Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of San Diego County No. GIC857142, Ronald S. Prager, Judge.
IRION, J.
The City of Calexico (Calexico) appeals from a judgment dismissing its consolidated action against the Imperial Irrigation District (the District), in which it challenges the District's increase of the water rates charged to municipalities. The trial court concluded that dismissal was warranted because Calexico was required to bring its challenge as a validation action pursuant to Code of Civil Procedure section 860 et seq. but failed to do so.
As we will explain, we conclude that the trial court erred in relying solely on a mixed legal-factual conclusion in Calexico's pleadings to determine that the water rate increase is a "capacity charge" within the meaning of Government Code section 66013, subdivision (b)(3), and thus must be challenged in a validation action, as provided in section 66022, subdivision (b). The trial court should have determined for itself, based on the relevant facts, whether the water rate increase constitutes a capacity charge, and should not have treated the statement in Calexico's pleadings as a judicial admission.
Unless otherwise specified, all further statutory references are to the Government Code.
We thus reverse the judgment and remand for the trial court to make a determination, based on facts and argument to be presented by the parties, as to whether the water rate increase is a capacity charge and, accordingly, whether this action should be dismissed because it was not brought as a validation action.
I
FACTUAL AND PROCEDURAL BACKGROUND
The District is a public irrigation district operating in California's Imperial Valley. Among other things, it provides water to agricultural customers and sells water on a wholesale basis to municipalities. (See Imperial Irr. Dist. v. U.S. E.P.A. (9th Cir. 1993) 4 F.3d 774.) The municipalities, in turn, treat the water and sell it to local residents at retail rates. (Ibid.)
A. Lawsuits Challenging the Rate Increase
On March 15, 2005, after holding several public board meetings and public workshops on the topic of balancing its budget, the District raised the rates that it charged to municipalities for the provision of wholesale water (the rate increase). The rate increase provided that municipalities would pay $48 per acre-foot, starting on July 1, 2005 (which was three times the rate for agricultural customers); $68 per acre-foot, starting on July 1, 2006 (which was four times the rate for agricultural customers); and a rate to be determined, starting on July 1, 2007 (which was to be five times the rate for agricultural customers).
Exactly 120 days later, on July 13, 2005, the City of Brawley filed a lawsuit against the District in Imperial County Superior Court (the Brawley action). Pled as a proposed class action, the Brawley action challenged the rate increase as illegal and asserted eight separate causes of action. Among other things, the Brawley action sought injunctive and declaratory relief, an accounting, recovery for unjust enrichment and for "unfair discrimination at common law." Two additional causes of action are especially pertinent here. The sixth cause of action alleged that the rate increase was a "capacity charge" within the meaning of section 66013, which, according to that statute, limited the District to imposing a charge that did not exceed the "reasonable cost of providing the service." (§ 66013, subd. (a).) The eighth cause of action alleged that the rate increase violated the provisions of Proposition 218 (codified as Cal. Const., arts. XIII C & XIII D; Gov. Code, § 53750 et seq. (Proposition 218)) in that it was imposed "as a fee incident to property ownership," but was not put to a public vote and did not bear a rational relationship to the cost of delivering the water.
The portion of the Government Code in which section 66013 appears is known as the Mitigation Fee Act. (§ 66000.5.) The term " '[c]apacity charge' " is defined by section 66013, subdivision (b)(3) of the Mitigation Fee Act as "a charge for facilities in existence at the time a charge is imposed or charges for new facilities to be constructed in the future that are of benefit to the person or property being charged."
"In November 1996, . . . the electorate adopted Proposition 218, which added articles XIII C and XIII D to the California Constitution. Proposition 218 allows only four types of local property taxes: (1) an ad valorem property tax; (2) a special tax; (3) an assessment; and (4) a fee or charge. (Cal. Const., art. XIII D, § 3, subd. (a)(1)-(4); see also Cal. Const., art. XIII D, § 2, subd. (a).) It buttresses Proposition 13's limitations on ad valorem property taxes and special taxes by placing analogous restrictions on assessments, fees, and charges." (Howard Jarvis Taxpayers Assn. v. City of Riverside (1999) 73 Cal.App.4th 679, 682.)
More than a month later, on August 28, 2005, Calexico filed a lawsuit against the District in the same court, challenging the rate increase (the Calexico action). The Calexico action sought mandamus relief, declaratory and injunctive relief, and an order for the refund of monies. Common to all of the causes of action were prefatory allegations regarding the illegality of the rate increase. Like the Brawley action, the Calexico action alleged that the rate increase unfairly discriminated between different types of customers and that the rate increase was a "capacity charge" within the meaning of section 66013, which impermissibly exceeded the reasonable cost of providing the water. The Calexico action also alleged that the rate increase was subject to Proposition 218. According to the Calexico action, the rate increase was subject to Proposition 218 as a "special tax," whereas the Brawley action had alleged that the rate increase was subject to Proposition 218 as a "fee incident to property ownership." Unlike the Brawley action, the Calexico action identified additional provisions of the California Constitution that were allegedly infringed by the rate increase.
Venue for both of the lawsuits was transferred to San Diego County Superior Court. Calexico then filed a motion for leave to substitute into the Brawley action as named plaintiff and class representative in place of the City of Brawley. Over the opposition of the District, the trial court granted Calexico's motion. Calexico filed an amended complaint in the Brawley action, which was identical to the original complaint except that it substituted Calexico as the plaintiff. The parties stipulated that the Brawley action and the Calexico action would be consolidated for all purposes under the case number assigned to the Brawley action. Calexico dismissed the class action allegations from the Brawley action.
In the consolidated action, Calexico filed its opening trial brief on its petition for writ of mandate, seeking to invalidate the rate increase. Calexico asserted the following theories: (1) the rate increase is both a "fee" and a "special tax" within the meaning of Proposition 218, but was adopted without following the procedural or substantive requirements of Proposition 218; and (2) the rate increase violates the provision of the Government Code and the Water Code, which, according to Calexico, provide that "any proposed water rate increase must be based upon a reasonable estimate of the cost to provide such service."
The portion of the Government Code cited in Calexico's trial brief is "[section] 66000 et seq," i.e., the Mitigation Fee Act. Calexico apparently intended to refer specifically to Government Code section 66013, subdivision (a) of the Mitigation Fee Act, as it had in its pleadings.
B. The District's Motion to Dismiss
Along with its opposition trial brief, the District filed a motion to dismiss the consolidated actions. The motion to dismiss argued that the trial court lacked jurisdiction because Calexico had alleged in both the Brawley action and the Calexico action that the rate increase is a capacity charge within the meaning of section 66013. The District premised its motion on section 66022, which requires that "[a]ny judicial action or proceeding to attack, review, set aside, void, or annul" a public agency's adoption of a capacity charge "described in and subject to" the Mitigation Fee Act "shall be" brought as a validation action under Code of Civil Procedure 860 et seq. (Gov. Code, § 66022, subds. (a), (c), (b).)
1. The Law Pertaining to Validation Actions
To fully understand the basis for the District's motion and the trial court's ruling on that motion, we must first review the law pertaining to validation actions. A validation action may either be brought (1) by a public agency as a means to obtain a conclusive determination that some matter, such as an ordinance, resolution, or other action taken by it, is valid (Code Civ. Proc., § 860; Katz v. Campbell Union High School Dist. (2006) 144 Cal.App.4th 1024, 1028), or (2) as a "reverse validation" action in which an interested party brings a lawsuit to challenge any matter that could have been the subject of a validation action by a public agency. (Katz, at p. 1028; Code Civ. Proc., § 863.) A challenge by an interested party, such as Calexico, to the rate increase under the procedures set forth in Code of Civil Procedure section 860 et seq. is a reverse validation action.
"The validation procedure is intended to provide a uniform mechanism for prompt resolution of the validity of a public agency's actions. [Citation.] The procedure 'assures due process notice to all interested persons' and settles the validity of a matter 'once and for all by a single lawsuit.' " (Katz v. Campbell Union High School Dist., supra, 144 Cal.App.4th at p. 1028.)
The Code of Civil Procedure sets forth specific requirements for validation actions (including reverse validation actions), which must be brought as proceedings in rem. (See Code Civ. Proc., § 860.) Specifically, the summons in a validation action must contain specific information describing the action, must be addressed to " 'all persons interested in the matter' " and must be served by publication in a newspaper of general circulation. (Id., §§ 861, 861.1, 863.)
The trial court does not obtain jurisdiction over the matter until the plaintiff has complied with the applicable procedures. (See Code Civ. Proc., § 862.) Further, "[i]f the interested person bringing [a reverse validation] action fails to complete the publication . . . and to file proof thereof in the action within 60 days from the filing of his complaint, the action shall be forthwith dismissed on the motion of the public agency unless good cause for such failure is shown by the interested person." (Id., § 863.)
2. The District's Arguments in Its Motion to Dismiss
It was undisputed that neither the Brawley action nor the Calexico action complied with the procedures required for validation actions because, among other things, no summons was published. The District argued that the trial court accordingly lacked jurisdiction over the matter and the consolidated actions should be dismissed.
The District also pointed out that the Calexico action (but not the Brawley action) was untimely because Government Code section 66022 states that an action challenging a capacity charge under the Mitigation Fee Act must be brought within 120 days of its enactment, and the Calexico action was filed more than 120 days after the District enacted the rate increase. Calexico argued in the trial court (and argues on appeal) that the Calexico action was, in fact, timely because the rate increase at issue here included certain automatic increases to be charged in years 2006 and 2007, and section 66022, subdivision (a) allows an action challenging a rate increase to be filed within 120 days of the automatic increase. However, we need not, and do not, decide whether the Calexico action was timely filed, as it is undisputed that the Calexico action did not comply with the procedures required for validation actions.
Although the District's motion to dismiss was premised on Calexico's allegation that the rate increase is a capacity charge, the District also made clear in its motion that it did not agree the rate increase is a capacity charge within the meaning of section 66013 because the rate was "not tied to any particular property development, or even any particular customer." Previewing the argument it intended to make at trial, the District argued, without referring to any evidence, that the rate increase was similar to the fee increase at issue in Rincon Del Diablo Municipal Water Dist. v. San Diego County Water Authority (2004) 121 Cal.App.4th 813, 820, and thus was not a capacity charge. The District stated that if the trial court determined that the rate increase is a capacity charge, it should dismiss the consolidated actions in their entirety, but if it determined that the rate increase is not a capacity charge, it should only dismiss the sixth cause of action in the Brawley action, which explicitly sought relief on the ground that the rate increase is a capacity charge.
3. Calexico's Opposition to the Motion to Dismiss
Calexico opposed the motion to dismiss with two central arguments. First, it argued that by not earlier asserting the issue, the District waived its right to argue that the challenge to the rate increase should have been brought as a validation action. Second, it argued that the trial court should find good cause to allow it to belatedly comply with the procedures for validation actions, as it had misread Code of Civil Procedure section 869 to say that municipalities are excused from following the procedures required for validation actions. Calexico did not attempt to present evidence or argument as to whether the rate increase is a capacity charge.
4. The Hearing on the Motion to Dismiss and the Trial Court's Ruling
The trial court heard oral argument on the District's motion to dismiss. At the hearing, Calexico argued that if the trial court was going to grant the District's motion, it should dismiss only the sixth cause of action in the Brawley action for violation of section 66013 (which explicitly relied on the premise that the rate increase is a capacity charge), leaving the rest of the lawsuit to proceed. Counsel for Calexico stated, "To the extent that we alleged it was a capacity charge, I'll dismiss that cause of action."
On appeal, Calexico has again offered to dismiss its cause of action that relies on the allegation that the rate increase is a capacity charge, and it also offered to stipulate that the rate increase is not a capacity charge. However, as we will explain, a dismissal of the capacity charge allegations would not be dispositive of whether this action was required to be brought as a validation action. The answer to that question requires a factual determination as to whether the rate increase is a capacity charge.
The trial court, however, appeared to have concluded that because Calexico pled that the rate increase is a capacity charge, Calexico could not escape that allegation even if it amended its pleadings. The trial court stated, "Aren't there numerous instances, though, where somebody makes some allegation in the pleading that has certain adverse consequences, they try to withdraw that or change that, and the courts say no, you said it, and once you say it, it has certain consequences, and now you cannot just try to distance yourself from that in order to further your objectives of the litigation. You said it was a capacity charge. If it was, then that gives rise to certain -- makes it an in rem action, requires certain forms of notice. You said it, and once you said it, . . . now we can't undo that. We can't just ignore that."
In a written ruling, the trial court granted the District's motion to dismiss. It did not determine whether the rate increase constituted a capacity charge within the meaning of section 66013, subdivision (b)(3). Indeed, it could not have done so because the parties had not meaningfully briefed that issue or presented evidence regarding it as part of the motion to dismiss.
Implicitly assuming that the rate increase is a capacity charge, the trial court proceeded to reject certain arguments that Calexico had raised in its opposition to the motion to dismiss. First, the trial court confirmed that the Calexico action was required to be filed no more than 120 days after the rate increase was enacted. Second, it observed that the Brawley action, although filed within the 120-day period, did not follow the procedures required for a validation action. Third, it pointed out that a defense based on the court's lack of subject matter jurisdiction cannot be waived. Finally, it rejected Calexico's argument that there was good cause to excuse it from complying with the validation procedures, as long-standing case law put it on notice that public agencies bringing a reverse validation action are required to file the suit following the procedures set forth in Code of Civil Procedure section 860 et seq.
C. Calexico's Appeal
Calexico appeals from the dismissal. It presents several arguments on appeal. First, Calexico's opening brief takes the position that the rate increase may or may not have been a capacity charge, and it points out that the trial court "failed" to make a determination on that issue. Calexico's reply brief elaborates on this point and specifically asserts that we should remandthis action for the trial court to make a finding as to whether the rate increase is a capacity charge so that it can determine whether it lacks jurisdiction over the action. Second, it argues that because not all of its claims for relief require it to establish that the rate increase is a capacity charge, the trial court should have allowed it to proceed with those other theories, including specifically, its claim that the rate increase was enacted in violation of the substantive and procedural requirements of Proposition 218. Third, Calexico argues that the trial court abused its discretion in not finding good cause to allow it to belatedly comply with the procedures required for validation actions.
Calexico also argues that because an automatic rate increase is involved, the Calexico action was timely filed, even though it was filed more than 120 days after the rate increase was enacted. As we have explained, the issue of whether the Calexico action was timely filed is not determinative, because regardless of its timeliness, it failed to follow the procedures required of a validation action, and thus if the rate increase is a capacity charge, Calexico will be subject to those requirements, as well as the 120-day statute of limitations.
The parties' appellate briefing did not adequately address whether the trial court erred by relying on Calexico's pleadings rather than making its own determination of whether the rate increase is a capacity charge. Accordingly, we asked the parties to submit supplemental letter briefs on that issue.
II
DISCUSSION
A. The Trial Court Erred in Not Making a Determination as to Whether the Rate Increase Is a Capacity Charge
We first address the issue on which we requested supplemental briefing, i.e., whether the trial court erred in determining it lacked jurisdiction over the entirety of Calexico's claims without first determining that the rate increase is a capacity charge.
Preliminarily we note that Calexico relied on at least two theories for relief that did not require it to establish that the rate increase is a capacity charge. Specifically, Calexico alleged (1) that the rate increase violated the requirements of Proposition 218 (or perhaps, as pled in the Calexico complaint, different constitutional provisions) and (2) that the rate increase constituted "unfair discrimination at common law." Our inquiry here is focused on determining whether the trial court erred in determining it lacked jurisdiction over those claims that did not require Calexico to establish that the rate increase is a capacity charge.
Calexico's sixth cause of action in the Brawley action complaint alleges that the rate increase is invalid because it exceeded the amount that could be legally imposed for a capacity charge under section 66013, subdivision (a). That cause of action would unquestionably require Calexico to establish that the rate increase is a capacity charge, and thus it would unquestionably have to be brought as a validation action.
Our legal analysis begins with the premise that under section 66022, subdivisions (a) and (b), an action seeking to "attack, review, set aside, void, or annul" a capacity charge must be brought as a reverse validation action. As we have explained, where a public agency's action must be challenged through a reverse validation action, a trial court lacks jurisdiction unless the applicable procedures have been followed. (Code Civ. Proc., §§ 862, 863;Katz v. Campbell Union High School Dist., supra, 144 Cal.App.4th at pp. 1031-1032.) Here, where Calexico unquestionably did not follow the procedures required for a validation action, the crucial factual question for the jurisdictional analysis is whether the rate increase constitutes a capacity charge.
The necessity of properly following the procedures required for reverse validation actions has been explained as follows: "[V]alidation actions are actions in rem. . . . Strictly speaking, an action 'in rem' is an action ' "against a thing." ' (Black's Law Dict. (8th ed. 2004) p. 809, col. 1.) Classic in rem jurisdiction is acquired by seizing the thing (usually property) and commencing proceedings for satisfaction of a claim against the property by giving 'general notice to all the world' of the seizure and the pendency of the action. (Lee v. Silva (1925) 197 Cal. 364, 368-369.) Notice to all the world 'suffices to make the claimants to the property parties to the action' and the resulting judgment conclusive as against all the world. (Id. at p. 369.) [¶] In a validation action the thing that is the subject of the action is the matter to be validated, i.e., the ordinance, resolution, or other action taken by the public agency. The only way for the court to acquire jurisdiction over the matter is to ensure that notice is given to all interested persons so that the resulting judgment can be conclusive as against them. (Planning & Conservation League v. Department of Water Resources (2000) 83 Cal.App.4th 892, 920-921 . . . .) Notice is provided by publishing the summons in a particular form, within a specified timeframe, and specifying a date for response. Jurisdiction is not 'complete' until 'after the date specified in the summons.' ([Code Civ. Proc., ]§ 862.) Failure to publish a summons in accordance with the statutory requirements deprives the court of jurisdiction over 'all interested parties' ([Code Civ. Proc., ]§ 861), which deprives the court of the power to rule upon the matter. The Legislature has given the trial court power to permit a plaintiff to cure the defect if the plaintiff can demonstrate good cause. ([Code Civ. Proc., ]§ 863.) But the court cannot overlook a defective summons. Unless the plaintiff has published a summons in compliance with the statutory requirements, the court has no jurisdiction to rule upon the matter that is the subject of the action." (Katz v. Campbell Union High School Dist., supra, 144 Cal.App.4th at pp. 1031-1032, fn. omitted.)
The trial court did not determine whether the rate increase is a capacity charge. Instead, the trial court apparently relied on Calexico's allegations on that subject. It did so even though the District took an opposite position, advocating that the rate increase is not a capacity charge.
In relying on the contents of Calexico's pleadings to establish that Calexico sought to attack a capacity charge, the trial court appears to have relied on the doctrine of judicial admissions. Under that doctrine, "[a]n admission in a pleading is conclusive on the pleader. [Citation.] 'He cannot offer contrary evidence unless permitted to amend, and a judgment may rest in whole or in part upon the admission without proof of the fact.' " (Valerio v. Andrew Youngquist Construction (2002) 103 Cal.App.4th 1264, 1272, quoting 4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 415, p. 512.) The doctrine of judicial admissions is often applied in motions for summary judgment when a party moving for summary judgment is permitted to carry its initial burden of production by pointing to statements in the opposing party's pleadings. (See, e.g., Uram v. Abex Corp. (1990) 217 Cal.App.3d 1425, 1433.)
The trial court erred in relying on the doctrine of judicial admissions in this case. An important limitation to the doctrine is that "a mere conclusion, or a 'mixed factual-legal conclusion' in a complaint, is not considered a binding judicial admission." (Castillo v. Barrera (2007) 146 Cal.App.4th 1317, 1324.) Thus, for example, in the context of a summary judgment motion, "[a] mixed factual-legal conclusion may be contradicted by a declaration or other evidence . . . ." (Ibid.)
In its supplemental briefing, the District contends that because Calexico did not attempt to offer evidence contradicting its allegation that the rate increase is a capacity charge, it should be bound to that allegation. We disagree. The fundamental applicable principle here is that the trial court has an independent obligation to determine legal issues and may not rely on a legal conclusion in a party's pleadings to make determinations about its jurisdiction. This principle applies even though the party asserting the legal conclusion does not attempt to withdraw it or disprove it.
A statement that the rate increase is a capacity charge is clearly a mixed factual-legal conclusion. It involves the application of a certain set of facts (i.e., the District's basis for formulating the rate increase) to a specific legal standard (i.e., the definition of a capacity charge under section 66013, subdivision (b)(3)). In this way, it is similar to other mixed factual-legal conclusions, such as a statement in a complaint that a party acted within the scope of his employment. (See Bahan v. Kurland (1979) 98 Cal.App.3d 808, 812.) Accordingly, because a mixed factual-legal conclusion cannot be treated as a judicial admission, the trial court erred in treating the allegations in Calexico's allegation that the rate increase is a capacity charge as a judicial admission sufficient to establish that premise for the purpose of its ruling on the motion to dismiss.
The District argues that in some cases trial and appellate courts have relied solely on the contents of a plaintiff's complaint to determine whether a lawsuit was required to be brought as a validation action. However, in the cases cited by the District (California Commerce Casino, Inc. v. Schwarzenegger (2007) 146 Cal.App.4th 1406 (California Commerce Casino); Kaatz v. City of Seaside (2006) 143 Cal.App.4th 13, it was clear from the pleadings themselves or other judicially noticeable evidence that a validation action was required. Here, because there is a factual dispute over whether the rate increase is a capacity charge, and the pleadings do not contain the information necessary to resolve that dispute, the trial court erred in relying solely on the pleadings to determine it lacked jurisdiction. In the context in which the case is presented to us, we also are unable to rule on whether the rate increase is a capacity charge.
Courts commonly make factual and legal determinations to resolve preliminary jurisdictional issues. (See, e.g., School Dist. of Okaloosa County v. Superior Court (1997) 58 Cal.App.4th 1126, 1131 [personal jurisdiction]; Warburton/Buttner v. Superior Court (2002) 103 Cal.App.4th 1170, 1181 [subject matter jurisdiction].) Here, the question of whether the rate increase is a capacity charge is a preliminary jurisdictional issue that the trial court must resolve by directing the parties to provide adequate factual and legal argument on the issue. Accordingly, we will remand so that the trial court may consider the applicable facts and legal standards and make a determination as to whether the rate increase is a capacity charge. On remand, Calexico, as the plaintiff, shall have the burden of proof to establish that the trial court may properly exercise jurisdiction over its claims. (See School Dist. of Okaloosa County, at p. 1131; Lawrence v. Barona Valley Ranch Resort & Casino (2007) 153 Cal.App.4th 1364, 1369.)
B. If the Rate Increase Is Determined to Be a Capacity Charge, the Trial Court Will Be Without Jurisdiction to Consider Any of Calexico's Claims
Calexico argues that whether or not the rate increase is a capacity charge, it should still be permitted to proceed with the rest of its claims, which center on the allegation that the rate increase was illegally enacted in violation of Proposition 218. As we will explain, we disagree. If the trial court determines that the rate increase is a capacity charge, it will lack jurisdiction over all of Calexico's claims that attempt to challenge the rate increase, regardless of the legal basis for those claims.
Because the trial court did not reach the issue, we also do not determine whether the rate increase is subject to the requirements established by Proposition 218.
In Utility Cost Management v. Indian Wells Valley Water Dist. (2001) 26 Cal.4th 1185 (Utility Cost Management), the plaintiff brought a lawsuit alleging that a public utility overcharged for water service because the charges were " 'capital facilities fees' " that exceeded the amounts permitted for such fees by section 54999.3. (Id. at p. 1188.) Although the lawsuit did not allege that the challenged fees were capacity charges and did not allege that the public utility violated any portion of the Mitigation Fee Act as it applies to capacity charges, our Supreme Court determined (1) that according to the facts alleged in the complaint, the challenged fee was a capacity charge as defined in section 66013, subdivision (b)(3) of the Mitigation Fee Act; and (2) the plaintiff was thus required to comply with the procedures set forth in the Mitigation Fee Act for challenging a capacity charge, namely complying with a 120-day statute of limitations and bringing the suit as a validation action. (Utility Cost Management, at pp. 1192-1195.)
The court expressly stated that it was "irrelevant" that the complaint did "not allege a violation of section 66013." (Utility Cost Management, supra, 26 Cal.4th at p. 1193.) Noting that the Mitigation Fee Act requires that the procedures for validation actions must be followed when a lawsuit seeks to invalidate capacity charges " 'described in and subject to' " section 66013 (§ 66022, subd. (c)), the court perceived "no reason why a fee cannot be subject to the restrictions stated in section 66013, and not in breach of those restrictions." (Utility Cost Management, at p. 1193, italics added.) The court thus concluded that the plaintiff was required to follow the procedures set forth in section 66022 (i.e., filing the suit as a validation action and observing the 120-day statute of limitations) regardless of the fact that the lawsuit did not expressly allege the imposition of a capacity charge that violated section 66013 and instead alleged an entirely different theory for invalidating the challenged fees.
Relying on Utility Cost Management, we conclude that if the rate increase at issue in this case is determined to be a capacity charge, any cause of action which seeks to attack, review, set aside, void or annul that rate increase will be required to comply with the procedures for validation actions, whether or not that cause of action alleges a violation of section 66013. If the rate increase is determined to be a capacity charge, Calexico cannot avoid the requirements applicable to validation actions merely by dismissing its cause of action that expressly alleges a violation of section 66013 and focusing instead on other methods of invalidating the rate increase.
Despite the holding of Utility Cost Management, Calexico presents two specific arguments as to why the claim based on Proposition 218 would not need to be brought as a validation action even if the rate increase is determined to be a capacity charge. We reject both arguments.
First, Calexico points to the text of one provision enacted by Proposition 218, which states that "[t]he notice, protest, and hearing requirements imposed by this section supersede any statutory provisions applicable to the levy of a new or increased assessment that is in existence on the effective date of this section, whether or not that provision is in conflict with this article. . . ." (§ 53753, subd. (a).) According to Calexico, section 53753, subdivision (a) establishes that "the provisions of Proposition 218 supersede all other provisions of law" and thus a claim alleging a violation of Proposition 218 should not have to be filed as a validation action. We reject this argument because section 53753, subdivision (a) plainly refers only to the "notice, protest, and hearing requirements" required to be followed by a public agency when it levies an assessment covered by Proposition 218. It has nothing to do with the procedures that a party must follow when it brings a lawsuit alleging a violation of Proposition 218, and thus says nothing about whether, in some instances, that lawsuit must be brought as a validation action.
Second, Calexico argues that the procedural history of Richmond v. Shasta Community Services Dist. (2004) 32 Cal.4th 409 (Richmond) establishes that an action premised on Proposition 218 need not be brought as a validation action, even when it challenges a capacity charge. In Richmond, the plaintiffs sought a declaration that a capacity charge imposed by a local water district was subject to the restrictions imposed by Proposition 218. (Id. at p. 415.) Calexico argues that if the plaintiffs in Richmond were permitted to challenge a capacity charge by alleging that it violated Proposition 218, it too should be permitted to pursue the same theory even though it did not bring its suit as a validation action.
Calexico's argument fails because it overlooks a crucial fact. Richmond states that the lawsuit in that case was brought as a validation action under Code of Civil Procedure section 860. (Richmond, supra, 32 Cal.4th at p. 416 [stating that plaintiffs "brought this action to test the validity of the resolution increasing the fees for new connections" and citing "Code Civ. Proc., § 860; Gov. Code, §§ 66013, 66022"].) Thus, instead of proving Calexico's point, the procedural history of Richmond undermines it. By bringing their lawsuit as a validation action, the plaintiffs in Richmond acknowledged the rule that we follow here. As Utility Cost Management, supra, 26 Cal.4th 1185, 1193, establishes, even though a lawsuit is premised on another legal basis, such as Proposition 218, if it attempts to attack a capacity charge, it must be brought as a validation action.
C. The Trial Court Did Not Abuse Its Discretion by Failing to Find Good Cause to Allow Calexico to Belatedly Comply with the Validation Procedures
Code of Civil Procedure section 863 states that a reverse validation action that fails to comply with the required procedures "shall be forthwith dismissed on the motion of the public agency unless good cause for such failure is shown by the interested person." Calexico argued to the trial court that it had shown good cause for its failure to bring this litigation as a validation action. It explained to the trial court that it had misread the applicable statutes and did not believe it was required to follow the validation procedures. The trial court rejected this argument, noting that extensive case law interpreting the applicable statutory provisions had existed for many years.
This issue is not moot despite our decision that this case must be remanded for the trial court to determine whether the rate increase is a capacity charge. If Calexico was to prevail in arguing that it should have been given leave to belatedly comply with the requirements for validation actions, Calexico would be able to continue with the litigation of this action as a validation action even if the trial court were to conclude on remand that the rate increase is a capacity charge.
On appeal, Calexico argues that the trial court abused its discretion by failing to find good cause. (SeeKatz v. Campbell Union High School Dist., supra, 144 Cal.App.4th at p. 1036 [applying abuse of discretion standard of review to trial court's failure to find good cause under Code Civ. Proc., § 863].) As we will explain, the trial court did not abuse its discretion.
Calexico's argument for good cause focuses on its claim that it did not follow the validation procedures in its reverse validation action because it justifiably misread Code of Civil Procedure section 869. That provision states: "No contest except by the public agency or its officer or agent of any thing or matter under this chapter shall be made other than within the time and the manner herein specified. The availability to any public agency, including any local agency, or to its officers or agents, of the remedy provided by this chapter, shall not be construed to preclude the use by such public agency or its officers or agents, of mandamus or any other remedy to determine the validity of any thing or matter." (Code Civ. Proc., § 869, italics added.) According to Calexico, it incorrectly understood this provision to mean that because it is a public agency, it did not have to follow the procedures for validation actions.
However, case law has long established that despite the reference to "any public agency" in Code of Civil Procedure section 869, a public agency bringing a challenge to the action of another public agency in a reverse validation action is treated as any other interested party challenging an agency action and must follow the procedures applicable to validation actions. (Millbrae School Dist. v. Superior Court (1989) 209 Cal.App.3d 1494, 1497; Coachella Valley Mosquito and Vector Control Dist. v. City of Indio (2002) 101 Cal.App.4th 12, 15; Embarcadero Mun. Improvement Dist. v. County of Santa Barbara (2001) 88 Cal.App.4th 781, 784; see also 2 Cal.Jur.3d (2007) Administrative Law, § 655, p. 82.) In light of this long-standing case law, the trial court was well within its discretion to conclude that Calexico did not have good cause for failing to follow the procedures for validation actions and, accordingly, should not be given leave to belatedly comply with those procedures.
D. Because There Has Not Yet Been a Determination that the Rate Increase Is a Capacity Charge, We Reject the Argument that the Appeal Is Untimely
In its supplemental letter brief, the District for the first time raises a challenge to the timeliness of this appeal. It relies on Code of Civil Procedure section 870, subdivision (b), which states that "no appeal shall be allowed from any judgment entered pursuant to this chapter" (i.e., Code Civ. Proc., §§ 860-870.5, concerning validation actions) "unless a notice of appeal is filed within 30 days after the notice of entry of the judgment." (Italics added.) The District argues that by entering a judgment of dismissal based on the premise that Calexico failed to comply with the procedures for validation actions, the trial court entered judgment "pursuant to" the chapter concerning validation actions, and that Calexico's appeal is untimely because it was filed more than 30 days after notice of entry of judgment.
There is no dispute that the notice of appeal was filed more than 30 days after service of the judgment. The notice of entry of judgment was mailed on October 31, 2006. Calexico filed its appeal on December 20, 2006.
Two recent opinions have considered similar situations. (California Commerce Casino, supra, 146 Cal.App.4th at pp. 1418-1419; Kaatz v. City of Seaside, supra, 143 Cal.App.4th at pp. 25-27.) In both cases, the trial courts entered dismissal, concluding that the suits should have been brought as validation actions, but were not. (California Commerce Casino, at p. 1416; Kaatz, at p. 24.) The defendants challenged the timeliness of the appeals pursuant to Code of Civil Procedure section 870, subdivision (b). In both cases, the appellate court interpreted Code of Civil Procedure section 870, subdivision (b) to mean that the 30-day deadline for filing an appeal would apply if in fact the lawsuits were governed by the statutory scheme for validation actions; it was not sufficient that the trial court had decided that the validation procedures should apply. (California Commerce Casino, at pp. 1418-1419 ["In order to determine the timeliness of the notice of appeal, we must determine whether the underlying action was governed by the statutory scheme pertaining to validation proceedings"]; Kaatz, at p. 27 ["We conclude that in order to determine the timeliness of the appeal notice, . . . we must determine if the underlying action was, in fact, a proceeding under the validation statutes"].) In California Commerce Casino, the appellate court affirmed the trial court's conclusion that a validation action was required, and it accordingly also determined that the appeal was subject to the 30-day deadline contained in Code of Civil Procedure section 870, subdivision (b). (California Commerce Casino, at p. 1419.) In Kaatz, however, the appellate court reversed the trial court's decision that a validation action was required, and accordingly concluded that the 30-day appeal deadline did not apply. (Kaatz, at p. 27.)
In this case, as we have explained, the trial court never made a determination that the rate increase is a capacity charge and did not properly determine that the litigation is, in fact, governed by the statutory scheme that applies to validation actions. Further, the record has not yet been sufficiently developed to enable us to make a ruling as to whether this litigation should have been brought as a validation action. Accordingly, there is no basis for us to undertake the type of analysis performed in California Commerce Casino, supra, 146 Cal.App.4th 1406, and Kaatz v. City of Seaside, supra, 143 Cal.App.4th 13, and to decide, as did the appellate courts in those cases (1) whether a validation action is required and (2) whether the 30-day appeal deadline in Code of Civil Procedure section 870, subdivision (b) accordingly applies. As there is currently before us no basis to determine that the appeal was required to be filed on a 30-day filing deadline under Code of Civil Procedure section 870, subdivision (b), we reject the District's argument that the appeal is untimely.
DISPOSITION
The judgment is reversed, and the matter is remanded for the trial court to conduct proceedings and determine whether this case must be prosecuted as a reverse validation action pursuant to Code of Civil Procedure section 863 because the rate increase is a capacity charge as defined in section 66013, subdivision (b)(3) or for any other reason. If the trial court determines this case must be prosecuted as a reverse validation action, it shall dismiss the action. Otherwise, it shall proceed with the action. Each party is to bear its own costs on appeal.
WE CONCUR: McDONALD, Acting P. J., AARON, J.