Opinion
E051304
08-23-2011
PROVIDENT SAVINGS BANK, F.S.B., Plaintiff and Appellant, v. CITY OF COACHELLA, Defendant and Respondent.
Thompson & Colegate, Susan Knock Brennecke and John A. Boyd for Plaintiff and Appellant. Best Best & Krieger, Douglas S. Phillips and Kira L. Klatchko for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Super.Ct.No. INC080596)
OPINION
APPEAL from the Superior Court of Riverside County. Harold W. Hopp, Judge. Affirmed.
Thompson & Colegate, Susan Knock Brennecke and John A. Boyd for Plaintiff and Appellant.
Best Best & Krieger, Douglas S. Phillips and Kira L. Klatchko for Defendant and Respondent.
I
INTRODUCTION
All statutory references are to the Government Code unless stated otherwise.
Plaintiff and appellant, Provident Savings Bank (Provident), appeals from a judgment entered after the trial court sustained the demurrer of defendant and respondent, the City of Coachella (the City), to Provident's third amended complaint without leave to amend. The appeal involves the application of the 90-day statute of limitations (§ 66499.37), which applies to all causes of action under the Subdivision Map Act (SMA). (§ 66410 et seq.; Friends of Riverside''s Hills v. City of Riverside (2008) 168 Cal.App.4th 743, 751 [Fourth Dist., Div. Two](Friends),citing Hensler v. City of Glendale (1994) 8 Cal.4th 1, 7, 26-27 (Hensler).)
The SMA establishes bond requirements to guarantee the completion of public improvements for subdivisions, as set forth in sections 66499 and 66499.7. Provident alleges the City failed to comply with the SMA's bond requirements. Nevertheless, Provident argues its complaint is not an action under the SMA but, instead, Provident is suing for damages under the Government Claims Act. (§ 810 et seq., § 815.6.) As such, Provident contends the 90-day limitations period does not apply. We reject Provident's effort to exclude its SMA-based claims from application of the 90-day statute of limitations. Based on our independent review, we affirm the judgment.
II
FACTUAL AND PROCEDURAL BACKGROUND
We treat the assertions of the third amended complaint (TAC) as true for purposes of appeal: '""On appeal from dismissal following a sustained demurrer, we take as true all well-pleaded factual allegations of the complaint."' (Haggis v. City of Los Angeles (2000) 22 Cal.4th 490, 495.)" (Guzman v. County of Monterey (2009) 46 Cal.4th 887, 894.)
Provident is the current owner of 14 lots of real property located in the City, in a planned subdivision known as La Colonia II. The original developer was Coachella Capital Partners (the Partners).
As required by the SMA, the Partners secured a performance bond for the completion of public improvements issued by American Contractors Indemnity Company (ACIC). (§ 66499.) After the City approved the recording of the final subdivision map but before the public improvements were completed, the Partners sold La Colonia II to James Walker or the Walker entities (Walker). In October and November 2005, with the City's approval, Walker supplied letters of credit from Harbor Capital to replace the ACIC bond, which the City then exonerated. However, the City and Walker did not enter into a new agreement for the construction of the public improvements.
Walker proceeded to sell unimproved lots in La Colonia II, with Provident as the lender providing construction financing. Provident did not know the ACIC bond had been released. Walker subsequently failed to complete the public improvements. After the City sought recovery under the letters of credit, Harbor Capital rejected the City's claims, maintaining it never issued security for La Colonia II because the City did not have an improvement agreement with Walker. The City's federal complaint against Harbor Capital was dismissed with prejudice. The dismissal was affirmed on appeal in November 2009. (City of Coachella v. Harbor Real Asset Fund, LP (2009) 359 Fed.Appx. 713.)
The public improvements at La Colonia II were not completed and Provident obtained ownership of the 14 subject properties through foreclosure proceedings. Provident alleges the value of the properties has diminished because of the lack of public improvements. On November 20, 2008, the City denied the governmental claims submitted by Provident under the Tort Claims Act. (§ 900 et seq.)
Provident filed the original complaint on September 26, 2008. In the TAC, Provident alleges two causes of action for damages against the City: (1) breach of a mandatory duty to require security pursuant to section 66499, subdivision (a); and (2) failure to discharge a mandatory duty to release mandatory security pursuant to section 66499.7.
In May 2010, the court sustained the City's demurrer to the TAC without leave to amend. The court determined: "The action is time-barred by Government Code section 66499.37 because Provident filed this action more than 90 days after Coachella's allegedly wrongful actions" and, "[e]ven if this action is not time-barred, Provident is not protected by a mandatory duty under Government Code section 815.6." After entry of judgment, Provident filed a timely appeal.
III
DISCUSSION
The parties agree that the appellate court conducts an independent review to determine whether a complaint is sufficient to state a cause of action. (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034; Palestini v. General Dynamics Corp. (2002) 99 Cal.App.4th 80, 86.)
A. The 90-Day Statute of Limitations, Section 66499.37
All controversies under the SMA are subject to a 90-day statute of limitations. (§ 66499.37; Friends, supra, 168 Cal.App.4th at p. 751, citing Hensler, supra, 8 Cal.4th at pp. 7, 26-27.) Section 66499.37 of the SMA broadly provides:
"Any action or proceeding to attack, review, set aside, void, or annul the decision of an advisory agency, appeal board, or legislative body concerning a subdivision, or of any of the proceedings, acts, or determinations taken, done, or made prior to the decision, or to determine the reasonableness, legality, or validity of any condition attached thereto, including, but not limited to, the approval of a tentative map or final map, shall not be maintained by any person unless the action or proceeding is commenced and service of summons effected within 90 days after the date of the decision."
Provident is suing based on two SMA statutes, pertaining to bonding requirements for public improvements. Notwithstanding its express reliance on the SMA, Provident attempts to distinguish its claims as being for breach of statutory duty. Resorting to dictionary definitions, Provident argues that its complaint does not seek '"to attack, review, set aside, void, or annul the decision'" of the City relating to the La Colonia II subdivision. It further argues that the purpose of the abbreviated 90-day limitations period is to expedite community development and to avoid "delays and restraints upon expeditiously completing housing projects." (§ 65009, subd. (a)(1).) Provident identifies 15 SMA cases, including Hensler, involving the application of section 66499.37 and argues that each one involves discretionary decisionmaking, which is properly subject to the 90-day limitations period. In contrast, Provident maintains that its suit for damages is based on mandatory statutory duties involving bond requirements and is not a "decision" that should be subject to the short limitations period. In oral argument, Provident cited Uniwill v. City of Los Angeles (2004) 124 Cal.App.4th 537, 543-544, holding that an inverse condemnation action is not subject to section 66499.37.
Case law has interpreted section 66499.37 to apply to any cause of action brought under the SMA: "[T]he general rule of narrowly interpreting statutes of limitations does not apply to an unambiguous statute like section 66499.37 that reflects a policy judgment by the Legislature that 'litigation involving the Subdivision Map Act must be resolved as quickly as possible consistent with due process.' (Maginn [v. City of Glendale (1999)] 72 Cal.App.4th [1102], 1109-1110, citing Hensler v. City of Glendale (1994) 8 Cal.4th 1, 23.)" (Sprague v. County of San Diego (2003) 106 Cal.App.4th 119, 129.) In Hensler, "the California Supreme Court concluded that ""[t]he 'patent legislative objective' of [section 66499.37] is to ensure that judicial resolution of Subdivision Map Act disputes occurs 'as expeditiously as is consistent with the requirements of due process of law.'" [Citation.].'" (Sprague, at p. 129, fn. 8.)
In Friends of Riverside's Hills, this court has already addressed at length the arguments made by Provident. In Friends, we observed "there is ample case law holding that the 90-day requirement applies to all types of actions seeking review of a legislative or advisory body's subdivision-related decisions under the SMA, regardless of the legal basis.
"In Presenting Jamul v. Board of Supervisors (1991) 231 Cal.App.3d 665, (Jamul), the appellate court found that the 90-day statute of limitations for challenging a legislative decision concerning subdivisions, resulting from section 66499.37's 90-day filing requirement, applies to any action or proceeding, regardless of its form, and thus applies to a complaint for declaratory relief. The appellate court affirmed the trial court's judgment denying a petition for writ of mandate and complaint for declaratory relief challenging the board of supervisors' denial of the petitioner's request to toll the expiration date of a tentative subdivision map. The basis of the denial was failure to file the petition within 90 days of the board's decision as required by section 66499.37.
"The court found that the Legislature 'specifically designed' the statute's 'broad language' to include a wide range of actions. [Fn. omitted.] (Jamul, supra, 231 Cal.App.3d at p. 671.) '[R]egardless of the nature of or label attached to the action challenging the legislative body's subdivision-related decision, the action is governed by section 66499.37.' (Ibid.)The court stressed that section 66499.37 applies to any challenge to a subdivision-related decision, regardless of the 'legal stratagems' employed, whether the challenge is 'procedural or substantive,' and whether it 'directly or indirectly' attacks the legislative or advisory body's action or 'inaction.' (Jamul, supra, at pp. 671-672.) The court cites to five appellate cases for this point, which include attacks on school impact fees and other conditions of tentative maps, the granting or failure to grant certificates of compliance, extension of a tentative map, and the legislative body's process and legal authority for making decisions under the SMA. [Citation.]
"Even our state's Supreme Court has emphasized, in Hensler v. City of Glendale (1994) 8 Cal.4th 1, (Hensler), that the 90-day statute of limitation under section 66499.37 applies to any type of action seeking review of a legislative or advisory body's subdivision-related decision under the SMA. In Hensler, the Supreme Court upheld the appellate court's affirmance of the trial court's judgment of dismissal, holding that the plaintiff landowner's inverse condemnation action against the city was barred under the 90-day statute of limitations imposed by section 66499.37, because it was filed three years after the city rejected the plaintiff's proposed development on his property. This is because the alleged taking resulted from the city's adoption pursuant to the SMA, and application to plaintiff's property, of an ordinance prohibiting construction on major ridge lines. The court concluded that, 'An action which requires that review [judicial review of a decision of the local legislative body concerning a subdivision or of the reasonableness, legality, or validity of any condition attached to a permit decision] is governed by section 66499.37 regardless of the plaintiff's characterization of the cause of action.' (Hensler, supra, at p. 7.) The court further stated, 'Every appellate decision which has considered the issue in a case involving a controversy related to a subdivision has held that section 66499.37 is applicable no matter what the form of the action.' (Id. at pp. 26-27.) The Supreme Court then cited nine separate cases, including Jamul and the cases it cited, that find section 66499.37 applicable in various contexts. The key factor in each of the cases is that the action attacked or sought review of a decision of a local legislative or advisory body relating to a subdivision under the SMA." (Friends of Riverside's Hills v. City of Riverside, supra, 168 Cal.App.4th at pp. 750-751.) Based on the foregoing, we again conclude the 90-day limitations period applies broadly to any controversy concerning a subdivision, regardless of the nature or label attached to the action.
Here, the City released the ACIC bond and accepted the letters of credit from Harbor Capital as replacement security in October and November 2005. The City's decision to allow a replacement was actually discretionary, not mandatory as argued by Provident, because the statute permits a substitution to occur, "subject to the approval of the local agency." (§ 66499.7, subd. (d).) Thereafter, the City failed to obtain a new subdivision agreement with Walker, rendering the letters of credit unenforceable. The City's conduct qualifies under the SMA as a "decision . . . concerning a subdivision, or of any of the proceedings, acts, or determinations taken, done, or made prior to the decision, or to determine the reasonableness, legality, or validity of any condition attached thereto, including, but not limited to, the approval of a tentative map or final map." (§ 66499.37.) Provident's complaint and government claims, filed in September and November 2008, are time-barred because they were based on the City's actions in October and November 2005, meaning Provident brought its claims about three years after the expiration of the applicable 90-day limitations period. (Trinity Park, L.P. v. City of Sunnyvale (2011) 193 Cal.App.4th 1014, 1044-1045.)
B. Breach of Statutory Duty, Section 815.6
Although the bar of the statute of limitations is dispositive of Provident's claims, we briefly address Provident's additional contention that it may state a cause of action under section 815.6 for breach of a statutory duty:
Although the parties do not discuss it, any cause of action under section 815.6 would also be barred by the two-year limitations period of section 945.6.
"Where a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty."
As the statute expressly states, for the City to be liable under section 815.6, the mandatory statutory duty must be designed to protect against the risk of the particular kind of injury suffered by Provident. (Hoff v. Vacaville Unified School Dist. (1998) 19 Cal.4th 925, 939-940.) One purpose of the SMA and its bonding requirements is to assure that proper improvements are made so that a development does not become a burden on the taxpayers. (Gardner v. County of Sonoma (2003) 29 Cal.4th 990, 998.) The bond is required for the benefit of "counties, cities, and the public" (Evola v. Wendt Constr. Co. (1959) 170 Cal.App.2d 21, 25) or—in this instance—for the benefit of the City and the public. The incidental benefit the bond may afford to a lender like Provident does not translate into a basis for liability against the City. (Nunn v. State of California (1984) 35 Cal.3d 616, 626.)
Provident attempts to rely analogously on Morris v. County of Marin (1977) 18 Cal.3d 901, in which the California Supreme Court held that Labor Code section 3800 imposes a mandatory duty on counties to insure that applicants for building permits carry workers' compensation insurance and that, under section 815.6, a county may be held liable for a worker's injuries when the county failed to discharge its duty. Morris, however, is readily distinguishable. An injured worker, who cannot obtain compensation because of the lack of workers' compensation insurance is obviously the subject of "an enactment that is designed to protect against the risk of a particular kind of injury." (Morris, at p. 906.) As we have already discussed exhaustively, the SMA's statutory bond requirements are designed to assure that public improvements be completed expeditiously and without cost to the public. Although an SMA bond may have provided a collateral benefit to Provident, the SMA statutes are not designed to protect against the risk of diminution in property value suffered by a construction lender. Provident cannot assert a cause of action based on section 815.6.
IV
DISPOSITION
Provident's claims based on the SMA are barred by the 90-day statute of limitations. (§ 66499.37.) Provident cannot assert an alternative cause of action based on section 815.6.
We affirm the judgment. As the prevailing party, the City shall recover its costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Codrington
J.
We concur:
McKinster
Acting P.J.
King
J.