Summary
naming the Department of Finance in addition to the director was redundant
Summary of this case from Gerwig v. GordonOpinion
C087417
11-25-2019
CITY OF ANAHEIM et al., Plaintiffs and Appellants, v. Keely M. BOSLER, as Director, etc., et al., Defendants and Respondents.
Rutan & Tucker and William H. Ihrke, for Plaintiffs and Appellants. Xavier Becerra, Attorney General, Thomas S. Patterson, Senior Assistant Attorney General, Benjamin M. Glickman and Anthony P. O’Brien, Deputy Attorneys General, for Defendants and Respondents.
Certified for Partial Publication.
Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified for publication with the exception of parts 2.0 and 3.0 of the Discussion.
Rutan & Tucker and William H. Ihrke, for Plaintiffs and Appellants.
Xavier Becerra, Attorney General, Thomas S. Patterson, Senior Assistant Attorney General, Benjamin M. Glickman and Anthony P. O’Brien, Deputy Attorneys General, for Defendants and Respondents.
Butz, J. Nearly eight years after the Great Dissolution (see City of Pasadena v. Cohen (2014) 228 Cal.App.4th 1461, 1463, 176 Cal.Rptr.3d 729 ), in which the political branches of our state government abolished redevelopment agencies (RDA’s) because of abuses improperly diverting tax increment ( City of Tracy v. Cohen (2016) 3 Cal.App.5th 852, 855, 208 Cal.Rptr.3d 128 ( City of Tracy )), we continue to encounter schemes in which cities and counties seek to avoid the intended effects of this enactment (given our distinction as the designated appellate forum for these disputes by virtue of Health & Saf. Code, § 34168 ). This latest appeal involves an effort to foist the pension and retiree healthcare costs (hereafter "retirement costs") for city employees who performed redevelopment-related work onto the successor agency to the now-abolished Anaheim Redevelopment Agency (Anaheim RDA). Plaintiff City of Anaheim, in its own right and as the successor agency to the Anaheim RDA (collectively "City" unless we need to distinguish the two), and John Woodhead, who works for both entities, brought this 2017 petition for a writ of mandate. The petition sought to overturn the determination that an agreement between the City of Anaheim and the Anaheim RDA to reimburse the City of Anaheim for the retirement costs of its employees who worked for the Anaheim RDA was not an enforceable obligation of the Anaheim RDA, and thus payments to the City of Anaheim for this purpose from the successor agency were not permissible. As defendants, the petition identified the director of the Department of Finance (Department), presently Keely Bosler, in her official capacity; the Department of Finance (a redundant defendant, as we repeatedly point out (e.g., City of Brentwood v. Campbell (2015) 237 Cal.App.4th 488, 492, fn. 3, 188 Cal.Rptr.3d 88 ( City of Brentwood )); the auditor-controller for Orange County (a neutral stakeholder ( ibid . )); and the oversight board that supervises the operations of the successor agency ( County of Sonoma , supra , 235 Cal.App.4th at p. 45, fn. 2, 184 Cal.Rptr.3d 911 ). (Neither of the latter parties appears on appeal; only the former answered the petition.) The trial court entered judgment in favor of the Department, after issuing a lengthy and cogent ruling.)
As there now exists a substantial corpus of case law defining the various terms of art that are involved in the dissolution law (see County of Sonoma v. Cohen (2015) 235 Cal.App.4th 42, 45, fn. 3, 184 Cal.Rptr.3d 911 (County of Sonoma )), with which the parties are well familiar, we will simply employ them without further elaboration.
Undesignated statutory references are to the Health and Safety Code.
On appeal, petitioners reiterate their claims, which focus on their interpretation of what is a "legally enforceable" required payment from the Anaheim RDA (§ 34171, subd. (d)(1)(C); hereafter § 34171(d)(1)(C)), the purported unconstitutional impairment of contractual rights, and estoppel. We shall affirm.
FACTUAL AND PROCEDURAL BACKGROUND
"As is generally the case in Great Dissolution appeals, the facts are undisputed and merely serve to provide a contextual framework." ( Covarrubias v. Cohen (2016) 3 Cal.App.5th 1229, 1232, 208 Cal.Rptr.3d 226 ( Covarrubias ).) As neither party disputes the summary of the facts in the trial court’s ruling, we draw them from that source.
Beginning in 1950, the employees of the City of Anaheim have participated in a public retirement system by virtue of the City of Anaheim’s contract with the system, which assesses contributions based on actuarial assumptions to fund the employee benefits to which City of Anaheim has agreed. The City of Anaheim also has entered into memoranda of understanding (MOU’s) with the representatives of its employees governing the terms and conditions of their employment. The Anaheim RDA never contracted with the retirement system itself on behalf of these joint employees, and did not have an MOU with them. Only about nine RDA’s ever directly contracted with the retirement system on behalf of their employees. In 1973, the City of Anaheim created the Anaheim RDA, designating its city council as the governing body and its city manager as the executive director of the RDA. The City of Anaheim and the Anaheim RDA decided to make use of City of Anaheim employees to perform redevelopment work. The two entities entered into a "Cooperation Agreement" under which the Anaheim RDA would bear the compensation costs of the city employees performing redevelopment work based on the proportion of time performing such duties. It is undisputed that the City of Anaheim and the Anaheim RDA are the joint employers of these workers.
Upon the enactment of the dissolution law, the City of Anaheim elected to become the successor agency. It was able to reassign most of the joint redevelopment employees, except for eight. The record is not clear whether unfunded retirement costs in excess of $9 million are attributable only to the eight employees or is an overall obligation to the former joint employees.
As part of its duties as successor agency, the City of Anaheim must file a list of the enforceable obligations of its former RDA called the "Recognized Obligation Payment Schedule" (ROPS). The nomenclature and frequency of ROPS filings has changed over the years, for which reason we will simply designate them by the month that begins the covered period.
In the January 2012 ROPS and July 2012 ROPS, the Department approved claims of the retirement costs of joint employees. In the January 2013 ROPS, the Department denied the claims for retirement costs, which led to litigation. While the parties were working through this issue, the successor agency did not include claims for retirement costs in the ROPS for July 2013 or January 2014. In the July 2014 ROPS, the Department approved claims for present retirement costs and 83 percent of claims from prior cycles. This approval continued from the January 2015 ROPS through the January 2016 ROPS. In apparent response to these approvals, the City withdrew the issue of these costs from its then-pending litigation against the Department. In the ROPS for fiscal year 2016-2017, the successor agency listed the retirement costs as administrative overhead; the Department reclassified them as enforceable obligations but denied the claims because they had been overfunded in previous cycles. For the fiscal year 2017-2018 ROPS, the Department ruled that retirement costs were not enforceable obligations, leading to the present litigation.
DISCUSSION
"In truth, we have little to add to the trial court’s ... dispatch of the merits of the petition. We are obligated to respond to the arguments [the City] renew[s] at length on appeal. We [are also] unpersuaded." ( Covarrubias, supra , 3 Cal.App.5th at p. 1235, 208 Cal.Rptr.3d 226.) 1.0 Retirement Costs are not an Enforceable Obligation of the Anaheim RDA
In matters of statutory interpretation of an agency’s governing statutes, we accord a weak deference to the agency’s viewpoint where it has superior expertise, but the issue ultimately is subject to our de novo review. ( County of Sonoma, supra , 235 Cal.App.4th at p. 47, 184 Cal.Rptr.3d 911.)
We begin with disposing of an effectively conceded point. Although there are "penumbras" and "emanations" ( Griswold v. Connecticut (1965) 381 U.S.479, 484 [85 S.Ct. 1678, 14 L.Ed.2d 510, 514] ) interspersed in the City’s briefing with respect to the sponsor agreement between the City of Anaheim and the Anaheim RDA, this agreement is not an enforceable obligation of the former RDA under section 34171, subdivision (d)(2), regardless of whether its subject might otherwise come within the definitions of an enforceable agreement in subdivision (d)(1) of that statute under settled precedent (e.g., County of San Bernardino v. Cohen (2015) 242 Cal.App.4th 803, 814, 195 Cal.Rptr.3d 439 ( County of San Bernardino )). The City thus apparently disavows any reliance on the sponsor agreement for the payment of retirement costs: "the Cooperation Agreement does not negate other legally sufficient grounds" for an enforceable obligation; "the Cooperation Agreement is not the only source giving rise to payment" of retirement costs as an enforceable obligation. (Italics added.) As a result, we do not belabor the unenforceable nature of the Cooperation Agreement itself.
The enforceable obligations of a former RDA include "legally enforceable payments required in connection with the agencies’ employees, including, but not limited to, pension payments, pension obligation debt service ..., or other obligations conferred through a [MOU]. Costs incurred to fulfill [MOU’s] for layoffs or terminations of city employees who performed work directly on behalf of the former [RDA] shall be considered enforceable obligations ...." (§ 34171(d)(1)(C), italics added.) This language, however, obligates the former RDA only to the extent of its own contractual costs for joint employees, including any contractual costs associated with the laying off or termination of joint employees, not to all costs that are associated with joint employees whom a former RDA has laid off or fired, such as the eight joint employees that the City has identified in the present case.
The City argues that the phrase "agencies’ employees" in this statute must be construed to include other local entities performing work for the former RDA’s and the successor organizations. However, the Department does not dispute the joint-employee status of the city employees who worked for the Anaheim RDA. The determinative qualification in the sentence is that the payments on behalf of "employees" (whosoever they may be) are legally enforceable . That is the beginning and end of the issue. It is also irrelevant that few former RDA’s may have contracted directly with the retirement system itself. It is entirely within the Legislature’s prerogative in line-drawing to have concerned itself only with a narrow category of employees that does not embrace by implication the broader network of joint employees. The City does not explain how it would further the object of dissolution to expand the liability of former RDA’s to include extracontractual obligations to employees of other entities.
Another irrelevant contention focuses on the declaration in section 34190 of the Legislature’s intent "to stabilize the labor and employment relations of [RDA’s] and successor agencies ... under ... this part." (§ 34190, subd. (a).) This again begs the question of whether there is a legally enforceable contractual obligation to such employees to "stabilize" in the first place, as this provision furthering employment relations does not purport to create legally enforceable substantive duties beyond those that already contractually exist with the City of Anaheim (and the City does not provide any authority to that effect), so we do not need to pursue this inquiry further.
Also unavailing is the City’s attempt to analogize to the inapposite provision in section 34179.5 in an effort to "harmonize" that provision with section 34171(d)(1)(C). In City of Brentwood , we explained that the Legislature in 2012 added provisions to the dissolution law to audit transfers that former RDA’s scurried to make to their sponsors after the end-of-redevelopment-as-they-knew-it appeared on the horizon in January 2011. This audit was termed the " ‘due diligence review’ " in order to recoup unauthorized transfers. ( City of Brentwood, supra , 237 Cal.App.4th at pp. 495, 499, 188 Cal.Rptr.3d 88.) In City of Tracy , we held that in due diligence review, under section 34179.5 the payments to the sponsors that reflected labor costs of sponsor staff who directly provided services for redevelopment activities were not subject to recoupment. ( City of Tracy, supra , 3 Cal.App.5th at p. 863, 208 Cal.Rptr.3d 128.) The City does not provide any authority or cogent argument why we must import principles from the distinct due diligence process into the definitions of enforceable obligations for the ongoing liabilities of former RDA’s.
We finally come to the heart of the City’s argument. Essentially, it claims the retirement costs for the joint employees are legally enforceable obligations of the Anaheim RDA regardless of a contract. To this end the City included a lengthy string cite in a footnote (in its memorandum of points and authorities) about cases generally involving the liability of joint employers in a variety of circumstances. We quote the trial court’s response: "The only authority offered is a footnote citing cases in which joint ... employers were held liable ... for wage and hour violations, for providing workers’ compensation benefits, for injuries to employees, for an employee’s job-related torts, or for the obligation to bargain collectively with employees. Petitioners have not cited any cases, and the court likewise has not found any, holding that a joint employer is legally responsible for funding retirement benefits promised by another employer." The trial court then looked to somewhat analogous federal authority under which the duty to make pension contributions under federal law must arise from a direct contractual duty. ( Trustees of the Screen Actors Guild-Producers Pension & Health Plans v. NYCA, Inc. (9th Cir. 2009) 572 F.3d 771, 776-780 [absent proof of need to pierce corporate veil, nonsignatory not liable]; Sullivan v. William A. Randolph, Inc. (7th Cir. 2007) 504 F.3d 665, 668 [no evidence of course of conduct indicating nonsignatory’s intent to be bound to contract]; Olivieri v. P.M.B. Constr., Inc. (E.D.N.Y. 2005) 383 F.Supp.2d 393, 401, 404.) We agree. The City fails to provide any authority remotely suggesting that there is some extracontractual duty on the part of the Anaheim RDA to the City of Anaheim’s employees for the payment of retirement costs.
This leaves the City’s exhortation that we should construe the statute in terms of multiple independent policy concerns of the Legislature such that reducing the liability of a local entity for retirement costs must somehow be part of the object of eliminating the abusive diversion of tax increment. We have repeatedly made clear that even within the dissolution law itself we do not interpret specific statutory provisions in light of an inchoate overall policy ( City of Galt v. Cohen (2017) 12 Cal.App.5th 367, 379, 218 Cal.Rptr.3d 779 ( City of Galt ); County of San Bernardino, supra , 242 Cal.App.4th at p. 816, 195 Cal.Rptr.3d 439 ; City of Brentwood, supra , 237 Cal.App.4th at p. 501, 188 Cal.Rptr.3d 88 ; County of Sonoma, supra , 235 Cal.App.4th at p. 48, 184 Cal.Rptr.3d 911 ), a principle that applies with even more relevance to any legislative concerns outside the object of a statutory scheme.
See footnote *, ante .
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The Department’s request for judicial notice, filed May 23, 2019, is denied as unnecessary to our analysis. The judgment is affirmed. The Department shall recover its costs of appeal. ( Cal. Rules of Court, rule 8.278(a)(1), (2).)
We concur:
Robie, Acting P. J.
Hoch, J.