduct in a civil proceeding — which any first-week law student can recognize as unconstitutional — and was not going to take the city attorney’s bait by agreeing to anything that dealt with a criminal accusation. It was very clear to me that the judge was trying to protect me when he reminded me of my right to remain silent. Eventually he denied the city attorney’s multiple requests and rejected the city attorney’s position without even having to hear me speak.
Sir/Madam: In my personal experience and observation, this is a technicality that is rarely, if ever, enforced. It suggests that the City Attorney has no case, so they are looking for some jaywalking type offense to save them. Sure, the state law says you can’t do business while suspended, but I am betting that is intended to give leverage to the FTB to ensure people pay/report on time. The question would be: Has any small nonprofit that overlooked a filing and corrected it some months after the fact ever been prosecuted? I’m guessing no. Certainly it makes no sense for the City Attorney to endeavor to enforce a regulation aimed at giving the FTB authority to ensure prompt filings. That would be the job of the attorney general. This seems to me to be more smoke. What’s missing so far, in the inewsource reporting, is fire. Gloating is not fire in my book.
Cory, it’s nice that you came to the defense of Judge Pollack. I read the entire transcript of last Friday’s hearing (courtesy of iNewsource’s published documents herein) and must agree with you. I was very impressed with the judge’s impartiality and professionalism. It gave me renewed faith in our judicial system.
Thank you for this detailed and informative post. It’s helpful to illustrate that there are many, many requirements for non-profits. However, not all have staff to manage these filings, nor professional expertise to prepare some of the required accounting reports, etc.
But as you point out- failure to file, or to file on time, and/or with inaccuracies, are handled typically administratively, not in a courtroom.
What this series of news reports and City Attorney office exercises appear to be suggesting is some sort of criminal intent.
My takeaway: it may inadvertently be showing why it is so difficult it is to get attorneys to enter public interest vs. corporate law, and why so few do these, or pro bono, cases, given the scrutiny and enmity they may endure from their professional colleagues and certain reporters.
I know Briggs and Pollack… Both are outstanding members of our legal community. I tried cases against Greg Pollack and wrote a reccomendation to the State Bar on his behalf when my opinion was solicited.
I am President of a Non-profit Corporation that files lawsuits under the California Environmental Quality Act. I have never been paid a single penny for any of my legal work in Environmental Law. In fact, we have to hire our lawyers ourselves or create a legal defense fund.
I have read and appreciate B.C. Brewster’s comments below. I am also familiar with the work of San Diegans for Open Government. This is very imortant work to break up.the behind-the-doors deals that corrupt our City.
The cost of maintsining non-profits has become prohibitive. Our Board of Directors.cannot continue our work.
Journalists do not often understand law enough to reliably report. Corporate suspensions are common yet rarely invalidate court filings. You can drive on a suspended license. I have such a case. The other guy blew the red light. In law school, many students would deny recovery to my plaintiff given that hypothetical. They are smart but do not know the law.
Seeking corporate reinstatement is simple. The period of suspension does not affect the filing . That is what the Appellate Courts say.
I could report on brain surgeries but am not a neurosurgeon. Law is very comlex. It is experience, not “logic” that counts.You must have both, but logic by reporters is as good as my commentaty on a brian surgery when they purport to understand legal proceeding and ethics without law school and years of practice.
They will try to fo to Briggs what they tried to do to Aguirre. He is under investigation they say because they made the complaint themselves. Then they repeat it in their small-minded media.ad nauseum. Aguirre was never disciplined and neither will Briggs be. Developers and their minions are behind this Briggs witch hunt.
.
B.C. Brewster,
You are absolutely right.
I could call 911 on someone and then claim that that person is “under investigation.” I could call the newspapers and then tell the reporters that “a big investigation is underway.”
The City Attorney has an agenda here. His office should be disqualified.
San Diego is still a small town. It is run by a small clique downtown.
Cory,
Agreed. Use of criminal threats to gain an advantage in a civil.suit are unethical. It is not you or Pollack, it is the City Attorney and magnification by a reporter who is being used.
I like reporting by the Los Angeles Daily Journal. Their reporters know the law.
My own commentary on brain surgery sucks because I never went to medical school. I have practiced law for 38 years. My comments are based on that. What you do is very complex. You provide an invaluable service to our community. I am a member of the Environmental Law Section of the Stae Bar.This is a tough area of law. You are one of the best. Keep up what you are doing. Illegitimi non carborendem.
Ha! THIS image explains so much…. so, based on INews logic: I guess we can disregard any of the previous reporting that was done while their non-profit status was in delinquency, right? It was all done in error, outside the scope of the law, without the proper filings to the State, so… case closed.
So good to learn it’s all been one big misunderstanding of what is legally required to do the work of a non-profit organization in California…
http://www.sandiegoreader.com/users/photos/2015/jun/03/82221/
thank you. totally agree. This is a public show trial.
People are so eager to accuse someone of being a “criminal” for violating any perceived law these days- civil, administrative, regulatory… and journalists (as I pointed out in a previous comment) have taken no legal oath requiring them to uphold the laws/constitution etc. that members of the bar, elected officials and others take. Nor do they study law, so their understanding of these nuances is limited, at best.
And now to discover INews own 501(c)3 status is out of date… oh my, how to address that? Are all their articles and reports fatally flawed as a result of this paperwork error?
Hoisted by one’s own, well, you know…
So why is it taking Brad so long to write a story about this failure of his organization to perfect its status as a registered charity? Brad? Hello? Anyone out there?
And seriously people, given the reporting thus far, are you surprised? When I first got involved Brad sent me an email saying he could find my law firm listed in any of the public databases he peruses as part of his so-called “research”. Didn’t think to check with the State Bar. Genius. Demanded that I cough up private business records to justify the legal existence of Coast Law Group. Yeah, right buddy….
So why is it taking Brad so long to write a story about this failure of his organization to perfect its status as a registered charity? Brad? Hello? Anyone out there?
And seriously people, given the reporting thus far, are you surprised? When I first got involved Brad sent me an email saying he couldn’t find my law firm listed in any of the public databases he peruses as part of his so-called “research”. Didn’t think to check with the State Bar. Genius. Demanded that I cough up private business records to justify the legal existence of Coast Law Group. Yeah right, buddy….
Whoa- hold up there Marco! These investigtions into delinquent charitable organization filings take time. Give INews a chance to log into the AG’s site and figure out what happened. I’m sure they will post their reasons soon…
Also of note: INews reported $8800 in “Accounting” and $4800 in “Legal” services on their last filings, more than marketing and promotions expenses, so clearly- unlike many struggling community nonprofits- they had the resources to hire people, presumably with legal & accounting expertise, to help them file those required documents.
What could have happened…?
Finally- careful, you almost sound like you agree with my post. You don’t want to ruin your consistent record of publicly chastising/disagreeing with me, as you so often do on other discussion boards.
FYI, for those keeping score: the name, address & phone # of the person who has prepared INews annual charitable org tax filings in past years (last one was for 2013) is available on the bottom of this page.
Does this mean everything they have written since February 27, 2015 when they were Delinquent is all fake, worthless, illegal? Wow….what nerve.
Lori – I only disagree when you’re wrong, or when you forget or ignore facts. 🙂
It is up to the defense to file a demur as to lack of capacity to sue when a corporation is suspended. The plaintiff usually has not paid his fees to the Francise Tax Board. The payment is made and capacity to sue is restored.
The Department if Corporations has jurisdiction to issue a restraining order for persistent abuse. The City Attorney’s Office should have filed a demurrer based on lack of capacity. But there is bad blood here.
When something is “illegal” does that mean “criminal?”.This sounds like malum prohibitum, not malum in se. “Illegal” is not a legal term. To a layman it is, but not to lawyers.
A pleading could be uncertain or ambiguous. That would be “illegal.” Nobody goes to jail for a technical defect in pleadings. It is up to the other party (ies) to file a demurrer. It would be an abuse of discretion not to allow an amendment.
I see that there are now “Pleading Nazis.” That is a new form of authoritarians who are pro developer. If your Franchise Tax deposit is not up to date, you are waterboarded summarily!
How clever of a non-news story teller to turn this into an ongoing drama with headlines like “San Diego Judge Warns Briggs About Possible Criminal Prosecution”. What bothers many of us is that PBS San Diego has apparently taken a page from Fox News and has set out to try make it even more difficult for the ordinary citizen to have representation. Read the lawyers discussing this and you get an appreciation how cunning inews headlines have been. Congratulations to inews for joining the Fox News team. Very clever.