by Alan E Pryor
In the June 7, 2022, election, Davis voters were asked to approve the annexation of 102 acres of land off Mace Blvd. into the City of Davis for the construction of a large industrial project known as the Davis Innovation and Sustainability Campus. The matter was on the ballot as Measure H and was resoundingly defeated by voters by almost a 2:1 margin.
Prior to the election but immediately following the submission of ballot statements to the City Clerk by the proponents and opponents of Measure H, Davis City Council Member Dan Carson, as a private resident, sued the six Davis citizens who authored and signed the Argument Against Measure H alleging that their ballot statement contained numerous references that were false and misleading.
After ruling on the matter generally in favor of the defendants and making only very minor changes in the ballot statement language, Yolo County Superior Court Judge Dan Maguire also later ruled that Dan Carson must repay $42,209.25 in legal fees to the 
Counsel for the six defendants in the case. In his ruling he stated the defense by the six defendants “served a public benefit purpose…as the public in a democracy has a strong interest in political debate that is ‘uninhibited, robust and wide open’.” After the election, this fee award was finally paid on behalf of Council Member Carson by the Yes on Measure H campaign committee.
Assuming no monetary or other consideration was given by Council Member Carson to the Yes on Measure H committee, the payment of the fee award for Councilmember Carson, an elected public official, by the Yes on Measure H campaign is probably considered a “Gift” under California law. Any such “Gift” to an elected official in excess of $520 per calendar year is prohibited under California law and, if so determined to have occurred, is subject to administrative penalties of up to $5,000 per violation or three times the amount of the gift received.
Further, any such gift may also be subject to an Internal Revenue Service levy of income tax on the donor of the “Gift” rather than the recipient. In this case, the responsible party incurring that liability would be the Yes on Measure H committee, which potential liability has not been reported on their Form 460 financial filings with the City.
Background
On March 21, 2022, Davis City Council Member Dan Carson, as a private citizen, filed a lawsuit against 6 Davis residents (including this author) who wrote and signed the Argument Against ballot statement supporting a No vote on Measure H on the recent June ballot in Davis. The lawsuit against the six individual ballot statement authors/signers (the “Real Parties of Interest”) sought to suppress almost 1/3 of the language – over 80 words – in the ballot statement, alleging the statements were “false and misleading.”
Dan Carson was a long-time supporter of the Davis Innovation and Sustainability Campus (DISC) project, which the Measure H ballot sought to approve and be annexed into the City. Of further interest, Council Member Carson was part of the 2-person City Council subcommittee that negotiated the terms of the DISC industrial project with the developer on behalf of the City.
After he voted to put the project before the citizens on the ballot, Council Member Carson also then became the “Honorary Chair” of the Yes on Measure H committee, further clouding the nature of his relationship with the Yes on Measure H committee and the managing partner of the development project, Dan Ramos of Ramco Enterprises.
On March 30, 2022, Judge Maguire ruled that only 2 minor changes needed to be made in the ballot statement—deleting the word “only” from one clause and changing the unit of measurement of the greenhouse gas emissions produced by the project in another clause. The ballot statement was otherwise left unchanged and the functional intent of the language remained in place.
Shortly thereafter, counsel for the six defendants, Strumwasser and Woocher, filed a Petition for Award of Attorney’s Fees requesting reimbursement of their legal fees and expenses incurred by the firm defending the six Davis residents from the Carson lawsuit. Counsel for Mr. Carson subsequently submitted their own petition for award of attorney’s fees from the six Davis defendants alleging that he, Dan Carson was, in fact, the “successful party” in the litigation and was thus entitled to reimbursement of legal fees from the six individual Davis defendants.
This was a highly unusual request because both Council Member Carson and Dan Ramos had previously publicly admitted that the Yes on Measure H committee had funded the lawsuit on behalf of Dan Carson. Payment of these legal fees to Mr. Carson’s attorney’s prosecuting the case, Nossaman LLP, was confirmed by the Yes on Measure H committee Form 460 financial disclosure filings with the City of Davis.
Thus, although Mr. Carson had not actually paid any legal fees himself, he still petitioned the court to order the six individual Davis defendants who successfully fended off his lawsuit, to reimburse the legal fees that were otherwise actually paid for by the developer through the Yes on Measure H committee.
After a hearing on the matter, on June 1, 2022, Judge Daniel Maguire ordered Dan Carson, as the plaintiff in the lawsuit, to pay $42,209.75 in legal fees to counsel for the six Davis defendants. In his ruling Judge Maguire stated,
“As explained below, while both sides gained some of their objectives in this litigation, the Real Parties in Interest have achieved the greater share of success, and are awarded a net fees recovery of $42,209.75.”
He further explained his ruling stating,
“Under the ‘American Rule,’ litigants in this country generally pay their own lawyers, win or lose. In contrast, under the “English Rule,” the loser pays both lawyers…
There are exceptions to the American Rule, and one is the private attorney general doctrine. Its purpose is to encourage “meritorious public interest litigation vindicating important rights.”…
The private attorney general doctrine accomplishes this purpose by awarding attorneys’ fees to litigants who advance the public interest by successfully bringing or defending a lawsuit. (Ibid,) The aim is to incentivize legitimate public interest litigation, not to punish the losing side. (Ibid.) Without the prospect of a fee award, litigants may be unable or unwilling to undertake or defend litigation that transcends their own private interest, even when doing so would benefit “a broad swath of citizens.”
“The Real Parties in Interest also satisfy this requirement, as the public in a democracy has a strong interest in political debate that is ‘uninhibited, robust and wide open.’…Our society has a deep commitment to free speech, especially in political matters, and by defending their right to make their argument in their words, the Real Parties in Interest have also enforced an important right affecting the public interest.”
In summary, Judge Maguire based his Award of Attorney’s Fees on the finding that the six defendants, the Real Parties of Interest, were more “successful” than Mr. Carson in the outcome of the litigation and that the award “advanced the public interest” by “defending their right to make their argument in their words“.
According to the most recent Form 460 financial filing by the Yes on Measure H committee, these required legal fee reimbursements were paid to their Counsel, Nossaman LLP, on June 21 for forwarding to Strumwasser and Woocher, the Counsel for the six defendants. However, Nossaman LLP did not forward any payments to Strumwasser and Woocher until July 26, telling Strumwasser and Woocher that the Yes on Measure H committee had not paid them until them.
Unanswered Questions Concerning the Payment of Mr. Carson’s Legal Award Fees by the Yes on Measure H Campaign
1st Question – Is the Payment by the Yes on Measure H Campaign of the Legal Fees Owed by Mr. Carson Considered a “Gift” to an “Elected Official” Not Allowed Under State Law?
The California Political Reform Act restricts gifts, honoraria, payment of travel expenses, and loans in excess of $520 per calendar year to 1) elected officials and candidates for local elected offices, 2) most local officials, 3) judicial candidates, and 4) designated employees of local government agencies.
In determining whether the payment of the awarded legal fees by the Yes on Measure H committee on Mr. Carson’s behalf is a non-allowable “Gift” to Mr. Carson, the following information is provided in the Fair Political Practices Commission publication FPPC Ed – Pro 046 10-2021, October 2021 (https://www.fppc.ca.gov/content/dam/fppc/NS-Documents/TAD/gift-fact-sheet/LocalGiftFactSheet_Final_2021%20Version_2_Gendered%20Terms_Clean_Copy.pdf).
What is a “Gift”?
A “gift” is any payment or other benefit that confers a personal benefit for which a public official does not provide payment or services of equal or greater value….(Section 82028.) (See Regulation 18946 for valuation guidelines.)”
The award of attorney’s fees by Judge Maguire explicitly orders a payment by Petitioner, Dan Carson, to Counsel for the Real Parties (the six defendants). However according to the Form 460 reporting Yes on Measure H committee finances filed on July 28, 2022, with the City of Davis City Clerk, full payment for the obligation by Dan Carson was actually instead made by the Yes on Measure H committee. The payment was purportedly made by the committee on June 21 to Counsel for the six defendants, Strumwasser and Woocher, to the committee’s Counsel, Nossaman LLP, acting as the payment agent for the Yes on Measure H committee.
Conclusion – In the absence of any recompense otherwise made by Mr. Carson to the Yes on Measure H committee, it would otherwise appear that this payment of Mr. Carson’s obligation by the Yes on Measure H committee would be considered a “Gift” to him from the Yes on Measure H committee.
“Enforcement”
Failure to comply with the laws related to gifts, honoraria, loans, and travel payments may, depending on the violation, result in criminal prosecution and substantial fines, or in administrative or civil monetary penalties for as much as $5,000 per violation or three times the amount illegally obtained. (See Sections 83116, 89520, 89521, 91000, 91004 and 91005.5)“.
Conclusion – If the payment of Mr. Carson’s legal fees by the Yes on Measure H committee is construed to be a “Gift”, it could result in criminal penalties in addition to imposition of administrative penalties up to $128,127.75 ($42,709.25 x 3).
Possible Exceptions – The primary exception to the restrictions and limitations on “Gifts” to elected public officials exists as follows,
“Existing Personal Relationship. Benefits received from an individual where it is clear that the gift was made because of an existing personal or business relationship unrelated to the official’s position and there is no evidence whatsoever at the time the gift is made that the official makes or participates in the type of governmental decisions that may have a reasonably foreseeable material financial effect on the individual who would otherwise be the source of the gift. (Regulation 18942(a)(19).)”
However, this exception would seemingly not apply in this instance because Council Member Carson has publicly declared on numerous occasions that he has no business or economic relationships of any kind with the Yes on Measure H committee, the developer Ramco Enterprises, or the DISC project itself.
Further, it is clear by being part of the City Council subcommittee that negotiated the development agreement between the City of Davis and the project, that Council Member Carson “makes or participates in the type of governmental decisions that may have a reasonably foreseeable material financial effect” on the principal developers of the project who, not coincidentally, are the principal funders of the Yes on Measure H committee. Additionally, because one of the developers of the DISC project, Ramco Enterprises, also has numerous other properties within the City in which Mr. Carson “makes or participates in the type of governmental decisions that may have a reasonably foreseeable material financial effect” on those properties, this exception to the restriction of a gift is not applicable.
Conclusion – The payment of the award of legal fees by the Yes on Measure H campaign committee is seemingly not excepted by FPPC regulations regarding restrictions on “Gifts” and otherwise could be considered a gift to Council member Carson because it “confers a personal benefit (to Council member Carson) for which a public official does not provide payment or services of equal or greater value.”
We assume in this discussion that Council Member Carson has not provided or agreed to provide any past or future favorable treatment of any matters before the City by the developer by virtue of the developer’s many other property holdings within the City. But if any such promises or inferences were otherwise made in exchange for the payment of the Mr. Carson’s legal fees, it otherwise could be construed as a “Bribe” rather than a “Gift” for which much more substantial criminal and civil penalties could result.
2nd Question – Will any such “Gift” to Dan Carson of the Payment of His Legal Fees by the Yes on Measure H Committee Impose any Additional Income Tax Liability?
According to the Internal Revenue Service,
“The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether or not the donor intends the transfer to be a gift. The gift tax applies to the transfer by gift of any type of property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return.” (https://www.irs.gov/businesses/small-businesses-self-employed/gift-tax)
“The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead.” (https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes)
In the present circumstances, the “Gift” to Dan Carson by the Yes on Measure H committee (by virtue of their payment of legal fees owed by Mr. Carson) would presumably generate an income tax liability on the part of the Yes on Measure H committee, as the gift donor rather than by Mr. Carson as the recipient of the gift.
In their most recent financial 460 report (through June 30) filed with the City in which the payment of $42,209.25 by the Yes on Measure H committee was noted, there was NOT any corresponding accrued expense noted to reflect the additional income tax liability potentially incurred by the committee by virtue of their “Gift” to Carson.
3rd Question – Why Does a Discrepancy Exist in the Reported and Actual Date of Payment of Awarded Legal Fees to Counsel for the Six Defendants?
The $42, 209.75 fees ordered to be paid by Mr. Carson to the Counsel for the 6 defendants was supposedly paid by the Yes on Measure H committee through Carson’s Counsel, Nossaman LLP, on June 21 according to the most recent 460 campaign financial statements submitted by the Yes on Measure H committee to the City on July 28 for the period ending June 30, 2022.
However, the award amount was not forwarded by Carson’s Counsel to the six defendants’ Counsel, Strumwasser and Woocher, until July 26, 2022, and the delays were continually attributed by Carson’s Counsel to ongoing delays in receipt of the payment from the Yes on Measure H committee. Perhaps there is an honest accounting error here but these discrepancies in timing have not been explained.
Alan Pryor is the Principal Officer and Treasurer of the No on Davis Innovation and Sustainable Campus Campaign Committee and one of the defending Real Parties of Interest in the lawsuit brought by Mr. Carson.
Beating a dead horse.
“1st Question – Is the Payment by the Yes on Measure H Campaign of the Legal Fees Owed by Mr. Carson Considered a “Gift” to an “Elected Official” Not Allowed Under State Law?”
Unlikely since he didn’t keep any of the money himself.
“2nd Question – Will any such “Gift” to Dan Carson of the Payment of His Legal Fees by the Yes on Measure HCommittee Impose any Additional Income Tax Liability?”
Probably not. Likely to be seen as a pass through or wash.
“3rd Question – Why Does a Discrepancy Exist in the Reported and Actual Date of Payment of Awarded Legal Fees to Counsel for the Six Defendants?”
Yawn.
Once again Pryor wants to air his grievances in public. This time likely to try to damage Carson’s re-election chances. Last time Pryor made a huge deal about Carson’s actions as part of the no on H campaign instead of simply asking for attorney’s fees be awarded by the court.
This time he should make a complaint to the FPPC something I expect to follow along soon.
You may recall Carson and the Yes Campaign initially announced the filing of their lawsuit against the 6 defendants by a big announcement in the Vanguard and Enterprise even before the defendants were even notified they had been sued. I didn’t hear you complaining then about public airing of grievances.
Actually, the City Council should file the complaint with the FPPC since they have a history of demanding that FPPC laws be vigorously enforced in Davis (see Yes on Measure L Campaign has “Unclean Hands” when Alleging Improper Financial Disclosures by No on Measure L – Davis Vanguard, February 12, 2019)
My questions:
1. Did Alan Pryor consult with anyone who is an election law expert?
2. Did Alan Pryor consider the probability that the lawsuit was not filed by Dan Carson as an individual but rather as an agent of the campaign in his capacity as campaign chair?
3. Did Alan Pryor ask anyone about the third question or simply rely on his own reading of the documents?
I thought the lawsuit had to be filed by a resident of Davis. Does a “campaign” have the legal standing to file a such a lawsuit?
The lawsuit was filed by Dan Carson as an individual. The campaign would not have standing to file this lawsuit. Carson himself made a point of stating this, and it is easy to see by looking at Carson’s legal fillings. Further, the legal fee award was against Dan Carson as an individual and he alone was personally responsible for payment.
This is what the FPPC says:
Because Carson was personally responsible for paying the judgement against him, Carson received a very specific “personal benefit” from the Yes on H campaign paying the bill on his behalf. Had Yes on H not paid on Carson’s behalf, collection proceedings could have been initiated against Carson personally.
Yes, the FPPC who directed me to the sections of their regulations I quote in the article
It says right in the lawsuit that Carson filed as an individual Davis voter. Only an individual Davis voter has standing to file such a lawsuit.
I simply relied on the facts of the matter obtained from the Yes on Measure H’s Form 460 filing with the City and emails from their Counsel which showed the discrepancy – but then I also conferred with my dog, Spot, who is knowledgeable in such matters.
This is precisely why having someone familiar with election law would be helpful to your piece.
In almost every legal analysis I write you comment that it would be nice to have someone familiar with that aspect of the law to comment on it. By doing so you are inferring that I am not knowledgeable of such matters and trying to plant a seed of doubt with readers about the veracity and/or quality of my analyses.
I imagine you might be a little miffed if I similarly commented on every single analysis you wrote about any of the legal aspects of incarceration or housing or whatever and suggested that, since you are NOT a lawyer, your analysis would be taken more seriously if you had conferred with a lawyer with expertise in that matter.
If you have a problem with any statements I make then let’s hear your particular specific objection about what I said instead of just passively-aggressively throwing shade on me and making disparaging comments about needing an “expert” lawyer to opine about the truthfulness or pertinence of my analysis.
That said, regarding my understanding of election law, I have been called before the FPPC by the Council when they filed a formal complaint against me and the No on Measure L campaign at the unfounded urging of Stephen Boutin and David Taormino after the election. I successfully defended myself before them as evidenced by the “No Further Action” letter they issued. The Council also simultaneously referred the No on L campaign to the DA for investigation of campaign finance violations and I survived hours of interogation before the Yolo Co Grand Jury without any indictment or charges filed against me or the campaign.
I also intimately participated in the successful defense of the six defendants (including myself) against the most recent lawsuit filed by Carson. Finally, I have served as the Treasurer and/or Principal Officer of 8 different election campaign committees over the past dozen years in Davis and was intimately involved in several others helping performing those functions. Having been through all that I suggest that just maybe I have a gained a little bit of expertise in the area of campaign finance and disclosures.
So in the future, if you have a specific beef or gripe about anything I write, it would be more becoming of you if you pointed out those specific objections instead of just insinuating I don’t know what I am talking about and suggesting I confer with an “expert” lawyer. Thank you for this courtesy.
“In almost every legal analysis I write you comment that it would be nice to have someone familiar with that aspect of the law to comment on it. By doing so you are inferring that I am not knowledgeable of such matters and trying to plant a seed of doubt with readers about the veracity and/or quality of my analyses.”
That’s true. You are not a lawyer. You not only do not have expertise in the law, but you lack the knowledge of case law. There is a reason why you hired an attorney when push came to shove rather than relied on your own legal counsel.
Alan, I was thinking the same thing. If David has other facts or info that refutes your article then he should present them.
Neither are you, but that doesn’t stop you from basing more than half of your articles on some legal argument.
Even attorneys hire other attorneys to represent them in court. It’s unfortunate that Dan Carson and his developer friends forced this necessity on private citizens. But as it turns out, the result was not favorable to Carson and his friends (in more than one way).
Regarding Carson himself, his judgement regarding how his actions would be perceived do not reflect his own “reality”.
And David, perhaps you should reconsider your defensiveness regarding this issue. Something about digging your own hole (as perceived by others) even deeper. The same issue as Carson, himself.(Come to think of it, that’s fine with me. Can I get you a shovel?)
Doubtful. Payment of a personal legal judgment isn’t typically a deductible expense. However, since the tax on a gift is normally paid by the donor, the burden will likely fall on Dan Ramos. It’ll be chump change to him anyway in light of the overall costs of DISC to date.
The latest Form 460 filiing of the Yes on Measure H campaign with the City shows they spent $981,036 on the campaign of which $173,072 was on legal fees associated with their failed lawsuit.
I wonder if they think they got their money’s worth?
My only “question” remaining is whether the No on H campaign operatives who got sued have learned anythning from the experience?
Direct democracy requires good information. The no Campaign came out of the gate with an entire raft of mis-information: half-truths that were subtly worded to be defensible as free speech. It was a dis-service to our community and should not be condoned or defended by anyone.
And yes, before anyone tries to implement “whataboutism”. The Yes side followed up with a vapid and misleading campaign of their own.
They LOST the campaign with their strategy more than the No side “won” it. I have been critical of their approach unequivocally. But having talked to those involved in the time since, I know for a fact that THEY at least have learned something from this and regret it. The voters showed them they won’t be so easily hoodwinked, and despite the economic injury to our city, a small part of me is glad that such tactics were not rewarded.
Can the no on H side come to regret the disinformation they spread because of this lawsuit? Or has their victory with H emboldened them? Was getting sued over their mis-information something that will cause them to pause about being so cavalier with the truth in future issues? Or was it all worth it to them in he end?
I do worry it’s the latter.
Tim K… re: your questions posed @ 2:26
Last paragraph… except for the fact they ‘won’, the “no side” seems to be inspired by a ‘play-book’ authored by the folk on the ‘losing’ side in the 2020 prez elections… denial (of misrepresentations/half-truths, etc.); being emboldened; etc.
Mr Pryor is doubling down on his prior attacks of anyone who does not share his views…
Gotta’ find me a good, wet, unseasoned log to burn in my fireplace tonight… there might be an inversion layer tonight… and please don’t pry, or ask me where I find such wood…
Mr. Keller – Judge Maguire did not agree with you or Carson or Ramos about rampant misinformation being spread by the No campaign. But speaking of misinformation, I find it interesting that you blame the Yes campaign for spreading disinformation when you were marching side-by-side with them the whole campaign spewing your own nonsense about what type of space new start-ups wanted and needed and claiming DISC was going to give it to them. The reality is that cheap lab space at DISC was never going to happen except in some alternate universe you conjured. Yet after your ramblings were completely discredited by other more experienced entreprenuers, all of a sudden you present yourself as the new and only arbiter of truth in the campaign and try to completely dissociate yourself from the Yes campaign who you rabidly supported all the way through the campaign. Some saying about not needing fair-weather friends comes to mind.
“Mr. Keller – Judge Maguire did not agree with you or Carson or Ramos about rampant misinformation being spread by the No campaign. ”
That’s not exactly true. There were several instances where he ruled in your favor because of where the burden fell rather than because he ruled that the statement was accurate.
This is an interesting insight into how your mind works.
I supported Disc AND I was critical of many of the elements in disc. PUBLICLY.
Is that possible? Can you vote for something despite it’s flaws? Yes, Yes you can.
This all-or-nothing ideological assumption you make is simply incorrect. I was critical of many elements of DiSC publicly here and on nextdoor, I put in a lot of time to debunking the lies and mis-information from the other side…
But as someone who knows EXACTLY what startups in this town need better than anyone in this town ( I don’t make that claim idly…) I knew that on-balance, DiSC was what was best for our city, and because I had that perspective and could speak to the need better than probably anyone else.. I felt i HAD to weigh in for the sake of the economic sector that I support.
That doesne mean I was “lock step” with the developers. That is a lie. Or to re-use a phrase from Judge Maguire “your statement is verifiably false”
How someone can have a judge use language like that against their campaign statement and THEN still claim vindication is simply amazing…
Please stop any and all personal attacks. Stick to the issues. Thanks.