in the supreme court of the state of …...2020/01/17 · supreme court of california jorge e....
TRANSCRIPT
Supreme Court No. _______________
IN THE SUPREME COURT
OF THE STATE OF CALIFORNIA
______________________________________________________
GEORGE W. LUKE,
Petitioner and Appellant,
vs.
SONOMA COUNTY, AND ITS BOARD OF SUPERVISORS, AND ITS
AUDITOR-CONTROLLER-TREASURER-TAX COLLECTOR, AND
ITS DIRECTOR OF HUMAN RESOURCES, AND ITS COUNTY
COUNSEL, AND ITS COUNTY ADMINISTRATOR; AND THE
SONOMA COUNTY EMPLOYEES RETIREMENT ASSOCIATION
AND ITS CEO/RETIREMENT ADMINISTRATOR; AND THE
SONOMA COUNTY LAW ENFORCEMENT ASSOCIATION; AND
THE SERVICE EMPLOYEES’ INTERNATIONAL UNION; AND THE
SONOMA COUNTY DEPUTY SHERIFFS’ ASSOCIATION,
Defendants and Respondents.
___________________________________________________
After a Decision By the Court of Appeal,
First Appellate District, Division Five, Case No. A155286
_______________________________________________________
PETITION FOR REVIEW
______________________________________________________
Jeffrey A. Robinson (SBN 132262)
Email: [email protected]
Charles R. Patterson (SBN 310656)
Email: [email protected]
ROBINSON & ROBINSON, LLP
2301 Dupont Drive, Suite 530
Irvine, CA 92612
(949) 752-7007
(949) 752-7023 (fax)
Attorneys for Petitioner and Appellant
GEORGE W. LUKE
Supreme Court of CaliforniaJorge E. Navarrete, Clerk and Executive Officer of the Court
Electronically RECEIVED on 1/17/2020 on 5:00:29 PM
Supreme Court of CaliforniaJorge E. Navarrete, Clerk and Executive Officer of the Court
Electronically FILED on 1/17/2020 by Celia Wong, Deputy Clerk
2
TABLE OF CONTENTS
TABLE OF CONTENTS..………………………………………………….... 2
TABLE OF AUTHORITIES..……………………………….………………. 4
I. ISSUES FOR REVIEW….……………………………..………….….... 7
II. WHY REVIEW SHOULD BE GRANTED..….…………………….….. 7
III. STATEMENT OF THE CASE..…....…………………….………….... .12
A. Local Governments Are Statutorily And Constitutionally
Prohibited From Adopting And Implementing Public Pension
Increases That Do Not Meet Specific Requirements…...…......12
1. Government Code Section 7507 ……………….……...13
2. Government Code 23006 ……………………...….….. 14
3. Contitutional No-Gift Rule …………………………... 15
B. Luke Brought This Statutory Taxpayer Lawsuit To Enforce
Sonoma County's Compliance With The Laws Governing
Adoption And Payment Of Pension Increases…….………..... 15
C. The First District Court Of Appeal Deviated From This Court's
Holding In Howard Jarvis Taxpayers' Assn v. City of La Habra,
Allowing Sonoma County To Continue Violating Government
Code Sections 7507 And 23006 In Perpetuity, And Creating
Vested Rights In Unauthorized Pension Benefits……………. 17
1. Continuous Accrual………………….……………….. 18
2. Publication and Other Pending Cases………………... 21
3
IV. REVIEW IS NECESSARY TO RESOLVE IMPORTANT
STATEWIDE ISSUES AFFECTING PENSION BENEFITS
AND UNLAWFUL EXPENDITURE OF PUBLIC FUNDS……..… 21
A. The Supreme Court Should Resolve The Conflicts
Between The First Appellate District And Four Other
Appellate Districts About Whether Vested Rights In
Unauthorized Pension Benefits Can Accrue By The Mere
Passage of Time……………………………………………..... 22
B. The Supreme Court Should Resolve The Confusion
Among The Courts of Appeal About The Scope Of The
Continuous Accrual Doctrine Applicable In Taxpayer Lawsuits
To Stop Ongoing Government Misfeasance, As Articulated By
The Supreme Court In Howard Jarvis and Aryeh……………..26
C. The Supreme Court Should Resolve The Conflict
Among The Courts Of Appeal As To Whether Continuous
Accrual Applies In Suits To Stop Unauthorized Pension
Payments (As The Sixth District Held in Blaser and Baxter)
Or Does Not So Apply (As The First District Held)…..…..…. 29
V. CONCLUSION........................................................................................... 32
CERTIFICATE OF COMPLIANCE…..……………………………………. 34
ATTACHMENTS
Opinion of Court of Appeal, Luke v. Sonoma County, et al,
First Appellate District, Division Five, Case No. A155286
(filed December 12, 2019) ................................................................................35
Attachment 1
Ca. Gov. Code section 7507, text as adopted and
in effect1977 through 2008 …………………………………………………...49
Attachment 2
Cited excerpts of Oral Argument in Luke v. Sonoma County,
Case No. A155286.............................................................................................51
PROOF OF SERVICE…………………….…………………………………..56
4
TABLE OF AUTHORITIES
Cases Abbott v. City of Los Angeles (1958) 50 Cal. 2d 438………………….. 19, 27, 30
Alameda County Deputy Sheriff’s Assn v. County Employees’ Retirement
Assn (2019) 19 Cal.App.5th 61………………………………………… 11
Aryeh v. Canon Business Solutions (2013)
55 Cal.4th 1185…………………………………………………… passim
Baxter v. California State Teachers' Retirement System (2017)
18 Cal.App.5th 340, 349, 379,380-281, reh'g denied (Jan. 9, 2018),
review denied (Feb. 21, 2018).……………………… 8, 11, 22, 24, 30-32
Blaser v. State Teachers’ Retirement System (2019)
37 Cal.App.5th 349…………………….............. 8, 11, 22, 24, 28, 30-32
Cal Fire Local 2881 v. California Public Employees’ Retirement System
(2019) 6 Cal.5th 965…………………………………………................ 11
City of Pasadena v. Estrin (1931) 212 Cal. 231, 235-36……………………... 23
Crumpler v. Board of Administration Employees’ Retirement System (1973)
32 Cal.App.3d 567……………………………………………… 8, 23, 24
Dillon v. Board of Pension Commissioners (1941)
18 Cal.2d 427………………………………………..……................... 30
Dryden v. Board of Pension Commrs. (1936) 6 Cal.2d 575.…………. 19, 27, 30
Flethez v. San Bernardino County Employees Retirement Ass’n (2017)
2 Cal.5th 630…………………………………………………………… 11
Freemont Indem Co. v. Freemont General Corp. (2007)
148 Cal.App.4th 97, 113-15……………………………………………. 18
Howard Jarvis Taxpayers Ass’n v. City of La Habra (2001)
25 Cal.4th 809, 812-814, 818-825.…............................................... passim
In Re Ricardo P. (2019) 7 Cal.5th 1113……………………………………………… 28
5
Lamb v. Board of County Peace Officers Retirement Commission of
Los Angeles County (1938) 29 Cal.App.2d 248, 250…………………. 15
Los Angeles Dredging Co. v. Long Beach (1930) 210 Cal. 348, 353………..... 24
Medina v. Board of Retirement (2003)
112 Cal.App.4th 864, 871-72………………………………......... 8, 22, 24
Miller v. McKinnon (1942) 20 Cal.2d 83….…………………………… 8, 23, 24
Modoc County v. Spencer & Raker (1894) 103 Cal. 498……………………… 23
Orange County Foundation v. Irvine Co. (1983) 139 Cal.App.3d 195……….. 15
Pacific Gas & Elec. Co. v. City of Union City (N.D. Cal.2002)
220 F. Supp.2d 1070, 1079, 1080…………………………………………….. 28
Page v. Mira Costa Community College Dist. (2009)
180 Cal.App.4th 471, 496……………………………………………….15
Riverside Portland Cement Co. v. City of Los Angeles (1918)
178 Cal. 609, 609–610…………………………………………………. 23
San Diego City Firefighters, Local 145 v. Bd. Of Admin. Of San Diego
City Emp. Ret. Sys. (2012) 206 Cal.App.4th 594, 606………….…… 8, 22
San Diego Gas & Electric Co. v. City of Carlsbad (1998)
64 Cal.App.4th 785, 792–793………………………………………….. 23
Shalabi v. City of Fontana (2019) 35 Cal.App.5th 639………………………… 12
Sherwin–Williams Co. v. City of Los Angeles (1993)
4 Cal.4th 893, 897–898………………………………………………… 23
Utility Cost Management v. Indian Wells Valley Water District (2001)
26 Cal.4th 1185, 1195………………………………………………….. 29
Voters for Responsible Retirement v. Board of Supervisors (1994)
8 Cal.4th 765, 785……………………………………………………… 14
Walsh v. Board of Administration (1992) 4 Cal.App.4th 682, 696-97……… 8, 23
6
Wilmot v. Contra Costa County Employees’ Retirement Assn. (2018)
29 Cal.App.5th 846…………………………………………………….. 11
Constitutional Authority California Constitution, Article XI, § 7………………………….……….... 9, 23
California Constitution, Article XVI, § 6 ………………………………..... 9, 15
Statutes & Rules
California Rules of Court, rule 8.504(b)(3)…………………………………... 21
Code of Civil Procedure § 338 …………………………….…………….. 18, 19
Government Code § 7507 ……………………………………………….. passim
Government Code § 23006 …….……………………..…………………. passim
Government Code § 23026 ….…….……...……………… 13, 14, 16, 17, 20, 32
Government Code § 31515 ….…….……...……………… 13, 14, 16, 17, 20, 32
Government Code § 31515.5 ..…….……...……………… 13, 14, 16, 17, 20, 32
Government Code § 31516 ….…….……...……………… 13, 14, 16, 17, 20, 32
Secondary Sources
California Bill Analysis, Senate Committee, 2007-2008 Regular Session,
Senate Bill 1123, 4/14/2008, at p. 1 (Westlaw 2018 Online)…………. 14
B. Witkin, 9 Summary of California Law, Taxation § 17
(11th Ed. 2017 Westlaw Online)………………………………………. 15
7
I. ISSUES FOR REVIEW
Does the government’s ongoing expenditure of public funds to
implement an illegal public pension increase—actions that are void under the
Constitution’s Supremacy Clause—become lawful by the mere passage of
time, thereby creating a vested right in a pension benefit that was never
lawfully authorized and allowing the government to continue to violate state
law in perpetuity, as the lower court held; or should the public retain the right
to compel government’s compliance with state public expenditure laws by
application of the well-recognized statute of limitations principle of
continuous accrual, as the Supreme Court has previously held in similar
cases? (See Howard Jarvis Taxpayers’ Association v. City of La Habra
(2001) 25 Cal.4th 812 and Aryeh v. Canon Business Solutions (2013) 55
Cal.4th 1185.)
II. WHY REVIEW SHOULD BE GRANTED
This case raises important statewide issues involving pension reform
and the proper application of statutes of limitation in lawsuits to compel local
governmental compliance with state law.
In recent published and unpublished cases the courts have grappled
with the issue of whether pension agencies and public taxpayers have the
right to enjoin payment of unauthorized pension benefits, and to recover past
payments of unauthorized benefits, after the statute of limitations as
measured from the date of the initial unauthorized payment has lapsed but
when the unauthorized payments are continuing. Some courts have held,
properly, that the doctrine of continuous accrual allows such actions. Based
on the Supreme Court’s seminal holdings in Howard Jarvis Taxpayers’
Association v. City of La Habra (2001) 25 Cal.4th 812 [“Howard Jarvis”]
and Aryeh v. Canon Business Solutions (2013) 55 Cal.4th 1185 [“Aryeh”] the
Sixth District has held that continuous accrual allows such actions. (See
8
Blaser v. State Teachers’ Retirement System (2019) 37 Cal.App.5th 349
[“Blaser”]; and Baxter v. California State Teachers' Retirement System
(2017) 18 Cal.App.5th 340, 349, 379,380-281, reh'g denied (Jan. 9, 2018),
review denied (Feb. 21, 2018) [“Baxter”]). However, the lower court
disregarded Blaser and Baxter, and reached the opposite result. This creates
a direct conflict between the First District and Sixth District.
The lower court’s refusal to allow the application of continuous
accrual has the effect of creating a vested right to an illegally granted pension
benefit. This has never been the law, and should not be the law. At least
four other appellate districts (the Second, Third, Fourth, and Sixth) have held
that no vested rights accrue in pension benefits that were adopted in violation
of local or state law. (See, e.g., San Diego City Firefighters, Local 145 v. Bd.
Of Admin. Of San Diego City Emp. Ret. Sys. (2012) 206 Cal.App.4th 594,
606-10 & note 10; Medina v. Board of Retirement (2003) 112 Cal.App.4th
864, 871-72; Walsh v. Board of Administration (1992) 4 Cal.App. 4th 682,
696-97; Crumpler v. Board of Administration Employees’ Retirement System
(1973) 32 Cal.App.3d 567.) Our constitutional Supremacy Clause precludes
local jurisdictions (such as counties and municipalities) from ignoring state
laws. (E.g., Miller v. McKinnon (1942) 20 Cal.2d 83, 87) Prior to the lower
court’s decision, it was accepted law that no vested rights accrue in
unlawfully granted pension benefits. Now the courts are split.
This Court should immediately resolve the confusion among the lower
courts and hold that the doctrine of continuous accrual applies to lawsuits
challenging payment of unauthorized pension benefits. Otherwise the public
will lose an important tool to curb unfunded, unauthorized pension increases.
This case arises out of a local government’s violation of Government
Code section 7507, which was enacted to protect against local agencies’
unsupported adoption of pension increases. The Supreme Court has never
before interpreted Section 7507, nor addressed the respective rights and
9
obligations of public agencies, public employees, and public taxpayers when
local pension-adopting bodies violate this statute and refuse to come into
compliance.
Government Code section 7507 provides that a local legislative body
shall not adopt a pension increase without first taking certain steps, including
the engagement of a qualified actuary to provide a statement of the financial
impact on future pension costs and the disclosure of the cost impact
projections to the public. (Gov. Code section 7507.) Compliance with
Section 7507 is critical because of the problem of unfunded pension
liabilities plaguing all levels of state and local government.
The County of Sonoma failed to comply with Section 7507 and related
laws when it adopted pension increases beginning in 2002-2003. It mislead
the public about the source of funding for the increased costs, stating that
pubic employees would pay for the costs. When these violations came to
light, a taxpayer of the County, Appellant George W. Luke, filed a petition
for a writ of mandate to stop enforcement of the illegally adopted pension
increases and to recover taxpayer funds spent in violation of law. Luke
alleged that each ongoing payment of an unauthorized pension benefit is void
and ultra vires under the Constitutional Supremacy Clause (Ca. Const. Art.
XI, section 7); that each such ongoing payment violates Government Code
section 23006, which prohibits expenditure of funds for any unauthorized
contract or payment; and that the payments also violate the Constitution’s
No-Gift Rule (Cal. Const., Art. XVI, § 6). Because of the continuing
obligation to pay only lawfully adopted pension benefits, Luke argued, each
payment triggered a separate period of limitations under the continuous
accrual doctrine. Rejecting this position, the superior court sustained without
leave to amend the Respondents’ demurrers based on statute of limitations,
and the First District Court of Appeal affirmed in a published opinion.
In two recent opinions, the Supreme Court has previously held that
10
the doctrine of continuous accrual allows an injured party, including a public
taxpayer, to stop ongoing violations, even though the statute of limitations—
as measured from the initial violation—has lapsed. (Howard Jarvis, supra
25 Cal.4th at 812 and Aryeh, supra, 55 Cal.4th at 1185.)
In Howard Jarvis, the city violated a measure that required voter
approval of a tax, rendering it unlawfully adopted. The California Supreme
Court reversed the lower courts which had refused to apply the doctrine of
continuous accrual. (Howard Jarvis, supra, 25 Cal.5th at 809, 825.) The
Supreme Court specifically disagreed with the lower court’s reasoning that
the adoption of the unlawful tax was the only event that could give rise to a
violation of the statute of limitations. (Id. at 819) The Supreme Court held:
“[E]ven if the Ordinance's original enactment was an event giving rise to a
cause of action, it was not the only such event.” (Id. at 818-819; emphasis
original and added). Because the tax ordinance was unauthorized and void,
each time the tax was collected a new violation occurred, and the statute of
limitations accrued anew. In language directly contrary to the holding of the
First District, the Supreme Court stated:
The statute of limitations “is not a trump card that somehow
requires courts to countenance ultra vires or illegal”
practices…. Cities and counties must eventually obey the state
laws governing their taxing authority and cannot continue
indefinitely to collect unauthorized taxes.”
(Id. at 824-25)
The rationale for this holding was emphasized in Aryeh. If continuous
accrual were not applied, “inequities would arise,” since “parties engaged in
long-standing misfeasance would thereby obtain immunity in perpetuity
from suit even for recent and ongoing misfeasance.” (Aryeh, supra, 55
Cal.4th at 1198.)
The First District chose to disregard the Supreme Court’s clear
11
holdings in Howard Jarvis and Aryeh. The lower court twisted Howard
Jarvis to conclude that the County of Sonoma only had a “one-time” legal
obligation not to adopt pension benefits in violation of Section 7507; but had
no “continuing duty” not to pay unlawfully adopted benefits. (Opinion, p. 9.)
Nothing in Howard Jarvis or Aryeh supports this absurd result. The opinion
directly conflicts with the holdings of the Sixth District in Blaser and Baxter,
which allowed the application of continuous accrual to lawsuits to stop
unauthorized pension benefit payments, even though the statute of
limitations as measured from the original unauthorized payment had lapsed.
The opinion transforms illegally granted pension benefits into vested rights.
It conflicts with decades of rulings by four other appellate districts that vested
rights do not accrue in unauthorized or illegally granted benefits. No other
appellate court has interpreted Howard Jarvis and Aryeh so narrowly.
Review is necessary to settle these wide-reaching issues of state law.
Every local agency adopting a pension increase must comply with
Section 7507. In recent years it has come to light that many agencies have
not, which likely contributed to the hundreds of millions of dollars or more
in unfunded pension liabilities vexing all levels of government in California.
Other cases have been raised or are pending that raise this issue. This Court
should give guidance to the public taxpayers and local governments about
their rights and respective obligations when Section 7507 has been violated.
Recently, the Supreme Court has granted review to develop and
clarify the law to determine the scope of vested pension rights.1 Here the
1 Pending cases include Alameda County Deputy Sheriff’s Assn v. County
Employees’ Retirement Assn., review granted March 28, 2018, S247095
(whether reduction of pension benefits impairs vested rights); Wilmot v.
Contra Cost County Employees’ Retirement Assn., review granted February
13, 2019, S252988 (same). Recent cases: Cal Fire Local 2881 v. California
Public Employees’ Retirement System (2019) 6 Cal.5th 965 (certain
retirement benefits were not subject to vesting protections); Flethez v. San
12
Supreme Court should similarly grant review because the court of appeal has
adopted a new vesting rule of even more sweeping effect; rights are to
become vested even when unlawfully obtained solely through the passage of
time. The Supreme Court has also granted review in cases involving statutes
of limitation affecting claims against the government.2 This case is
compelling because it arises at the intersection of both of these areas—
pension vesting and the statute of limitations. It requires balancing of the
competing issues arising out of public employees’ interest in retirement
benefits, the Legislature’s statutory pension reforms, and the taxpayers’
interest in funding only validly granted pension benefits. This case presents
an important opportunity to advance the Supreme Court’s jurisprudence on
significant statutory and constitutional issues affecting these interests.
III. STATEMENT OF THE CASE
The Legislature has enacted multiple statutes to protect the public
from unexpected, unfunded pension costs and unauthorized expenditures of
public funds. The proper interpretation and enforcement of these laws affects
hundreds of millions of dollars and public pensions at all levels throughout
the state.
A. Local Governments Are Statutorily And Constitutionally
Prohibited From Adopting And Implementing Public
Pension Increases That Do Not Meet Specific
Requirements
Under the Supremacy Clause, the State Legislature may impose limits
on spending by local government via statute. One such limit on pension
Bernardino County Employees Retirement Ass’n (2017) 2 Cal.5th 630 (right
to prejudgment interest on retroactive payment of retirement benefits). The
results of these cases do not directly affect the issues in this Petition. 2 Pending Case: Shalabi v. City of Fontana, review granted August 14, 2019,
S256665 (method of calculation of statute of limitation applicable to claim
against government for wrongful death).
13
spending is found in Government Code section 7507, which set requirements
that must be met before public pensions are increased. Another limit on
spending is found in Government Code section 23006, which makes it
unlawful for counties to make payments under a contract or other
commitment that was entered without compliance with state law. The
Constitution’s No-Gift Rule prohibits local government agencies from
spending money without legal authority. Together, these provisions make it
clear that each ongoing pension increase payment made by the County of
Sonoma is unlawful because the County cannot identify any lawful authority
for making it.
1. Government Code Section 7507
Government Code section 7507 prohibits the Legislature and local
legislative bodies from increasing pension benefits without taking certain
mandatory steps to identify the future costs of the increased benefits, and the
effect those costs will have on pension funding. Section 7507 provides that
“before authorizing” any “increases in public retirement plan benefits,”
pension-adopting government bodies “shall secure the services of an enrolled
[or qualified] actuary” to obtain “a statement of the actuarial impact” of the
proposed public pension benefit increases “upon future annual costs” (Gov.
Code section 7507; emphasis added.3) Such governmental bodies must make
the future annual costs public before voting on the proposed pension
increases. (Id.) In addition to Section 7507, the Legislature has adopted a
series of other statutes requiring government bodies to comply with these
obligations prior to adopting any public pension increases. (See Gov. Code
3 The statutory language is quoted from the text as adopted in 1977 and in
effect through 2008. (See Attachment 2.) The text has since been amended
and strengthened several times, and the prohibition against adoption of
pension increases without complying remains in effect. (All versions of
Section 7507 from enactment to the present are included in Appellant’s
Opening Brief [“AOB”], pp. 59-67.)
14
sections 31515, 31515.5, 31516, and 23026; together with Section 7507 the
“Pension Cost Protection Statutes.”)
Government Code section 7507 has been called “the major ‘sunshine’
provision in California pension law.” (California Bill Analysis, Senate
Committee, 2007-2008 Regular Session, Senate Bill 1123, 4/14/2008, at p. 1
(Westlaw 2018 Online)) It was adopted in 1977 to prevent the “end running”
of local governments by employee groups pressuring public agencies into
adopting pension increases “without the taxpayers ever knowing the real
cost.” (Appellant’s Appendix [“AA”] 94) The California Supreme Court
cited Section 7507’s important requirements when concluding that a county’s
ordinance adopting certain retirement benefits was not subject to the
referendum process. (Voters for Responsible Retirement v. Board of
Supervisors (1994) 8 Cal. 4th 765, 785.) However, the Supreme Court has
never been called upon to determine the rights of the public, taxpayers, and
public employees when a county purports to implement a pension benefit
increase in violation of Section 7507.
2. Government Code 23006
The Legislature enacted Government Code section 23006, which
prohibits counties from spending public funds when there is no valid
authorization.
“Any contract, authorization, allowance, payment, or
liability to pay, made or attempted to be made in violation of
law, is void and shall not be the foundation or basis of a claim
against the treasury of any county.”
(Gov. Code § 23006; emphasis added.)
On its face Section 23006 declares that any purported ”contract,
allowance, payment, or liability to pay”—i.e., any possible legal
commitment the County made to its unions for pension increases—“is void”
if made “in violation of” Government Code section 7507 and “shall not be
15
the foundation or basis of a claim” against the treasury of the County. Each
disbursement of County money to pay an unauthorized pension increase
violates Section 23006. Section 23006 is an important statewide protection
against unlawful expenditure of public funds. The California Supreme Court
has not been called upon to construe its effect on unlawfully adopted pension
benefit increases, nor whether the violation of this statute will support the
application of continuous accrual.
3. Constitutional No-Gift Rule
The California Constitution prohibits gifts of public funds. (Cal.
Const., Art. XVI, § 6; “No-Gift Rule”) The No-Gift Rule “prohibits the state
and its subdivisions from … making gifts of public money or property to an
individual or a corporation….” (B. Witkin, 9 Summary of California Law,
Taxation § 17 (11th Ed. 2019 Online Westlaw; emphasis added.) In multiple
different contexts, courts have held that governmental payments made
contrary to statutory authorization are unconstitutional gifts. (See, e.g., Page
v. Mira Costa Community College Dist. (2009) 180 Cal.App.4th 471, 496;
Orange County Foundation v. Irvine Co. (1983) 139 Cal.App.3d 195
(1983).) Payment of pension benefits without statutory authorization has
been held to be an unlawful gift of public funds. (See Lamb v. Board of
County Peace Officers Retirement Commission of Los Angeles County
(1938) 29 Cal.App.2d 248, 250 (grant of retroactive pension benefits was an
unconstitutional gift because nothing obligated payment of the benefits).)
The California Supreme Court has not yet ruled on whether payment of
public pension benefits adopted in violation of the Pension Cost Protection
Statutes and Section 23006 violates the Constitutional No-Gift Rule.
B. Luke Brought This Statutory Taxpayer Lawsuit To
Enforce Sonoma County’s Compliance With The Laws
Governing Adoption And Payment Of Pension Increases
In 2002-2003, Sonoma County (through its Board of Supervisors)
16
purported to adopt a series of substantial increases in pension benefits. (AA
11 at preamble and ¶1; 997 at ¶1)4 Acting under the influence of conflicted
advisors, the Board of Supervisors failed to comply with Section 7507 and
the other Pension Cost Protection Statutes. (AA 35-45) It did not engage a
qualified actuary to perform an actuarial study. (AA 35-36) The Board of
Supervisors did not disclose its failure to obtain the requisite study. Instead
it disseminated false and misleading information to the public (AA 32 at
¶28), including statements that the employees, not the public, would pay for
the cost of increased benefits. (Id.; AA 114-117.)
The County’s pension increases did not require employees to pay for
the costs. (AA 31-33) According to the County, unfunded pension costs
increased by 840% (AA 88), and the ultimate cost to county taxpayers is
likely to exceed hundreds of millions to a billion dollars. (AA 33 at ¶28) The
diversion of public funds to pay these unfunded liabilities has undermined
the County’s ability to provide basic services and left it saddled with an
“unsustainable” financial structure. (AA 14 at ¶¶ 5; 15, 88, 89, 92.)
In 2012 the Sonoma County Grand Jury questioned whether the
County had complied with the Pension Cost Protection Statutes. (AA 1074)
In response, the County continued misrepresenting its actions to the public,
presenting reports by its conflicted county counsel (who had managed the
pension increases (AA 33-34, 1009-10), and a law firm that was hired by the
Board of Supervisors (AA 479), but without any participation by neutral
taxpayers. Their lawyers’ reports claimed that the County had substantially
complied with the Pension Cost Protection Statutes. (AA 453, 481-82) The
County did not admit wrongdoing. (Id.) R¶espondents’ lawyers’ reports
4 The judgment on review is from a dismissal at the demurrer stage. The
facts discussed in this Petition (those alleged in Luke’s pleadings) are
accepted as true. (Aryeh, supra, 55 Cal.4th at 1185, 1191.)
17
provided inaccurate factual information designed to mislead the public into
believing that the County had hired an actuary and conducted the necessary
studies before adopting the pension increases.5 This misled the public and
prevented it from bringing legal action against the County.
Luke eventually looked into the matter and became convinced that the
County had misrepresented the truth regarding its noncompliance with the
Pension Cost Protection Statutes. (AA 1391 at ¶1; 1418 at lines 22-24). In
2017 Luke filed a petition for writ of mandate pursuant to Code of Civil
Procedure 526a and 1085. (AA 10) Luke alleged that the Board of
Supervisors had not engaged an actuary or obtained an actuarial study
required by Section 7507. (AA 12) He alleged that the pension increases
violated Section 7507 and the other Pension Cost Protection Laws; violated
Section 23006; and were ultra vires and void under the California
Constitution. He sought orders enjoining any further implementation of the
pension increases and recovering funds unlawfully spent to fund the
unauthorized pension increases. The Sonoma County Superior Court
sustained Respondents’ demurrers to Luke’s petition and amended petition
for writ of mandate, finding the case barred by the statute of limitations.
C. The First District Court Of Appeal Deviated From This
Court’s Holding In Howard Jarvis Taxpayers’ Assn. v. City
of La Habra, Allowing Sonoma County To Continue
Violating Government Code Sections 7507 And 23006 In
Perpetuity, And Creating Vested Rights In Unauthorized
Pension Benefits
5 These facts are referenced in summary fashion at e.g., AA 1008 at ¶26
(public at all times was deceived); 1012 at ¶33; 1015 at ¶38; (County
obstructed public efforts to ascertain the facts); 1009 at ¶30:23-24; 33:18-19;
1012:22-24; 1023:14-15; AA 25 ¶22 (provided misleading and incomplete
information); 1028:12-14; 1037:8-9; the significance and nature of these
facts are discussed in detail in Appellant’s Reply Brief at pp. 29-34).
18
Ordinarily a three-year statute of limitations applies to taxpayer
lawsuits. (Code of Civil Procedure 338(a).) In both the trial court and court
of appeal, Luke asserted that two different principles rendered his petition
for writ of mandate timely: the doctrine of continuous accrual and estoppel.
(AOB, pp. 4-5, 39, 46.) Luke seeks review primarily on the issue of
continuous accrual, but the estoppel issue was also decided incorrectly and
Luke seeks to preserve this issue in conjunction with review of the
continuous accrual doctrine.6
1. Continuous Accrual
On the issue of continuous accrual, Luke asserted in his petition that
the pension increases were adopted in violation of law; had never been
brought into compliance with Section 7507; and continued to be paid in
violation of the law. The laws violated include the Pension Cost Protection
Laws, Government Code section 23006, and the Constitution’s No-Gift Rule.
6 On the issue of estoppel, Luke alleged that, in the unique facts of this case,
governmental misconduct—including the dissemination of misleading facts
intended to divert the public from bringing a timely challenge to the pension
cost increases—constitutes an estoppel to assert the statute of limitations.
(AOB, pp. 46-54; Reply Br., pp. 28-43). Because the judgment was
sustained at the demurrer stage, Luke was never permitted to develop a
record to support his allegations. Luke pointed out to the court of appeal, in
detail, that the one-sided, incomplete collection of records submitted by
Respondents (over Luke’s objections) in a request for judicial notice
demonstrated estoppel (AOB, pp.46-49; Reply Br. pp. 29-44); and that
Respondents’ disputed interpretation of these records was inconsistent with
the rule against deciding disputed issues of fact based on incomplete
judicially noticed records at the demurrer stage. (E.g., Freemont Indem Co.
v. Freemont General Corp. (2007) 148 Cal.App.4th 97, 113-15
[“Freemont”]) Rather than correcting the lower court’s mistake, the court of
appeal sidestepped the entire issue and ruled, without any reference to or
analysis of any record, that the violations “would have been apparent” from
unspecified public records. (Opinion, p.10.). Because the ruling is not
supported by any references to any record it is purely speculative, in addition
to violating Freemont, supra.
19
The authority relied upon by Luke included Howard Jarvis and Aryeh. In
those cases the Supreme Court held that, under the doctrine of continuous
accrual, the courts retain the power to stop ongoing illegal payments, since
each wrongful act triggers the statute of limitations anew. (See Howard
Jarvis, supra, 25 Cal.4th at 815; Aryeh, supra, 55 Cal.4th at 1197.)
The fact pattern in Howard Jarvis is almost identical to Luke’s case.
As discussed above, taxpayer plaintiffs, like Luke, challenged the legality of
a local government’s action—in that case a city’s adoption of a tax without
obtaining voter approval. The Supreme Court first observed that under
Section 338(a), a cause of action accrues upon the occurrence of the last
element essential to the cause of action. (Howard Jarvis, supra, 25 Cal.4th at
815) According the Supreme Court’s analysis, while one cause of action
accrued when the city wrongfully approved a tax increase without having
obtained voter consent, subsequent causes of action accrued each time the
city collected unlawful taxes. (Id. at 820.) The city could have obtained the
necessary voter approval before collecting the taxes but did not. (Id. at 819.)
So when the taxpayers filed a lawsuit to stop future collection, that action
was timely. (Id. at 820-25.)
In reaching this conclusion, the Supreme Court relied heavily on its
prior holdings interpreting and enforcing continuous accrual in the context
of public pension administration. (Id. at p. 821, citing, inter alia, Abbott v.
City of Los Angeles (1958) 50 Cal.2d 438.) In Aryeh, the Supreme Court also
cited a pension administration case in support of its admonition that the
doctrine of continuous accrual is intended to prevent parties in “long-
standing misfeasance” from “obtain[ing] immunity in perpetuity from suit
even for recent and ongoing misfeasance.” (Aryeh, supra, 55 Cal.4th at 1198-
1199, citing Dryden v. Board of Pension Commrs. (1936) 6 Cal.2d 575.)
Pursuant to the Supreme Court’s holding in Howard Jarvis, the court
of appeal should have reversed the superior court. It did not. According to
20
the court of appeal’s analysis, the County had no “ongoing” obligation not to
pay unauthorized benefits, because Section 7507 only prohibited adoption of
an unlawful pension increase. (Opinion p. 9.) Since there was no specific
statutory language in Section 7507 prohibiting payment of unauthorized
pension increases, the court of appeal construed Section 7507 as only
imposing a “one-time” obligation that could not be violated by subsequent
payments of unauthorized benefits. (Opinion, pp. 6-9.) Among the many
glaring problems with this superficial analysis is the court of appeal’s failure
to recognize that Section 23006 and the Constitutional No-Gift Rule also
impose a separate obligation not to pay unauthorized pension increases,
beyond the language of Section 7507. In Aryeh the Supreme Court stated
that the court must not look to the label of the claim but to the “nature of the
obligation breached.” (Aryeh, supra, p.1200.) In Aryeh, the Supreme Court
held that “the nature of the duty owed [in that case, not to impose unfair
monthly charges] … was a continuing one, susceptible to monthly breaches.”
(Id.) In just the same way, the County’s continuing obligation was to not pay
ongoing unlawful, unauthorized benefits.
By construing Section 7507 as only prohibiting the adoption of
unlawful benefits, but not the subsequent payment of such unauthorized
benefits, the court of appeal ripped the guts out of Howard Jarvis’ holding.
Under the court of appeal’s ruling, the County has no obligation to bring its
unlawfully adopted pension increases into compliance with Section 7507,
Section 23006, and the No-Gift Rule. The lower court thus would allow the
County to continue collecting from public taxpayers the hundreds of millions
of dollars necessary to pay for unfunded pension increases adopted in direct
violation of the Pension Cost Protection Statutes. This contravenes the
Supreme Court’s admonition that a government handling taxpayers’ money
should not be permitted to violate the law “with immunity in perpetuity.”
21
(See Aryeh, supra, 55 Cal.4th at 1198.)7
2. Publication And Other Pending Cases
The tentative decision released by the Court of Appeal prior to oral
argument was not marked for publication. At oral argument, Respondents
asked the Court of Appeal to publish the decision because of the other cases
that have been raised, or are pending, in which taxpayers asserted continuous
accrual in challenges to pension increases.8 Luke is aware of at least two
such cases.9 The Court of Appeal granted Respondents’ request to publish
as to Part I of the Opinion, which limits the application of continuous accrual.
(Opinion, p. 1 at n.*)
IV. REVIEW IS NECESSARY TO RESOLVE IMPORTANT
STATEWIDE ISSUES AFFECTING PENSION BENEFITS
AND UNLAWFUL EXPENDITURE OF PUBLIC FUNDS
The California Supreme Court should hear this case to resolve the
issue of whether void, unconstitutional actions by a local government
become enforceable by the mere passage of time; to resolve conflicts among
the courts of appeal about whether public employees can acquire vested
rights in unlawfully granted pension increases; to prevent the lower courts
from misinterpreting and eviscerating this Court’s seminal opinions on the
doctrine of continuous accrual in Howard Jarvis and Aryeh; and to give
guidance to the lower courts in resolving pending cases arising out of the
unfunded pension liability crisis facing the state.
7 Since the court of appeal considered the facts and issues raised in the
parties’ briefs, there were no grounds for rehearing and none was sought.
(Cal. Rules of Court, rule 8.504(b)(3).) 8 See excerpts of Oral Argument transcript on this point, at Attachment 2;
Transcript pp. 18:8-28 & 28:4-15. 9Brown v. City of San Rafael, et al., First Dist. Ct. of App. No. A156261,
(app. pending; Super. Ct. Marin County Case No. CV1702258); Brown v.
Southern Marin Fire Department, Super. Ct. Marin County Case No.
CV1603276 (AA498).
22
A. The Supreme Court Should Resolve The Conflicts Between
The First Appellate District And Four Other Appellate
Districts About Whether Vested Rights In Unauthorized
Pension Benefits Can Accrue By The Mere Passage of Time
Historically, the courts of appeal have consistently held that public
employees do not have vested rights in pension benefits that are granted
unlawfully or without due authorization. In other words, the public or the
pension agency may stop the unlawful payments over the objections of the
pension recipient. The no-vesting rule has been applied by the Second,
Third, Fourth, and Sixth Appellate Districts in a wide variety of contexts.
San Diego City Firefighters, Local 145 v. Bd. Of Admin. Of
San Diego City Emp. Ret. Sys. (2012) 206 Cal.App.4th 594,
606-10 & note 10. The Fourth District held that city pension
benefits adopted by resolution, not an ordinance as required by
the city charter, were void and unenforceable. The
constitutional contract clause does not vest pension rights
based on contracts that are illegal, invalid, or unenforceable.
Blaser, supra, 37 Cal.App.5th at 373; see also Baxter, supra,
18 Cal.App.5th at 349, 379, 380-82. The Sixth District held
there is no vested right to unauthorized pension payments.
Continuous accrual allowed a lawsuit to stop such benefits.
Medina v. Board of Retirement (2003) 112 Cal.App.4th 864,
871-72 [“Medina”]. The Second District held that a pension
beneficiary acquired no vested rights under an unauthorized
classification despite 17 years of pension contributions. “[T]he
contract clause does not protect expectation that are based upon
contracts that are invalid, illegal or unenforceable.” (Id. at 871-
72.)
23
Walsh v. Board of Administration (1992) 4 Cal.App. 4th 682,
696-97. The Third District held that a beneficiary has no
vested right to pension benefits based upon an invalid or illegal
contract.
Crumpler v. Board of Administration Employees’ Retirement
System (1973) 32 Cal.App.3d 567, 586 [“Crumpler”]. The
Fourth District held that no vested rights accrued in pension
benefits under an erroneous classification despite 20 years of
contributions paid by the employee.
These results are consistent with, and required by, the Supremacy
Clause of the California Constitution. (Ca. Const. Art. XI, section 7.) Local
legislative action which “conflicts with state law … is preempted by such
law and is void.” San Diego Gas & Electric Co. v. City of Carlsbad (1998)
64 Cal.App.4th 785, 792–793 (emphasis added); Sherwin–Williams Co. v.
City of Los Angeles (1993) 4 Cal.4th 893, 897–898. Accordingly, the
Supreme Court and courts of appeal for more than a century have held that
when counties purport to enter contracts that lack constitutional authority or
statutory authority, such contracts are ultra vires and void. (Riverside
Portland Cement Co. v. City of Los Angeles (1918) 178 Cal. 609, 609–610
(requiring injunction against enforcement of a void contract that had been
issued under unconstitutional statute); Modoc County v. Spencer & Raker
(1894) 103 Cal. 498 (action of county board of supervisors purporting to
enter into a contract without statutory authority was “void,” and “created no
legal claim against the county”); City of Pasadena v. Estrin (1931) 212 Cal.
231, 235-36 (purported city contract void when not authorized by city’s
charter; not saved by estoppel or ratification).
Taxpayers have standing to sue in such cases. In Miller v. McKinnon
(1942) 20 Cal.2d 83, a county taxpayer sued to recover money illegally
expended by the county under a void contract. A “contract made without
24
compliance with the statute is void.” (Miller v. McKinnon (1942) 20 Cal.2d
83, 87.) “[C]ontracts wholly beyond the powers of a municipality are void.
They cannot be ratified; no estoppel to deny their validity can be invoked
against the municipality; and ordinarily no recovery in quasi contract can be
had for work performed under them.” (Miller, supra 20 Cal.2d at 99, citing
Los Angeles Dredging Co. v. Long Beach (1930) 210 Cal. 348, 353.)
By refusing to allow the public to enjoin the ongoing enforcement of
the unlawfully adopted pension increase, the First District Court of Appeal
took a void governmental act—the County’s adoption of a pension increase
in direct contravention of Section 7507—and converted it into a valid act.
The First District’s opinion is contrary to the principles enforced in the
Second, Third, Fourth, and Sixth Districts. The First District distinguished
these cases by stating that “they do not involve statute of limitations defenses
and are therefore inapposite.” (Opinion p. 8.) But the First District cited no
cases stating that the result would be different if a statute of limitations
defense had been asserted. For instance Medina involved the reversal of a
pension classification benefit after 17 years; Crumpler, after 20 years; and
Blaser and Baxter both involved statutes of limitation defenses asserted
against actions to recover “years-long” overpayments. (Medina, supra, 113
Cal.App.4th at 866-68; Crumpler, supra, 32 Cal.App3d at 571-72; Blaser,
supra, 37 Cal.App.5th at 353-354.) In Baxter, 7 years elapsed between
accrual of the claims and filing the action. (Baxter, supra, 18 Cal.App.5th at
364, 368, 378-82.)
The inconsistencies between the ruling of the First District and the
Second, Third, Fourth and Sixth Districts are obvious, fundamental and far-
reaching. Under the accepted rule as applied by all other appellate districts,
if the County (as it should have) had at any time stopped paying the illegally
adopted pension benefits, the public employees could not have complained,
because they have no vested rights in unlawfully adopted benefits. Now,
25
however, based on the lower court’s ruling, the public taxpayer cannot do
what the pension agency could do; the lower court denied the taxpayer the
same rights accorded to the pension agencies to stop paying unlawful,
unvested benefits.
In sum, the First District Court of Appeal created a zombie pension
benefit. If the pension increases issued in violation of Section 7507 had been
challenged in court within three years, the courts would have recognized
them as dead, void, and unenforceable. Once three years have passed,
according the holding of the First District, the enactments are now alive and
viable—and cannot be killed off by the courts even though they were void
originally under the Supremacy Clause.
The ruling of the First District creates a conflict with every other court
that has considered the issue of whether vested rights benefits can accrue in
unauthorized benefits. The settled rule established in the Second, Third,
Fourth, and Sixth Districts has been upended. The confusion caused by this
split should be resolved by the Supreme Court immediately.
Does a constitutionally void pension benefit (or any void
governmental action, for that matter) become valid and enforceable merely
by the passage of time? Does the Constitutional Supremacy Clause allow
local governments to flout state statutes in perpetuity when, for whatever
reason, no challenge is or can be mounted within the first three years of the
void action? Must a local government spending taxpayer funds “eventually”
come into compliance with the governing law, as suggested in Howard
Jarvis? (Howard Jarvis, supra, 25 Cal.4th at 825); or does that rule only apply
when the government is raising taxes, not spending them, as the First District
suggests?
Because these issues affect hundreds of millions of dollars in
unfunded pension benefits in Sonoma County alone, the Supreme Court
should clarify the law in this area. Moreover, other cases are pending that
26
raise these issues. (See supra note 9.) To support their request for publication,
Respondents argued below that the resolution of Luke’s claims should have
precedential application to other cases. This is a matter of paramount
constitutional importance requiring the guidance of the Supreme Court
without delay.
B. The Supreme Court Should Resolve The Confusion Among
The Courts of Appeal About The Scope Of The Continuous
Accrual Doctrine Applicable In Taxpayer Lawsuits To
Stop Ongoing Government Misfeasance, As Articulated By
The Supreme Court In Howard Jarvis and Aryeh
The First District’s narrow interpretation of Howard Jarvis would
eviscerate the doctrine of continuous accrual in taxpayer challenges to
government actions, even though “suits against public entities” are a primary
context in which the doctrine was developed. (See Aryeh, supra, 55 Cal.5th
at 1200.) Its ruling is bad law and bad policy.
The First District cited this Court’s broad rationale for applying the
doctrine of continuous accrual. (See Opinion at 3-4, quoting Aryeh, supra,
55 Cal.4th at 1192, and p. 7 quoting Howard Jarvis, supra 25 Cal.4th at 825.)
But then it ignored that rationale by adopting a narrow interpretation of this
Court’s decisions. (Opinion, pp. 6-9).
The court of appeal expressed the crux of the issue as follows: “[I]f
an authority is void for failing to comply with a state law, [is] a new
limitations period … triggered each and every time money is collected and
disbursed pursuant to that authority[?]” (Opinion, p. 7.) Answering this
question in the negative, the court of appeal missed the obvious: the
Legislature has enacted a separate statute prohibiting ongoing payments
under a void enactment: Government Code section 23006. Even if Section
23006 did not apply, the Constitution’s No-Gift Rule applies. Finally, even
if these independent laws did not apply (and they do), the ongoing nature of
27
the government’s duty should be inherent in the nature of the original
authorization itself. By prohibiting the enactment of something, the
Legislature implicitly prohibits its ongoing implementation.
In Howard Jarvis, the city violated a measure that required voter
approval of a tax, rendering it unlawfully adopted. Plaintiff’s action to
challenge the approval was untimely. But plaintiff argued that subsequent
collection of the unlawful tax was a second wrong, and its challenge to this
ongoing misfeasance was timely under the doctrine of continuous accrual.
The California Supreme Court agreed because the statute of limitations
should not be “a trump card that somehow requires courts to countenance
ultra vires or illegal” practices. (Howard Jarvis,25 Cal.4th at 824.) “Cities
and counties must eventually obey the state laws governing their taxing
authority and cannot continue indefinitely to collect unauthorized taxes.”
(Id. at 825.)
The court of appeal acknowledged this “broader language” applying
“continuous accrual,” but looked for a way around it. According to the court
of appeal, this part of Howard Jarvis’ holding “is limited to challenges to tax
measures,” and, in particular, only such tax statutes as specifically authorize
a “refund action” to recover taxes collected unlawfully. (Opinion, p. 7.) The
court of appeal noted that the tax measure construed in Howard Jarvis
included a separate mechanism for tax refunds, which it interpreted as “a
separate and ongoing obligation not to collect a tax enacted without voter
approval.” (Opinion, p. 6.) But Howard Jarvis never said that such a statute
was a prerequisite to the application of continuous accrual in challenges to
unlawful government action. Indeed, the Supreme Court has never found
such a statute to be required for continuous accrual in any of its prior pension
administration cases spanning decades—cases on which the Supreme Court
relied in Howard Jarvis and Aryeh. (See Abbott v. City of Los Angeles (1958)
50 Cal.2d 438, 462-63; Dryden v. Board of Pension Commrs. (1936) 6 Cal.2d
28
575.) The only authority cited by the court of appeal to require such a statute
as a prerequisite to application of continuous accrual was In Re Ricardo P.
(2019) 7 Cal.5th 1113. (Opinion, p. 6.) That was an unrelated criminal case
involving searches of electronic devices, and not the ability of the taxpayer
to compel local governments to comply with the law. In Re Ricardo P. has
no application in this proceeding.
This is a total misreading of the purpose and intent of Howard Jarvis.
Blaser cited at least thirteen different statutory contexts in which continuous
accrual has been applied but made no mention of any prerequisite for a
special statutory collection mechanism. (See Blaser, supra, 37 Cal.App.5th at
365-366.) The Northern District of California had no problem concluding
that Howard Jarvis authorizes continuous accrual in state constitutional
claims challenging municipal “street damage restoration” fees. (Pacific Gas
& Elec. Co. v. City of Union City (N.D. Cal. 2002), 220 F. Supp.2d 1070,
1079, 1080.) The Pacific Gas court stated that the “reasoning [of Howard
Jarvis] applies here.” (Id. at 1080.)
“As [the Supreme Court] notes [in Howard Jarvis] ‘Cities and
counties must eventually obey the state laws governing their
taxing authority and cannot continue indefinitely to collect
unauthorized taxes.’”
(Id.) The Pacific Gas court did not find that the nature of the tax collection
statutes interpreted in Howard Jarvis was a distinguishing factor that must
be present. (Id.)
The lower court’s opinion raises important issues of constitutional and
statutory construction that have not been addressed by the Supreme Court.
When considering the proper application of continuous accrual, should the
illegal nature of each subsequent collection and payment of public funds to
implement a void governmental act be inferred or must it be expressed as the
First District concluded? Can the ongoing illegal nature of the act be found
29
in other statutes that specifically apply (such as Section 23006); or the
Constitution itself (No-Gift Rule; Supremacy Clause)? Is it proper to assume
that the Legislature would not want the traditional doctrine of continuous
accrual applied to stop ongoing payments under a void statute, when the
Legislature could have capped the period of review of a pension enactment
by adoption of a specific statute of limitation like it has done in other settings,
as the Supreme Court has recognized? (See, e.g., Utility Cost Management v.
Indian Wells Valley Water District (2001) 26 Cal.4th 1185, 1195). Did the
Supreme Court mean what it said in Howard Jarvis and Aryeh about avoiding
inequities that follow when a government is permitted to violate the law with
impunity? Or, to the contrary, should Howard Jarvis and Aryeh be construed
to require the Legislature to adopt specific statutes to recover the unlawfully
collected funds, before the ongoing illegal nature of the public funding of
void enactments can be recognized, as the First District held?
The Supreme Court’s immediate resolution of these conflicts is
necessary. The First District’s creation of a vested right in void pension
increases, and its holding that public taxpayers must be forced to pay
hundreds of millions of dollars to fund unlawfully vested benefits, are prime
examples of the “inequities” that have arisen due to the First District’s
holding. (Aryeh, supra, 55 Cal.4th at 1200.) Review by the Supreme Court is
necessary to explain whether the County should be permitted to ignore the
Pension Cost Protection Statues with impunity and “in perpetuity” for as long
as the illegally granted pension benefits are funded and paid.
C. The Supreme Court Should Resolve The Conflict Among
The Courts Of Appeal As To Whether Continuous Accrual
Applies In Suits To Stop Unauthorized Pension Payments
(As The Sixth District Held In Blaser and Baxter) Or Does
Not So Apply (As The First District Held)
30
The published holding of the First District is fundamentally at odds
with the holding of the Sixth District in Blaser and Baxter. The First District
held that continuous accrual is not available to a taxpayer seeking to
challenge a void pension benefit, while Blaser and Baxter both emphatically
authorized the application of continuous accrual to stop payment of
unauthorized benefits. (Blaser, supra, 37 Cal.App.5th at 365-375; Baxter,
supra, 18 Cal.App.5th at 378-82.) Resolution of these inconsistent holdings
is an important matter requiring clarification by the Supreme Court.
The California Supreme Court has a long history applying the doctrine
of continuous accrual in pension cases. (See, e.g., Abbott v. City of Los
Angeles (1958) 50 Cal.2d 438, 462-63; Dillon v. Board of Pension
Commissioners (1941) 18 Cal.2d 427, 430; Dryden v. Board of Pension
Commrs. (1936) 6 Cal.2d 575.) The Sixth District cited and relied upon these
cases, together with Howard Jarvis and Aryeh among others, to require the
superior court to apply continuous accrual in lawsuits brought by a pension
agency to stop ongoing payment of unauthorized benefits. (Blaser, supra, 37
Cal.App.5th at 365-75; Baxter, supra, 18 Cal.App.5th at 378-82.) Even
though the unauthorized benefits (overpayments miscalculated by the
pension agency without any authority) had commenced outside the statutory
limitations period, under the principle of continuous accrual each subsequent
payment of an unauthorized benefit was a violation and the ongoing
overpayments (and those within the three year period before lawsuits were
filed) could be stopped and recovered. (See Blaser, supra, 37 Cal.App.5th at
364-76; Baxter, supra, 18 Cal.App.5th at 378-82.) The holdings of Blaser and
Baxter would have allowed Luke’s case to proceed, had his case arisen in the
Sixth District. We thus have a situation in which the taxpayers located in the
Sixth District can use continuous accrual to stop unauthorized payment of
pension benefits, but taxpayers located in the First District cannot. This
conflict should be resolved immediately.
31
Trying to distinguish the Supreme Court’s prior pension
administration cases, the First District appeared to suggest that the employee
has the right to invoke continuous accrual to compel valid payments, but the
public (e.g., the pension agency or the taxpayer) has no corresponding right
to stop invalid payments.10 The court of appeal stated: “That a pensioner has
a continuing right to a pension does not mean that Section 7507 imposes a
continuing obligation on the county.” (Opinion, p. 7.) This suggestion is
contrary to the published holdings in Blaser and Baxter, in which the Sixth
District explicitly rejected claims that only pension holders can assert
continuous accrual in pension benefit cases. (See Blaser, supra, 37
Cal.App.5th at 373; Baxter, supra, 18 Cal.App.5th at 380.) The Supreme Court
should end the confusion and use this case to confirm that the analysis of
Blaser and Baxter is correct. The taxpayer should not be more restricted in
applying continuous accrual to stop unauthorized payments than the public
employee is when compelling authorized payments. The neutral application
of continuous accrual should not depend on which party—the pubic taxpayer
or the public employee—is attempting to enforce the law.
The First District also attempted to distinguish Blaser and Baxter on
the grounds that the “continuing obligation” of the pension agency in those
cases was “to pay correctly calculated benefits—an obligation that occurred
with every pension payment made.” (Opinion, p. 8.) In so doing, the First
District made a distinction between “miscalculated” benefits in Blaser and
Baxter and “void” benefits in Luke’s case. Respectfully, that attempted
distinction only emphasizes that the First District reached a holding
incompatible with Blaser and Baxter. The reason the “miscalculation” (i.e.,
the overpayment) was a violation of law in Blaser and Baxter is that the
10 Respondents advocated for that position in their briefs to the court of
appeal. (See County Br., p. 35; Luke Reply Br., p.21.)
32
overpayment was not authorized by the pension plan. The First District
could just as easily have stated the “continuing obligation” of the pension
agency was “to pay authorized benefits—an obligation that occurred with
every pension payment made.” (Opinion, p. 8.) In just the same way,
Sonoma County has an ongoing obligation to pay only “authorized” pension
benefits. A pension increase that was not adopted in accordance with Section
7507 is void and unauthorized. If Howard Jarvis and Aryeh are to have any
meaning in the context of taxpayer lawsuits, the government should be
presumed to be under a “continuing obligation” to obey the law. To hold
otherwise would allow local government to violate the Supremacy Clause.
The Supreme Court should determine whether the lower court’s analysis is
correct, or if Blaser and Baxter and the weight of the other authorities
construing Howard Jarvis and Aryeh should govern.
V. CONCLUSION
This case raises important statewide issues involving the rights of
taxpayers to challenge pension increases adopted in violation of Government
Code sections 7507, 23006, and the Constitutional No-Gift Rule; whether
pension enactments that are void under the Constitutional Supremacy Clause
ripen into vested rights by the mere passage of time; and whether the holdings
of Howard Jarvis and Aryeh authorize application of continuous accrual in
taxpayer actions to enforce compliance with the Pension Cost Protection
Statutes. The published opinion of the First District contradicts those of the
Sixth District in Blaser and Baxter; contradicts decades of cases holding that
public employees do not acquire vested rights in unlawfully issued pension
benefits; and contradicts the approach taken in other cases that have
33
construed Howard Jarvis and Aryeh. The Supreme Court’s review of this
case is necessary to clarify and explain the law on all of these critical issues.
Dated: January 17, 2020 ROBINSON & ROBINSON, LLP
By: . /s/ Jeffrey A. Robinson .
Jeffrey A. Robinson
Attorneys for Petitioner and Appellant
George W. Luke
34
CERTIFICATE OF COMPLIANCE
Pursuant to Rule of Court 8.204(c), I certify that this Appellant’s
Reply Brief contains 8,055 words. In making this certification, I have
relied on the word count of the computer used to prepare the brief.
Dated: January 17, 2020 ROBINSON & ROBINSON, LLP
By: . /s/ Jeffrey A. Robinson .
Jeffrey A. Robinson
Attorneys for Petitioner and Appellant George W. Luke
Filed 12/12/19CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
GEORGE W. LUKE,Plaintiff and Appellant,
v.SONOMA COUNTY, et al.,
Defendants and Respondents.
A155286
(Sonoma County Super. Ct. No. SCV261187)
Plaintiff George W. Luke, a Sonoma County resident and taxpayer, appeals from
the trial court’s orders sustaining the demurrers of Sonoma County (the County) and
certain County officials, the Sonoma County Employees’ Retirement Association, and the
Sonoma County Law Enforcement Association (collectively, Respondents). Plaintiff
argues the trial court erred in finding his claims challenging the payment of increased
public employee pension benefits barred by the statute of limitations. We affirm.
BACKGROUND1
In 2002 or 2003, the County authorized increased pension benefits for County
employees, pursuant to a settlement of employee lawsuits alleging past miscalculation of
retirement benefits. In doing so, the County failed to comply with state laws requiring
local legislative bodies to obtain an actuarial statement of the future annual costs of
proposed pension increases, and to make the future annual costs public at a public * Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of part II.1 “On appeal from the sustaining of a demurrer, we accept as true the well-pleaded facts in the operative complaint . . . .” (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1189, fn. 1 (Aryeh).)
136
meeting, before authorizing the pension increases. (See Gov. Code, §§ 7507, 23026,
31515.5, 31516.)2 In 2017, Plaintiff filed the underlying petition for writ of mandate,
alleging these violations and seeking a writ enjoining payment of the increased pension
benefits.
The trial court sustained Respondents’ demurrers to Plaintiff’s original and first
amended petitions, finding the claim barred by the statute of limitations. In sustaining the
demurrers to the first amended petition, the trial court denied leave to amend. Judgment
issued in favor of Respondents.
DISCUSSION3
“This appeal follows the sustaining of a demurrer. The application of the statute
of limitations on undisputed facts is a purely legal question [citation]; accordingly, we
review the lower courts’ rulings de novo. We must take the allegations of the operative
complaint as true and consider whether the facts alleged establish [Plaintiff’s] claim is
barred as a matter of law.” (Aryeh, supra, 55 Cal.4th at p. 1191.)
“An affirmative defense, the statute of limitations exists to promote the diligent
assertion of claims, ensure defendants the opportunity to collect evidence while still
fresh, and provide repose and protection from dilatory suits once excess time has passed.
[Citations.] The duration of the limitations period marks the legislatively selected point
at which, for a given claim, these considerations surmount the otherwise compelling
interest in adjudicating on their merits valid claims. [Citations.] [¶] The limitations
period, the period in which a plaintiff must bring suit or be barred, runs from the moment
a claim accrues. [Citations.] Traditionally at common law, a ‘cause of action accrues
“when [it] is complete with all of its elements”—those elements being wrongdoing, harm,
and causation.’ [Citation.] This is the ‘last element’ accrual rule: ordinarily, the statute
2 All undesignated section references are to the Government Code.3 The Sonoma County Employees’ Retirement Association and the Sonoma County Law Enforcement Association join in the arguments submitted on behalf of the County and its officials.
237
of limitations runs from ‘the occurrence of the last element essential to the cause of
action.’ ” (Aryeh, supra, 55 Cal.4th at p. 1191.)
“To align the actual application of the limitations defense more closely with the
policy goals animating it, the courts and the Legislature have over time developed a
handful of equitable exceptions to and modifications of the usual rules governing
limitations periods. These doctrines may alter the rules governing either the initial
accrual of a claim, the subsequent running of the limitations period, or both.” (Aryeh,
supra, 55 Cal.4th at p. 1192.) “[The defendant] bears the initial burden of proving [the
plaintiff’s] claims are barred by [the applicable] limitations period. [Citation.]
Thereafter, the burden shifts to [the plaintiff] to demonstrate his claims survive based on
one or more nonstatutory exceptions to the basic limitations period. [Citation.] That
burden may be imposed even at the pleading stage.” (Id. at p. 1197.)
All parties agree the applicable statute of limitations is set forth in Code of Civil
Procedure section 338, subdivision (a), which provides a three-year limitations period for
“[a]n action upon a liability created by statute, other than a penalty or forfeiture.”
Because Plaintiff’s lawsuit was filed well over three years after the County approved the
challenged pension increases, Respondents have met their burden to prove Plaintiff’s
claims are barred by this limitations period. The parties dispute whether Plaintiff has met
his burden to demonstrate that his claim survives based on an exception to the limitations
period.
I. Continuous Accrual
“[U]nder the theory of continuous accrual, a series of wrongs or injuries may be
viewed as each triggering its own limitations period, such that a suit for relief may be
partially time-barred as to older events but timely as to those within the applicable
limitations period.” (Aryeh, supra, 55 Cal.4th at p. 1192.) “The theory is a response to
the inequities that would arise if the expiration of the limitations period following a first
breach of duty or instance of misconduct were treated as sufficient to bar suit for any
subsequent breach or misconduct; parties engaged in long-standing misfeasance would
thereby obtain immunity in perpetuity from suit even for recent and ongoing misfeasance.
338
In addition, where misfeasance is ongoing, a defendant’s claim to repose, the principal
justification underlying the limitations defense, is vitiated.” (Id. at p. 1198.) “Generally
speaking, continuous accrual applies whenever there is a continuing or recurring
obligation: ‘When an obligation or liability arises on a recurring basis, a cause of action
accrues each time a wrongful act occurs, triggering a new limitations period.’ ” (Id. at
p. 1199.) “[T]he theory of continuous accrual supports recovery only for damages arising
from those breaches falling within the limitations period.” (Ibid.)
The obligation allegedly violated is the one imposed by former section 7507, as
effective in 2002 and 2003: “The Legislature and local legislative bodies shall secure the
services of an enrolled actuary to provide a statement of the actuarial impact upon future
annual costs before authorizing increases in public retirement plan benefits. An ‘enrolled
actuary’ means an actuary enrolled under subtitle C of Title III of the federal Employee
Retirement Income Security Act of 1974 and ‘future annual costs’ shall include, but not
be limited to, annual dollar increases or the total dollar increases involved when
available. [¶] The future annual costs as determined by the actuary shall be made public
at a public meeting at least two weeks prior to the adoption of any increases in public
retirement plan benefits.” (Former § 7507, added by Stats. 1977, ch. 941, § 1; amended
by Stats. 1980, ch. 481, § 3, fn. omitted.)4 As Respondents argue, the statute on its face
does not impose a continuing or recurring obligation. Instead, the obligation is imposed
before pension increases are authorized.
Plaintiff argues the County’s failure to comply with former section 7507 renders
the authorized pension increases void and therefore each pension payment made pursuant
to this void authority is a new wrong triggering its own limitations period. Plaintiff relies
on Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809 (Howard
Jarvis), which involved “an action against a city for allegedly imposing and collecting a
general tax on its residents without the voter approval mandated by Proposition 62 (Gov.
Code, §§ 53720–53730) . . . .” (Howard Jarvis, at p. 812.) “Government Code section 4 The other statutes cited in Plaintiff’s petition effectively restate these requirements (§§ 23026, 31515.5, 31516) or set forth a statement of legislative intent (§ 31515).
439
53723 provides: ‘No local government . . . may impose any general tax unless and until
such general tax is submitted to the electorate of the local government . . . and approved
by a majority vote of the voters voting in an election on the issue.’ ” (Howard Jarvis, at
p. 814.) As here, it was “undisputed . . . that this action is one ‘upon a liability created by
statute,’ to which a three-year limitation period applies. (Code Civ. Proc., § 338, subd.
(a).)” (Id. at p. 815.) The city argued the cause of action accrued when the tax ordinance
was enacted without the requisite electorate vote and, because that enactment took place
more than three years before the plaintiffs’ action, the claim was time-barred. (Id. at
p. 819.) In response, the plaintiffs argued “they are seeking redress for two types of
injury: the violation of their right to vote on new taxes, and the City’s continued
collection of the tax without valid legal authority.” (Ibid.) As to the latter, the plaintiffs
alleged: “ ‘By continuing to impose the general tax at issue in this case,’ . . . ‘defendant
City is failing to perform the legal duties required of it by Proposition 62.’ ” (Ibid.)
The Supreme Court agreed with the plaintiffs and held each collection of the tax
triggered a new limitations period, pursuant to the continuous accrual theory. (Howard
Jarvis, supra, 25 Cal.4th at p. 812.) In its analysis, the court relied on the statutory
language enacted by Proposition 62 to conclude that the statute imposed an ongoing
obligation. “Proposition 62 prohibited the imposition of a general tax ‘unless and until
such general tax is submitted to the electorate.’ (Gov. Code, § 53723.) That command is
allegedly violated each time the City collects its utility tax through the service providers.”
(Howard Jarvis, at p. 823.) The court expressly rejected the city’s contention that
Proposition 62’s prohibition of the “imposition” of a tax without voter approval is limited
to the time of enactment: “Government Code section 53727, subdivision (b), which
governs taxes imposed prior to the measure’s passage, provides that no such tax ‘shall
continue to be imposed’ without a vote within two years of the measure’s effective date,
and that a taxing jurisdiction that fails to obtain a majority vote ‘shall cease to impose
such tax on and after November 15, 1988.’ Clearly, in this provision, ‘imposition’ is not
limited to the time of initial enactment, and nothing in Proposition 62 suggests that it was
used in a more restricted sense in Government Code section 53723, the prohibitory
540
provision at issue here. Government Code section 53728, moreover, provides a remedy
against a city’s continued collection of a tax that has not been approved by the voters,
requiring the responsible county official to withhold property tax transfers in a dollar
amount equal to the illegal collections. Clearly the intent of Proposition 62’s enactors
was not merely to preclude enactment of a tax ordinance without voter approval, but to
preclude continued imposition or collection of such a tax as well.” (Howard Jarvis, at
pp. 823–824.)
Howard Jarvis also noted that a tax refund action would have been timely as to the
collection of any tax within the relevant limitations period for such an action. (Howard
Jarvis, supra, 25 Cal.4th at p. 820 & fn. 3.) In a tax refund action, the plaintiff “is not
limited to seeking a refund, but may challenge the validity of the taxing agency’s policy
or continuing conduct by a claim for declaratory relief.” (Id. at p. 822.) The court
reasoned, “Plaintiffs’ causes of action for a declaration of the currently collected tax’s
invalidity and for a writ of mandate to prevent future collection of the tax are no more
barred by the statute of limitations than would be an action for refund of taxes paid.” (Id.
at p. 821.)
We find Howard Jarvis distinguishable. In Howard Jarvis, the allegedly violated
statute imposed an obligation at the time of a tax ordinance’s enactment, but it also
imposed a separate and ongoing obligation not to collect a tax enacted without voter
approval. The court discerned the legislative intent to impose this ongoing obligation
from the statutory language—in particular, the language in section 53727 providing that
no tax imposed prior to Proposition 62’s enactment “ ‘shall continue to be imposed’ ”
without voter approval—construing section 53723’s prohibition on the “impos[ition]” of
a tax without voter approval to mean both the tax’s initial enactment and its subsequent
collection. (Howard Jarvis, supra, 25 Cal.4th at pp. 823–824; see also Aryeh, supra, 55
Cal.4th at p. 1200 [“To determine whether the continuous accrual doctrine applies here,
we look . . . to the nature of the obligation allegedly breached.”].) In contrast, the plain
language of former section 7507 imposes only a one-time obligation: to obtain and make
641
public a statement of the future costs of proposed pension increases “before authorizing”
them.
Plaintiff does not appear to argue that former section 7507 itself imposes a
continuing obligation, but instead suggests Howard Jarvis stands for the proposition that,
if an authority is void for failing to comply with a state law, a new limitations period to
challenge the original failure is triggered every time money is collected or disbursed
pursuant to that authority. Plaintiff construes the case too broadly. As discussed above,
significant portions of the court’s analysis rely on statutory language imposing a
continuing obligation, not present here. We acknowledge that the opinion includes
broader language suggesting the limitations period for a challenge to the validity of a tax
measure based on a violation of any statute can be brought within three years after any
collection of the tax. (Howard Jarvis, supra, 25 Cal.4th at p. 825 [“Cities and counties
must eventually obey the state laws governing their taxing authority and cannot continue
indefinitely to collect unauthorized taxes.”]; ibid. [“[W]here the three-year limitations
period for actions on a liability created by statute (Code Civ. Proc., § 338, subd. (a))
applies, and no other statute or constitutional rule provides differently, the validity of a
tax measure may be challenged within the statutory period after any collection of the tax,
regardless of whether more than three years have passed since the tax measure was
adopted.”].) But the actual analysis hinges on the nature of the obligation imposed by
Proposition 62 itself. (See In re Ricardo P. (2019) 7 Cal.5th 1113, 1126 [“It is true that
our opinion in [a prior case] contains some expansive language . . . . But our reasoning
reflected the specific circumstances presented by the [facts of the case].”].) Moreover,
even this broader language is limited to challenges to tax measures. The court’s
reasoning relied in part on factors unique to such measures, to wit, the availability of a
refund action within a certain limitations period after the collection of a tax, and the
ability to challenge the validity of the underlying tax measure in such an action. (Howard
Jarvis, at pp. 820–822.) Plaintiff cites no comparable statute authorizing actions to
challenge pension payments (or other county expenditures) and setting forth separate
limitations periods for such actions.
742
The pension cases relied on by Plaintiff do not alter this analysis. The cases
discussed by Plaintiff finding certain pension benefits invalid do not involve statute of
limitations defenses and are therefore inapposite. (E.g., San Diego City Firefighters,
Local 145 v. Board of Administration, etc. (2012) 206 Cal.App.4th 594; Medina v. Board
of Retirement (2003) 112 Cal.App.4th 864.) Cases involving actions brought by
pensioners rely on the proposition that “ ‘[t]he right to receive periodic payments under a
pension is a continuing one [citation], and any time limitation upon the right to sue for
each instalment necessarily commences to run from the time when that instalment
actually falls due.’ ” (Abbott v. City of Los Angeles (1958) 50 Cal.2d 438, 462; see also
Dryden v. Board of Pension Commrs. (1936) 6 Cal.2d 575, 580–581.) That a pensioner
has a continuing right to a pension does not mean that Section 7507 imposes a continuing
obligation on the County.
In Baxter v. State Teachers’ Retirement System (2017) 18 Cal.App.5th 340
(Baxter), the California State Teachers’ Retirement System (CalSTRS) discovered a
years-long error in the monthly benefit calculation of certain retired teachers resulting in
overpayments. (Id. at p. 347.) The teachers argued the applicable statute of limitations
barred CalSTRS from bringing an action to recoup past overpayments and reduce future
benefits. (Ibid.) The Court of Appeal held that, although CalSTRS’ action was untimely,
the continuous accrual doctrine applied. (Id. at p. 382.) The court relied on the
continuing nature of the underlying obligation: “The right of each of the Teachers to
receive monthly payments, and the obligation of CalSTRS to disburse them, are
continuing ones that accrue when such payments become due.” (Id. at p. 380; accord,
Blaser v. State Teachers’ Retirement System (2019) 37 Cal.App.5th 349, 367–368.)
Contrary to Plaintiff’s suggestion, the court’s reasoning does not apply equally here. The
continuing obligation of CalSTRS was to pay correctly calculated benefits—an obligation
that recurred with every pension payment made. In contrast, the County’s obligation at
issue here was to procure and make public an actuarial statement before authorizing
pension increases. Although Plaintiff argues the alleged violation of this obligation
843
rendered the pension increases void, the underlying obligation itself does not recur each
time pension benefits are paid.5
In sum, former section 7507 imposes a duty on government entities to secure and
make public an actuarial statement before approving pension increases. This duty is
imposed at the time of approval and is not “a continuing one, susceptible to recurring
breaches . . . .” (Aryeh, supra, 55 Cal.4th at p. 1200; see also Howard Jarvis, supra, 25
Cal.4th at pp. 823–824.) Unlike the statutory language at issue in Howard Jarvis, there is
no basis to construe former section 7507 as imposing an additional and separate duty to
not pay increased pension benefits pursuant to a pension increase authorized without
compliance with its requirements regarding actuarial statements. To find such a
requirement outside of former section 7507—by finding every allegedly void government
action subject to ongoing challenge pursuant to the continuous accrual theory—would
ignore the direction that, “[t]o determine whether the continuous accrual doctrine applies
here, we look . . . to the nature of the obligation allegedly breached.” (Aryeh, at p. 1200.)
Accordingly, we find the continuous accrual doctrine does not trigger a new limitations
period every time retirement benefits are paid pursuant to the increased pension benefits
approved in 2002 and 2003.
II. Delayed Discovery/Estoppel
Plaintiff alternatively argues that his action is timely under the delayed discovery
and estoppel doctrines. “[T]he discovery rule, where applicable, ‘postpones accrual of a
cause of action until the plaintiff discovers, or has reason to discover, the cause of
action.’ ” (Aryeh, supra, 55 Cal.4th at p. 1192.) “A plaintiff relying on the discovery
5 Plaintiff’s reliance on a constitutional provision prohibiting gifts of public funds (Cal. Const., art. XVI, § 6) and on a statute barring county payments on a void contract (§ 23006), is unavailing. Plaintiff contends that because these provisions impose ongoing obligations, it was unnecessary for the Legislature to impose an ongoing obligation in former section 7507. We decline to construe these provisions as effectively extending the continuous accrual doctrine to any alleged violation of a one-time statutory obligation that results in an expenditure of public funds. To do so would contravene the direction in Howard Jarvis and Aryeh that the continuous accrual doctrine looks to the underlying obligation allegedly violated—here, the obligation imposed by former section 7507.
944
rule must plead ‘ “(1) the time and manner of discovery and (2) the inability to have
made earlier discovery despite reasonable diligence.” ’ [Citation.] Plaintiffs have an
obligation to plead facts demonstrating reasonable diligence.” (WA Southwest 2, LLC v.
First American Title Ins. Co. (2015) 240 Cal.App.4th 148, 157.) “A party may be
equitably estopped to assert the statute of limitations when his or her conduct induced
another not to file a lawsuit within the applicable limitations period.” (Walker v. City of
San Clemente (2015) 239 Cal.App.4th 1350, 1370.)
All of the statutes allegedly violated required the County to provide specified
notice at a public meeting of the board of supervisors. (Former section 7507 [“[L]ocal
legislative bodies shall secure the services of an enrolled actuary to provide a statement
of the actuarial impact upon future annual costs before authorizing increases in public
retirement plan benefits. . . . [¶] The future annual costs as determined by the actuary
shall be made public at a public meeting at least two weeks prior to the adoption of any
increases in public retirement plan benefits.” (italics added)]; see also §§ 23026 [“[T]he
board of supervisors shall make public, at a regularly scheduled meeting of the board, all
salary and benefit increases that affect either or both represented employees and
nonrepresented employees. . . . Notice shall occur prior to the adoption of the salary or
benefit increase, and shall include an explanation of the financial impact that the
proposed benefit change or salary increase will have on the funding status of the county
employees’ retirement system.” (italics added)], 31515.5 [same], 31516 [“The board of
supervisors, in compliance with Section 7507, shall secure the services of an enrolled
actuary to provide a statement of the actuarial impact upon future annual costs before
authorizing increases in benefits. . . . [¶] The future annual costs as determined by the
actuary shall be made public at a public meeting at least two weeks prior to the adoption
of any increases in benefits.” (italics added)].) Any violation would therefore be apparent
from the public records of the County Board of Supervisors’ meetings from 2002 and
2003. (See International Longshoremen’s and Warehousemen's Union v. Los Angeles
Export Terminal, Inc. (1999) 69 Cal.App.4th 287, 293 [“The Brown Act (§ 54950 et
seq.), adopted in 1953, is intended to ensure the public’s right to attend the meetings of
1045
public agencies. [Citation.] To achieve this aim, the Act requires, inter alia, that an
agenda be posted at least 72 hours before a regular meeting and forbids action on any
item not on that agenda.”].)
Plaintiff fails to allege (or argue) facts demonstrating why, under such
circumstances, he was unable to discover the alleged violation within the limitations
period. He has thus failed to meet his burden under the discovery rule. Moreover, “a
discovery rule is not appropriate, where as here, a public agency’s violation of a statute is
a matter of public record and the violation is being asserted by a plaintiff which has no
direct beneficial interest in the outcome of the litigation.” (Hogar Dulce Hogar v.
Community Development Commission (2003) 110 Cal.App.4th 1288, 1297.)
Plaintiff argues the public records “were superseded by the subsequent
misrepresentations of Respondents,” but the only cited misrepresentations were made in
response to a 2012 grand jury report on the issue. This conduct took place well outside of
the limitations period and therefore does not estop Respondents from invoking the statute
of limitations. (Walker v. City of San Clemente, supra, 239 Cal.App.4th at p. 1370
[defendant’s conduct “several years after the limitations period already had expired” was
insufficient to warrant estoppel].)
Accordingly, we conclude that neither delayed discovery nor estoppel applies to
toll the statute of limitations.6
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs.
6 Because of our conclusion, we need not resolve several issues raised by the parties: whether the 2012 grand jury report was sufficient to put Plaintiff on inquiry notice of the alleged violation; whether any County officials were fiduciaries and/or had a conflict of interest with respect to the County’s response to the grand jury report; whether Plaintiff failed to preserve certain claims; and whether the dismissal in favor of the Sonoma County Law Enforcement Association can be affirmed on alternative grounds. In addition, because our resolution of the issue relies solely on undisputed facts, we need not address the parties’ dispute about judicial notice or Plaintiff’s contention that the trial court relied on its own personal knowledge in resolving the issue.
1146
Superior Court of Sonoma County, No. SCV261187, Hon. Rene Chouteau, Judge.
Robinson & Robinson, Jeffrey A. Robinson and Charles R. Patterson for Plaintiff and Appellant.
Colantuono, Highsmith & Whatley, Michael G. Colantuono, Jon R. di Cristina and Conor W. Harkins for Defendants and Respondents County of Sonoma, Sonoma County Board of Supervisors, Erick Roeser, Christina Cramer, Bruce Goldstein, and Sheryl Bratton.
Nossaman, Ashley K. Dunning and Jennifer L. Meeker for Defendant and Respondent Sonoma County Employees’ Retirement Association and Julie Wyne.
Mastagni Holstedt, David P. Mastagni and Kenneth E. Bacon for Defendant and Respondent Sonoma County Law Enforcement Association.
1348
West’s Annotated California Codes
Government Code (Refs & Annos)
Title 1. General
Division 7. Miscellaneous
Chapter 21. Public Pension and Retirement Plans (Refs & Annos)
This section has been updated. Click here for the updated version.
West’s Ann.Cal.Gov.Code § 7507
§ 7507. Actuarial impact upon future annual costs prior toauthorizing increases in benefits; use of enrolled actuary
Effective: [See Text Amendments] to December 31, 2008
The Legislature and local legislative bodies shall secure the services of an
enrolled actuary to provide a statement of the actuarial impact upon future
annual costs before authorizing increases in public retirement plan benefits.
An “enrolled actuary” means an actuary enrolled under subtitle C of Title
III of the federal Employee Retirement Income Security Act of 19741 and
“future annual costs” shall include, but not be limited to, annual dollar
increases or the total dollar increases involved when available.
The future annual costs as determined by the actuary shall be made public
at a public meeting at least two weeks prior to the adoption of any increases
in public retirement plan benefits.
50
·1· · · · · · · MR. ROBINSON:· Thank you.
·2· · · · · · · MR. COLANTUONO:· Good morning, Michael
·3· ·Colantuono, appearing on behalf of the County.
·4· · · · · · · · · ·To start with just assignments
·5· ·question, how could your tentative be made better, I
·6· ·don't have a lot of suggestions.· I think it is a
·7· ·thoughtful and wise wending of a cluttered path.
·8· · · · · · · · · ·I do encourage you to publish your
·9· ·opinion, however.· It's not clear, from your tentative,
10· ·whether you intend to.· The reason for that is that
11· ·there are two grand jury reports out there, one in
12· ·Sonoma County, one in Marin County, studying this same
13· ·problem, that have fomented a bunch of cases, at least
14· ·one of which is pending in this court, in addition to
15· ·this case.
16· · · · · · · JUSTICE SIMONS:· Well, what about 23006? I
17· ·now realize that actually, there were two paragraphs in
18· ·the opening brief, as well as a sentence or two in the
19· ·reply.· What -- what -- what's the weakness in that
20· ·argument raised by the appellant?
21· · · · · · · MR. COLANTUONO:· The tentative does address
22· ·the suggestion that a void government action is
23· ·perpetually open to litigation, and 23006 is just one
24· ·more expression of that idea, so I think you have
25· ·covered it, without citing it, but it is not true that
53
·1· ·these payments, and the retirement board, as
·2· ·fiduciaries, is paying these benefits.· That's their
·3· ·obligation, and they were doing so, as required by law.
·4· · · · · · · · · ·So we respectfully request, Your
·5· ·Honors, as well -- we do agree with the County's
·6· ·attorney on the publication point.· We think it's very
·7· ·important that this case be published, to put an end to
·8· ·some of this litigation that is occurring against
·9· ·retirement boards, trying to find different ways to
10· ·unwind benefits that were properly granted, albeit
11· ·perhaps, in retrospect, different parties who'd like to
12· ·unwind them are saying that public notice wasn't
13· ·provided.· That is -- that is not an appropriate means
14· ·by which to unwind retirement benefits that are being
15· ·paid to the retirees of Sonoma County.
16· · · · · · · · · ·I'm happy to respond to any questions.
17· · · · · · · JUSTICE SIMONS:· We have none.
18· · · · · · · MS. DUNNING:· Thank you.
19· · · · · · · JUSTICE SIMONS:· Thank you.
20· · · · · · · · · ·And, Counsel, you have two minutes.
21· · · · · · · MR. BACON:· I won't even need that much,
22· ·Your Honors.· I'll just -- very briefly, my -- Ken
23· ·Bacon.· I represent the Sonoma County Law Enforcement
24· ·Association.
25· · · · · · · · · ·I agree with the comments that
54
·1· · · · · · · I, RENAE E. LOPEZ, a Certified Shorthand
·2· ·Reporter of the State of California, do hereby certify:
·3· · · · · · · That a record of the audio proceedings was
·4· ·made by me using machine shorthand, which was
·5· ·thereafter transcribed under my direction; that the
·6· ·foregoing transcript is a true record of the audio
·7· ·transcription.
·8· · · · · · · I further certify that I am neither
·9· ·financially interested in the action nor a relative or
10· ·employee of any attorney or any party to this action.
11· · · · · · · IN WITNESS WHEREOF, I have this date
12· ·subscribed my name.
13
14· ·Dated: January 13, 2020
15· · · · · · · · · · · ·________________________________· · · · · · · · · · · · ·Renae E. Lopez16· · · · · · · · · · · · CSR No. 12142
17
18
19
20
21
22
23
24
25
55
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF ORANGE
I am employed in the county of Orange, State of California. I am over
the age of 18 and not a party to the within action; my business address is
2301 Dupont Drive, Suite 530, Irvine, California 92612.
On 1/17/2020, I served the documents described as PETITION FOR
REVIEW on interested parties in this action, as follows:
Kenneth E. Bacon, Esq.
David P. Mastagni, Esq.
Mastagni Holstedt, A.P.C.
Civil Litigation Department
1912 I Street
Sacramento, CA 95811
PH: 916-446-4692 / FX: 916-447-4614
(Electronically Served Via EFS)
Ashley K. Dunning, Esq.
Nossaman LLP
50 California Street, 34th Floor
San Francisco, CA 94111
PH: 415-398-3600 / FX: 415-398-2438
(Electronically Served Via EFS)
Michael G. Colantuono, Esq.
Jon R. di Cristina
Colantuono, Highsmith & Whatley, PC
420 Sierra College Drive, Suite 140
Grass Valley, CA 95945-5091
PH: 530-432-7357 / FX: 530-432-7356
(Electronically Served Via EFS)
California Court of Appeal
First Appellate District, Division 5
350 McAllister Street
San Francisco, CA 94102
PH: 415-865-7300
(Electronically Served Via EFS)
(Attorneys for Respondent
Sonoma County Law
Enforcement Association)
(Attorneys for Respondents
Sonoma County
Employees’ Retirement
Association (SCERA))
(Attorneys for Sonoma
County Respondents)
(California Appellate
Court)
56
Hon. René A. Chouteau
c/o Clerk of Court
Sonoma County Superior Court
3055 Cleveland Avenue
Santa Rosa, California 95403
Civil and Family Law Courthouse
(Served Via Golden State Overnight)
(Trial Judge)
Supreme Court, State of California
350 McAllister Street
San Francisco, CA 94102
(Electronically Served Via EFS and
Golden State Overnight)
(California Supreme
Court)
[ ] (BY MAIL)[C.C.P. § 1013(a)(1)Person Depositing In Mail] I
deposited an envelope, containing the listed documents, addressed to the
persons listed above as “Sent via U.S. Mail” in the mail at Irvine, California.
The envelope was mailed with postage thereon fully prepaid.
[X] I caused the above documents to be submitted to the Court for filing
and electronic service on the persons listed above as served “Electronically
Served Via EFS” through the EFS [electronic filing system operated by
TrueFiling] in accordance with (Cal. Rule of Court, rule 8.78(a)) and by
Golden State Overnight where indicated.
Executed on January 17, 2020, at Irvine, California
I declare under penalty of perjury that I am employed in the office of
a member of the bar of this Court at whose direction the service was made
and that the foregoing is true and correct.
Charles Patterson /s/ Charles Patterson
(Type or print name) (Signature)
57