Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Fresno County. Ct. No. 08CECG03819, Alan M. Simpson, Judge.
Dowling, Aaron & Keeler, Stephanie Hamilton Borchers and Paul M. Parvanian for Plaintiff and Appellant.
Costanzo & Associates, Neal E. Costanzo for Defendant and Respondent.
OPINION
DETJEN, J.
This is an appeal from a judgment in favor of defendant and respondent, City of Selma, after the court sustained, without leave to amend, the city’s demurrer to the first-amended complaint of plaintiff and appellant, Rick Carsey Trucking and Construction, Inc. The court correctly concluded any possible cause of action for breach of mandatory duty was barred by the applicable statute of limitations. Accordingly, we affirm the judgment.
FACTS AND PROCEDURAL HISTORY
The first-amended complaint provides only the barest outline of the factual setting of this dispute. The briefs of the parties, however, largely concur about the facts. Because this case reaches us on a judgment entered after a demurrer was sustained without leave to amend the complaint, we will treat the additional facts as a proffer of what plaintiff would plead if given an opportunity to further amend the complaint. (See Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810.)
Canales-Selma, LLC. (hereafter “Canales”) was the owner and developer of a residential subdivision in the City of Selma. A developer who wishes to subdivide a parcel of land must comply with the Subdivision Map Act (SMA). (Gov. Code § 66410 et seq.; see generally 9 Miller & Starr, Cal. Real Estate (3d ed. 2000) § 25:12, p. 25-56.) That act places the regulation and control of the design of subdivisions in “the legislative bodies of local agencies.” (Gov. Code § 66411.) In this case, that entity was the City of Selma.
A vesting tentative map and a subdivision development agreement address, at different points in time, the government’s requirements for the developer’s work. Initially, a vesting tentative map, once approved by the local government, grants a developer the right to proceed with a subdivision in accordance with zoning and development laws in effect at the time of the approval; the vesting tentative map also establishes the further conditions and exactions imposed by the local government for completion of the development. (See Gov. Code § 66498.1; see generally 9 Miller & Starr, Cal. Real Estate, supra, § 25:73, pp. 25-348 through 25-349.) In 2005, the city approved a vesting tentative map for a subdivision proposed by Canales.
A development agreement comes later. It allows the local government to approve a final subdivision map even though some conditions established in the tentative map have not been fulfilled; it does so by imposing binding contractual obligations on the developer and the government. The primary purpose of a development agreement is to enumerate and require completion of the unfulfilled obligations of the developer under the vesting tentative map, when these unfulfilled conditions would otherwise bar approval of a final subdivision map. (See Gov. Code § 66462; see generally 9 Miller & Starr, Cal. Real Estate, supra, § 25:72, pp. 25-342 through 25-345, & § 25:58, p. 25-256.)
On March 21, 2005, the city and Canales entered into such an agreement and entitled it, “SUBDIVISION AGREEMENT TRACT NO. 5217 CANALES-SELMA, LLC. VESTING MAP PHASE I.” Among the unfulfilled conditions for approval of the final map in this case was construction of streets and other public improvements that would be turned over to the city upon completion. The development agreement provided for such construction and, of greater importance in the present context, required security for payment of the cost of such improvements if the developer failed to perform under the agreement. The agreement required, among other provisions, that at the time Canales submitted the final subdivision map for approval, Canales would “furnish to the City” “[i]mprovement security in the amount of one hundred percent (100%) of the total estimated cost for the faithful performance of work for the purpose of securing the performance of the work, ” and “[i]mprovement security in the amount of fifty percent (50%) of the total estimated cost of all required work to secure payment to the contractor, his subcontractors and to persons renting or furnishing labor or materials for such improvements.”
This second form of security is generally known as a payment bond, and we will refer to it as such. A payment bond covers unpaid claims from laborers and materialmen for public improvements. (See Gov. Code, § 66499.2.)
In 2005, the city approved the final subdivision map. The city failed, however, to require Canales to file a payment bond in accordance with the development agreement, and Canales apparently failed to obtain such a bond.
Two years later, plaintiff entered into an oral contract with Canales to perform grading, paving, and other construction services. Canales owed plaintiff $342,567.42, plus interest, for such services at the time Canales became insolvent. When plaintiff approached the city in July 2008 for information about the payment bond that was to have been posted by Canales at the time the final subdivision map was approved, plaintiff learned that the city had failed to require Canales to post it.
On or about August 5, 2008, plaintiff submitted a claim to the city (Gov. Code, § 910) in the amount of $342,567.42, plus interest and attorney fees, because the city’s actions had left plaintiff “without a payment bond remedy” for its work on the development. The city rejected the claim and plaintiff filed suit. The first-amended complaint alleges a cause of action for failure to discharge a mandatory duty and a cause of action for breach of contract, alleging plaintiff was a third-party beneficiary of the development agreement.
The city demurred. The city contended, as relevant here, that the breach of statutory duty alleged against the city was its failure to comply with the law in approving the final subdivision map; as such, the action was required by Government Code section 66499.37 to be filed within 90 days of the city’s act of approving the final subdivision map; the action was not filed within that time. The city also contended the breach of contract cause of action did not allege a breach by the city but, instead, only alleged a breach by Canales. The court sustained the demurrer to the statutory duty cause of action on the statute of limitations ground. The court sustained the demurrer to the breach of contract cause of action because there was no breach by the city alleged in the complaint. The order denied plaintiff leave to further amend the complaint.
Judgment was entered dismissing the complaint. Plaintiff filed a timely notice of appeal. Plaintiff’s briefing on appeal does not challenge the court’s ruling insofar as it addresses the breach of contract cause of action. Plaintiff contends the court erred in applying the 90-day statute of limitations to the breach of statutory duty cause of action.
Defendant’s demurrer contended that the first-amended complaint did not state a cause of action for breach of mandatory duty because the duty in question was not owed to the developer’s contractors and subcontractors. The trial court disagreed and rejected this basis for granting the demurrer. Defendant did not file a protective cross-appeal and does not otherwise contest the trial court’s determination that plaintiff stated a cause of action for breach of mandatory duty.
DISCUSSION
Plaintiff contends the 90-day statute of limitations set forth in Government Code section 66499.37 (hereafter “section 66499.37”) is not applicable because “[n]othing in the plain language of the limitations [statute] even purports to limit tortuous [sic] claims, and nothing in Carsey’s complaint seeks to challenge the City’s decision to approve the development itself.” Plaintiff misconstrues both the statute and its own cause of action.
Plaintiff’s brief states: “On the face of the complaint and accompanying exhibits, Carsey alleged that discovery of City’s failure to secure the proper bond occurred in July 2008, a claim was presented to the City in August of 2008, and suit was filed against City in January of 2009. Carsey’s allegations thus fall within any tort or claims act limitations period.” We disagree with this characterization of the first-amended complaint.
The complaint alleges that the city breached its duty under Government Code sections 66462 and 66499 (and related sections of the Selma Municipal Code) by failing to require Canales to file a payment bond. Although the complaint does not explicitly allege the date upon which the city breached its statutory duties, it is clear from plaintiff’s reference to Government Code section 66462 that the alleged breach occurred when the city approved the final subdivision map without obtaining the payment bond. Section 66462 provides, in part: “If, at the time of approval of the final map by the legislative body, any public improvements … have not been completed and accepted, ” the legislative body shall require the developer to agree to complete the improvements, and that “performance of the agreement be guaranteed by the security specified in Chapter 5 (commencing with Section 66499).” Thus, the complaint effectively alleges the city breached its statutory duty in 2005 when it approved the final subdivision map for the Canales development, years prior to plaintiff’s filing of its tort claim notice and complaint.
We note that plaintiff does not present a clear argument about the statute of limitations it contends is applicable if section 66499.37 is not applicable. Plaintiff’s tort claim was filed with the city far beyond the one-year limitations period under the Tort Claims Act (Gov. Code, § 810 et seq.) pursuant to Government Code section 911.2, subdivision (a). The complaint does not specifically allege the occurrence of any event that would toll the one-year limit on filing a tort claim. (See, e.g., Gov. Code, § 911.4, subd. (c) [specifying circumstances in which minority of claimant may toll filing period].) In its opening brief, plaintiff seems to imply that the delayed discovery rule (see Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110) would in some way operate to toll the tort-claim period until plaintiff discovered that the city had not required posting of a payment bond. Since we conclude the trial court properly applied section 66499.37, however, we find no need to address plaintiff’s allegations regarding delayed discovery of its injury.
Section 66499.37 states in clear terms that “[a]ny action or proceeding to … review … any of the proceedings, acts, or determinations taken, done, or made prior to the decision [of the legislative body] … 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.” In the present case, plaintiff seeks to impose liability based on its allegation that the city’s failure to obtain the payment bond was insufficient under the terms of the SMA to permit the city to adopt the final subdivision map for the Canales development.
Despite the apparent applicability of section 66499.37, plaintiff asserts three reasons why the statute is inapplicable.
First, it contends it is not seeking “review” of the city’s SMA determination because “review” would entail setting aside or altering the city’s approval of the final map. Plaintiff contends that it has no interest in or intent to alter approval of the map or development of the subdivision. It merely wants to collect damages because the city failed to discharge its duty under the SMA.
This is precisely the distinction made by the trial court in Anthony v. Snyder (2004) 116 Cal.App.4th 643, and it is precisely the distinction rejected by the appellate court in that case. In Anthony, the owner of property adjacent to an approved subdivision filed an action for writ of mandate and injunctive relief against the local government to force it to require the developer to improve a street adjacent to the development. (Id. at p. 646.) The trial court granted relief, rejecting application of section 66499.37 on the basis that the action did not seek to “affect the legality of the subdivision improvement agreement or any decision which was made in connection with the approval of the maps.” (Anthony v. Snyder, supra, 116 Cal.App.4th at p. 656.) The Court of Appeal reversed. It held: “If the action seeks to attack or review the decision of the legislative body, and the decision was ‘concerning a subdivision, ’ the statute by its terms applies.” (Ibid.)
Similarly, in the case before us, plaintiff’s cause of action depends entirely upon its successful attack on the decision of the city in approving the final subdivision map: If the city did not breach a statutory duty by approving the final map without posting of the payment bond, plaintiff’s cause of action cannot succeed.
Unlike the circumstances presented in this court’s decision in Legacy Group v. City of Wasco (2003) 106 Cal.App.4th 1305, 1313, plaintiff here does not challenge the interpretation of the development agreement. The agreement here clearly required a payment bond. Legacy Group does not support plaintiff’s contentions on appeal.
Second, plaintiff contends its cause of action does not attack a “decision” of the city at all (and, thus, the decision could not have been one “concerning a subdivision”) because the city did not “decide” not to require a payment bond, it simply failed to require the bond through negligent omission. We disagree. The city only had a duty to require a payment bond in the first instance because of the existence of Canales’s subdivision map application and the city’s affirmative decision to act on that application. Whether the city’s violation of the statutory precondition of a payment bond for unfinished improvements reflected intentional action or negligent inaction, the action or inaction occurred in connection with the decision to approve the subdivision map. Accordingly, section 66499.37 is applicable to plaintiff’s cause of action for breach of statutory duty.
Third, plaintiff contends section 66499.37 should not be applicable because that statute of limitations would “effectively eviscerate[]” the statutory bond requirement. Plaintiff relies primarily upon N.V. Heathorn, Inc. v. County of San Mateo, supra, 126 Cal.App.4th 1526, a case addressing an entirely different statutory scheme. As we shall explain, Heathorn provides no support for plaintiff’s contention.
Heathorn involved a public works project. Nielsen Dillingham Builders, Inc. contracted with San Mateo County to build the County Health Center. Heathorn contracted with Nielsen Dillingham Builders, Inc. to provide labor and materials for the project. Heathorn was not paid as expected (due to Nielsen Dillingham Builders, Inc. filing for bankruptcy) and sought to recover from the county. Heathorn argued the county was liable because of its failure to require its general contractor on a public project to obtain a payment bond as required by Civil Code section 3247. The court, in its analysis, examined the difference between the law regulating private projects and the law regulating government projects. In general, in private projects, the right to payment for labor and materials is secured by what is usually known as a “mechanic’s lien.” Such a lien is granted by the California Constitution in article XIV, section 3. The resulting lien, further defined statutorily in the mechanic’s lien law (see Civ. Code, § 3110 et seq.), arises when a contractor or subcontractor provides labor or materials for construction on the owner’s property. (See generally 4 Witkin, Summary of Cal. Law (10th ed. 2005) Security Transactions in Real Property, §§ 26-29, pp. 819-823.) Upon nonpayment for the labor or materials, the contractor or subcontractor can take steps to execute on the lien and recover payment through foreclosure of the lien. (Id. at § 29, pp. 822-823.) In the case of a public works project for which a government has hired a contractor, the project is exempt from the mechanic’s lien law: Suppliers of labor and materials are not entitled to a lien on public property. (See Heathorn, supra, 126 Cal.App.4th at p. 1535.) As a substitute for the mechanic’s lien, in the case of construction on government projects, Civil Code sections 3247 and 3248 provide that a government entity must require (in most cases) public works contractors to provide a surety bond for payment of those who have furnished labor and materials for the project-i.e., those who would be entitled to a mechanic’s lien on a private construction project. (See Civ. Code, § 3248, subd. (c).) In Heathorn, the Court of Appeal held that a county could be held liable for failing to require the general contractor on a public works project to provide a payment bond when a bankrupt general contractor failed to pay one of its subcontractors. (Heathorn, supra, at pp. 1529-1530, 1537.) The liability imposed upon the governmental entity was analogous to the liability imposed on a property owner in a private construction project; it simply took the form of a government tort claim for failure to discharge the Public Works Act bonding duty, rather than the form of a mechanic’s lien proceeding. (See Heathorn, supra, at p. 1536.)
Thus, in the case of a subdivision development, a grading and paving contractor can protect its right to payment through the mechanic’s lien law. When the time comes for the developer or landowner to dedicate the public improvements, such as streets and sewers, to the city as required by the subdivision map, the city undoubtedly would require the developer to furnish lien releases from all contractors and subcontractors. (See generally 10 Miller & Starr, Cal. Real Estate, (3d ed. 2000) § 26:22, p. 53 et seq.)
Heathorn did not involve the SMA in any way. While the bond requirement for public works under Civil Code section 3247 is specifically designed to provide security for payment of subcontractors, the bonding requirement under the SMA serves an entirely different purpose. The SMA security requirement only arises when the local government is asked to approve a final subdivision map before the public improvements associated with the development are completed. In other words, before the final subdivision map is submitted for approval, there is no bond or other security requirement whatsoever for labor or materials supplied under contract with the owner or developer.
Thus, the primary purpose of the bonding requirement under Government Code section 66462 is to protect the local government from its own bad judgment in approving unfinished subdivisions. The purpose of the bond requirement for public construction projects under Civil Code sections 3247 and 3248 is to protect those who provide labor and materials for such projects.
Plaintiff argues that the purpose of the Government Code section 66462 bonding requirement cannot be fulfilled if the section 66499.37 statute of limitations begins to run upon the approval of the final subdivision map because those persons injured by the failure to obtain a payment bond often will not commence work on the subdivision until long after the final map is approved, as occurred in this case. But as we have seen in the foregoing discussion, it is the interests of the public at large that the bonding requirement seeks to protect-the same public interests that all of the provisions of the SMA are meant to protect. All of those provisions are equally subject to the limitations period of section 66499.37, regardless of when the violation comes to the attention of any particular person. And as to all interests protected by the SMA, the Legislature has determined that the finality provided by a short and ascertainable statute of limitations outweighs the public interest in holding open for remediation every defect in the approval of a subdivision map that does not become apparent until a much later date. (See Presenting Jamul v. Board of Supervisors (1991) 231 Cal.App.3d 665, 670-671.)
The interests of contractors and subcontractors working for the developer are protected-and adequately so-not by the SMA but, primarily, by the mechanic’s lien law. In addition, of course, as the trial court pointed out, a contractor can use due diligence in dealing with a developer by requiring the developer to obtain an adequate payment bond before the contractor agrees to undertake work for the developer.
For the reasons stated, we are not persuaded that the law permits plaintiff to sue the city after the expiration of the limitation period established by section 66499.37.
DISPOSITION
The judgment is affirmed. Respondent is awarded costs on appeal.
WE CONCUR: LEVY, Acting P.J., KANE, J.
We have certain doubts about the trial court’s ruling. For reasons described in more detail in our discussion of N.V Heathorn, Inc. v. County of San Mateo (2005) 126 Cal.App.4th 1526 (Heathorn), post at page 8, we are concerned that the bond requirement is intended primarily to protect the local government, not the developer’s contractors and subcontractors. After all, if a contractor or subcontractor has provided services prior to approval of the final subdivision map, there is no government-required bond. It is not apparent why the statutes would provide additional protection to a contractor solely on the basis that the contractor’s services were provided after, and not before, governmental approval of the final subdivision map. That issue is not presented by the parties and, given our disposition of the statute of limitations issue, is not necessary for us to decide sua sponte. Our consideration of the statute of limitations issue should not, however, be construed as an implied affirmance of the trial court’s rejection of defendant’s alternative basis for demurring to the first-amended complaint.
The record does not disclose whether plaintiff acted in a timely manner to perfect and enforce a mechanic’s lien in the present case, nor whether there was sufficient equity in the Canales property to have satisfied such a lien. (See 4 Witkin, Summary of Cal. Law, supra, §§ 69-80, pp. 861-870.) Plaintiff’s ability to proceed under the mechanic’s lien law in this particular case is not the point, however. Our discussion is addressed in general terms to the difference between the reason for bond requirements in public works cases involving government projects and the reason for bond requirements in SMA cases involving improvements built by the developer and subsequently dedicated to public use.