City & Cnty, of San Francisco v. Cobra Solutions, Inc.
Annotate this CaseCobra was a prequalified vendor of information technology goods and services to the city. In 1999-2000, Cobra submitted invoices based on invoices submitted by its subcontractor, Monarch. Monarch had not performed the work, but was a sham corporation run by Armstrong, then-manager of information technology for a city agency. The city paid the invoices. After uncovering another scheme involving Armstrong and a different vendor, the city received complaints that Cobra had not paid subcontractors for work for which the city had paid Cobra. Cobra did not submit to an audit request. The City Attorney had represented Cobra on matters including city contracts while in private practice. Although he had personally been screened from matters related to Cobra, the court ordered the city to retain independent counsel, but stayed proceedings pending appeal. The California Supreme Court affirmed the disqualification. A jury returned verdicts against Cobra and rejected all counterclaims. The court of appeal held that Cobra waived appeal of its motion to preclude the city from using evidence procured with the participation of the City Attorney; reversed as to intentional misrepresentation, negligent misrepresentation, and violation of the false claims acts; and remanded for a new trial limited to those claims.
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