Merlo v. Palo Alto

Filed 7/26/07 Merlo v. Palo Alto CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

Anthony Merlo sued the City of Palo Alto (City), alleging that in 2005 it improperly conducted an election approving an increase in storm drain fees. The essence of his claim is that the proposed storm drain increase constituted an assessment under article XIII D of the California Constitution (hereafter article XIII D), and, as such, certain mandatory election procedures were not followed by City. The court sustained without leave to amend Citys demurrer to the third amended complaint (Complaint). Thereafter, Merlo filed a dismissal without prejudice of the action and initiated this appeal.

Merlo contends that the court should not have sustained the demurrer to the Complaint without leave to amend. He argues that the court erred in granting Citys request for judicial notice and that it improperly relied on the documents of which it took judicial notice to conclude that the Complaint failed to state a cause of action. He argues further that he stated a cause of action challenging the 2005 election because the proposed storm drain fee increase was an assessment, rather than a property-related fee, and City failed to comply with the required procedures for an election concerning a proposed assessment.

We conclude that the trial court did not err or abuse its discretion in granting Citys request for judicial notice. We hold further that the Complaint failed to state a cause of action and that Merlo did not demonstrate a reasonable probability that he could amend to state a viable cause of action. Accordingly, we will affirm the dismissal entered on the order sustaining demurrer without leave to amend.

FACTS

We glean the following factswhich this court accepts as true for purposes of evaluating the trial courts ruling on demurrer (Searle v. Wyndham Internat., Inc. (2002) 102 Cal.App.4th 1327, 1330, fn. 1)from our review of the Complaint:[1]

Merlo alleges that in 2005, City conducted an election concerning a potential increase in storm drain fees. The measure passed by roughly a 60 percent margin. Merlo alleges further that a similar measure in 2000 was defeated by approximately a 60 percent margin, and that there was a ballot count verifying the results.

The Complaint alleges that article XIII D requires that, for any election concerning a proposed assessment increase, the ballots (1) be weighted according to the magnitude of the assessment, (2) each contain the property owners name and property identification to permit later verification of the vote, and (3) be treated after tabulation as disclosable public records available for inspection and accessible for recounting (Government Code Section 53753[, subdivision] (e)(1)). Merlo alleges that the proposed storm drain increase was an assessment that was thus subject to the foregoing ballot procedures. He claims that City breached its mandatory duty to conduct the 2005 ballot proceeding because it failed to follow the procedures required for votes on assessments, and that he suffered monetary injury in the form of a storm drain fee increase as a result of Citys actions.

The Complaint alleges that Merlo complied with the claims-presentation requirements of Government Code section 911.2 by filing a timely claim (on August 29, 2005) within six months of the date the assessment became effective (on July 1, 2005). City rejected the claim on September 19, 2005.

PROCEDURAL BACKGROUND

On October 13, 2005, Merlo filed suit against City.[2] City demurred to the original pleading, but Merlo filed a first amended complaint before that demurrer was heard. The court sustained with leave to amend Citys demurrer to the first amended complaint. Merlo filed a second amended complaint, and City again demurred. Merlo obtained leave of court to file the (Third Amended) Complaint prior to a hearing on the demurrer to the second amended complaint. City filed a demurrer to the Complaint, which Merlo opposed. The court sustained the demurrer without leave to amend on April 26, 2006.

On July 18, 2006, the court entered a dismissal based upon Merlos request for entry of dismissal without prejudice of the Complaint.[3] Merlo filed a timely notice of appeal.

DISCUSSION

I. Issue On Appeal

The main issue presented in this appeal is whether the court erred in sustaining the demurrer to the Complaint.[4] We discuss below this issue, along with the subsidiary issues of whether Citys request for judicial notice should have been denied, and whether Merlo should have been granted leave to amend.

II. Standard of Review

A demurrer tests the sufficiency of the complaint as a matter of law; as such, it raises only a question of law. [Citations.] (Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 316.) Thus, the standard of review is de novo. (Cryolife, Inc. v. Superior Court (2003) 110 Cal.App.4th 1145, 1152.) In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed. [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; see also Randi W. v. Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066, 1075.)

It is not the ordinary function of a demurrer to test the truth of the plaintiffs allegations or the accuracy with which he describes the defendants conduct. A demurrer tests only the legal sufficiency of the pleading. (Committee On Childrens Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213.) Thus, as noted, in considering the merits of a demurrer, the facts alleged in the pleading are deemed to be true, however improbable they may be. [Citation.] (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604; see also Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496 [court reviewing propriety of ruling on demurrer not concerned with the plaintiffs ability to prove . . . allegations, or the possible difficulty of making such proof].)

On appeal, we will affirm a trial courts decision to sustain the demurrer [if it] was correct on any theory. [Citation.] (Kennedy v. Baxter Healthcare Corp. (1996) 43 Cal.App.4th 799, 808, fn. omitted.) Thus, we do not review the validity of the trial courts reasoning but only the propriety of the ruling itself. [Citations.] (Orange Unified School Dist. v. Rancho Santiago Community College Dist. (1997) 54 Cal.App.4th 750, 757.)

Where a demurrer is sustained without leave to amend, the reviewing court must determine whether there is a reasonable probability that the complaint could have been amended to cure the defect; if so, it will conclude that the trial court abused its discretion by denying the plaintiff leave to amend. (Williams v. Housing Authority of Los Angeles (2004) 121 Cal.App.4th 708, 719.) The plaintiff bears the burden of establishing that it could have amended the complaint to cure the defect. (Campbell v. Regents of University of California (2005) 35 Cal.4th 311, 320.)

III. Propriety of Sustaining Demurrer to Complaint

Because Merlos claim is based upon the assertion that the 2005 vote violated article XIII D, we begin with a brief discussion of that article of the states Constitution.

A. Article XIII D of the California Constitution

Article XIII D (as well as article XIII C of the Constitution) came into existence as a result of the adoption by the California voters in November 1996 of Proposition 218, the Right to Vote on Taxes Act. (Ballot Pamp., Gen. Elec. (Nov. 5, 1996) text of Prop. 218, 1; reprinted as Historical Notes, 2A West's Ann. Const. (2007 supp.) foll. art. XIII C, 1, p. 80.) It was designed to close government-devised loopholes in Proposition 13. (Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles (2001) 24 Cal.4th 830, 839.) In adopting the measure, the electorate found and declared that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases. However, local governments have subjected taxpayers to excessive tax, assessment, fee and charge increases that not only frustrate the purposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent. (Reprinted as Historical Notes, 2A West's Ann. Const. (2007 supp.) following article XIII C,  1, p. 80.)

Article XIII D sets forth procedures, requirements and voter approval mechanisms for local government assessments, fees and charges. (Howard Jarvis Taxpayers Assn. v. City of Roseville (2002) 97 Cal.App.4th 637, 640.) Article XIII D section 6, subdivision (c), provides that [e]xcept for fees or charges for sewer, water, and refuse collection services, no property-related fee or charge shall be imposed or increased unless and until that fee or charge is submitted and approved by a majority vote of the property owners of the property subject to the fee or charge or, at the option of the agency, by a two-thirds vote of the electorate residing in the affected area. The election shall be conducted not less than 45 days after the public hearing. . . . Article XIII D defines fee or charge as any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property-related service. (Art. XIII D,  2, subd. (e).) And article XIII D defines property-related service: as a public service having a direct relationship to property ownership. (Id.,  2, subd. (h).)

Section 4 of article XIII D provides for requirements for the imposition of an assessment that are more stringent than those required for a property-related fee or charge under section 6. In the context of article XIII D, assessment means any levy or charge upon real property . . . for a special benefit conferred upon the real property. . . . (Art. XIII D, 2, subd. (b).) It further defines special benefit as a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. . . . (Id., 2, subd. (i).) As our high court has explained concerning the requirements under section 4 for the imposition of an assessment: A local public agency may not impose an assessment, . . . unless: (1) the agency identifies all parcels which will have a special benefit conferred upon them and upon which an assessment will be imposed (art. XIII D, 4, subd. (a)); (2) the agency obtains an engineers report that supports the assessment (id., 4, subd. (b)); (3) the assessment does not exceed the reasonable cost of the proportional special benefit conferred on the affected parcel (id., 4, subds. (a) & (f)); and (4) after giving notice to affected property owners and holding a public hearing, the agency does not receive a majority protest based on ballots weighted according to the proportional financial obligation of the affected property (id., 4, subds. (c)-(e)). (Richmond v. Shasta Community Services Dist. (2004) 32 Cal.4th 409, 418.)

B. Viability of Merlos Complaint

The essence of the allegations of Merlos Complaint is that the increase in storm drain fees accomplished through the 2005 election process was illegal because City failed to follow the procedures required under section 4 of article XIII D pertaining to the imposition of assessments. City responds that the matter involved the increase of a property-related fee or charge governed by section 6, and that the procedure it followed complied with the law applicable for such increases.

In Howard Jarvis Taxpayers Assn. v. City of Salinas (2002) 98 Cal.App.4th 1351, we addressed the propriety of the Salinas city councils adoption of a resolution imposing a storm drainage fee upon each developed city parcel. We agreed with the taxpayer plaintiffs who had brought a reverse validation action that the resolution plainly established a property-related fee for a property-related service, the management of storm water runoff from the impervious areas of each parcel in the City. (Id. at pp. 1354-1355.) Therefore, we held that the fee was subject to the voter-approval requirements of article XIII D . . . . (Id. at p. 1356.)[5]

While in Howard Jarvis Taxpayers Assn. v. City of Salinas, supra, we were not directly addressing the question of whether a storm drainage fee was a property-related fee, rather than an assessment, we believe that we were nonetheless correct there in characterizing the challenged fee as a property-related fee governed by section 6 of article XIII D. We do not believe that the benefit of a storm drain system provided to a landowner constitutes a special benefit conferred upon the real property within the definition of an assessment under Article XIII D, section 2, subdivision (b); it is not one that is a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. . . . (Id., 2, subd. (i).)

Other authorities support this conclusion. For example, in Richmond v. Shasta Community Services Dist., supra, 32 Cal.4th at page 427, the Supreme Court concluded that water service fees were fees for property-related services and thus potentially came within the restrictions of article XIII D. (See also Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205, 217 [domestic water delivery through a pipeline is a property-related service].) Likewise, in Howard Jarvis Taxpayers Assn. v. City of Roseville, supra, 97 Cal.App.4th 637, the court held that a percentage-based in lieu franchise fee imposed by a municipality upon private utilities (water, sewer, and refuse collection services) and paid by ratepayers violated article XIII D because the fee was a property-related fee. (Accord, Howard Jarvis Taxpayers Assn. v. City of Fresno (2005) 127 Cal.App.4th 914, 925-926.) The court noted that the water, sewer, and refuse services were plainly property-related (Howard Jarvis Taxpayers Assn. v. City of Roseville, supra, at p. 644), and cited the words of the Legislative Analyst for Proposition 218 in support of that conclusion: Fees for water, sewer, and refuse collection service probably meet the measures definition of a property-related fee. . . . (Id. at p. 645, fn. omitted; see also 81 Ops.Cal.Atty.Gen. 104 (1998) [proposed new schedule for charging storm drainage fees involved imposition of property-related fees requiring voter-approval under article XIII D].)[6]

Merlo argues further that the court prejudicially erred when it granted Citys request for judicial notice in connection with the demurrer. As part of its demurrer, City requested that the court take judicial notice of provisions of its municipal code as well as Resolution number 8483 of its City Council (wherein City identified its storm drainage fees as being property-related fees under Proposition 218 and the California Constitution. Merlo objected to this request on the basis that Citys description of the storm drainage fees was not relevant, because it was for the court to decide whether they were assessments under article XIII D. We reject Merlos contention.

Matters such as municipal codes are appropriate subjects of which the court may take judicial notice. (Evid. Code,  452, subd. (b) [judicial notice may be taken of [r]egulations and legislative enactments issued by or under the authority of the United States or any public entity in the United States]; 1119 Delaware v. Continental Land Title Co. (1993) 16 Cal.App.4th 992, 996, fn. 2 [portions of San Diego Municipal Code proper subject for judicial notice under Evid. Code,  452].)[7] Similarly, the court may take judicial notice of city council resolutions. (Shapiro v. Board of Directors (2005) 134 Cal.App.4th 170, 174, fn. 2.) The trial court thus neither committed error nor abused its discretion when it granted Citys request for judicial notice. (Washington v. County of Contra Costa (1995) 38 Cal.App.4th 890, 901; cf. West Valley-Mission Community College Dist. v. Concepcion (1993) 16 Cal.App.4th 1766, 1778 [error by trial court in taking judicial notice held not prejudicial].)

We therefore conclude that the court properly sustained the demurrer to the Complaint. Because Merlo did not establish that he could have amended the Complaint to cure the defect, the court did not abuse its discretion by denying him leave to amend. (Campbell v. Regents of University of California, supra, 35 Cal.4th at p. 320.)[8]

DISPOSITION

The judgment of dismissal entered on the order sustaining the demurrer to the Third Amended Complaint without leave to amend is affirmed.

Duffy, J.

WE CONCUR:

Mihara, Acting P.J.

McAdams, J.

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Analysis and review provided by La Mesa Property line Lawyers.

[1] The Complaint presented in appellants appendix is not paginated, does not contain separate paragraph references, contains certain handwritten notations (that may or may not have been in the original Complaint in the superior court file), and refers to various exhibits that are not attached to the pleading. While such noncompliance with appellate procedures (see Cal. Rules of Court, rule 8.124) might well justify striking the appendix, imposing sanctions, or both (see Canal Ins. Co. v. Tackett (2004) 117 Cal.App.4th 239, 242; In re Marriage of Green (1984) 159 Cal.App.3d 1163, 1164-1165), we decline to do so here. Instead, we will do our best to review Merlos claims of error with the limited record he has presented, noting that it is Merlos burden as the appellant challenging an order of dismissal following the sustaining of a demurrer without leave to amend to establish error. (Jibilian v. Franchise Tax Bd. (2006) 136 Cal.App.4th 862, 866-867.)

[2] As we have noted (see fn. 1, ante), the appendix filed by Merlo does not comply with rule 8.124 of the California Rules of Court in several respects (e.g., inclusion of only excerpts of pleadings [i.e., Citys demurrer to Complaint and Merlos opposition], and use of copies that deviate from original pleadings in the court file [i.e., copies containing interlineations and other personal notes].) We have gleaned some of the relevant procedural facts (not shown by documents in the appendix) from the recitations in the parties respective briefs, where it is clear that those recitations are not disputed.

[3] On August 11, 2006, pursuant to Merlos request, the court entered a dismissal with prejudice of the Complaint.

[4] City argues that Merlos appeal is limited to the narrow question of whether the court erred in granting Citys request for judicial notice in connection with the demurrer. The notice of appeal is not so limited, nor do we read Merlos appellate briefs so narrowly. Therefore, we conclude that the central issue to be decided is whether it was error to sustain the demurrer to the Complaint without leave to amend.

[5] In the second part of the opinion, we addressed whether the storm drainage fee was nonetheless exempt from voter-approval requirements of article XIII D because the fee was related to sewer or water service and thus fell under the exception found in section 6, subdivision (c) for fees or charges for sewer, water, and refuse collection services. (Howard Jarvis Taxpayers Assn. v. City of Salinas, supra, 98 Cal.App.4th at pp. 1356-1359.) We concluded that the storm drainage fee was related neither to sewer nor to water services and therefore held that the proposed fee was subject to the voter-approval requirements of article XIII D, section 6. (Howard Jarvis Taxpayers Assn. v. City of Salinas, supra, at pp. 1358-1359.)

[6] Opinions of the Attorney General, while not binding, are entitled to great weight. [Citations.] In the absence of controlling authority, these opinions are persuasive since the Legislature is presumed to be cognizant of that construction of the statute. [Citation.] (California Assn. of Psychology Providers v. Rank (1990) 51 Cal.3d 1, 17.)

[7] City contends that the provisions of its municipal code and the resolution of its council were subject to mandatory judicial notice under Evidence Code section 451. We disagree. This disagreement, however, is immaterial since we conclude that the court below properly granted discretionary judicial notice under Evidence Code section 452, subdivision (b).

[8] Because we have concluded that the Complaint did not state a cause of action, we need not address Citys alternative assertion that the Complaint was time-barred under Code of Civil Procedure section 329.5, because Merlo did not bring suit within 30 days of the balloting as required for a challenge to the validity of an assessment against real property for public improvements. (See Hiser v. Bell Helicopter Textron Inc. (2003) 111 Cal.App.4th 640, 655 [appellate courts generally decline to decide questions not necessary to the decision].)