Jordan v. Dept. of Motor Vehicles
Decision Date | 22 July 2002 |
Docket Number | No. C038343.,No. C038339.,No. C038735.,C038339.,C038343.,C038735. |
Citation | 100 Cal.App.4th 431,123 Cal.Rptr.2d 122 |
Court | California Court of Appeals Court of Appeals |
Parties | Anna JORDAN et al., Plaintiffs and Appellants, v. CALIFORNIA DEPARTMENT OF MOTOR VEHICLES et al., Defendants and Appellants. State of California et al., Plaintiffs and Appellants, v. Anna Jordan et al., Real Parties in Interest and Appellants. Dean Andal et al., Plaintiffs and Appellants, v. Milberg, Weiss, Bershad, Hynes & Lerach et al., Defendants and Respondents. |
Eugenia Castruccio Salamon for Plaintiffs and Appellants in C038343 and for Defendants and Appellants in C038339.
In these consolidated appeals we determine whether the trial court erred in vacating the arbitration award of $88,479,713 for fees and expenses in settlement of Jordan v. Department of Motor Vehicles (1999) 75 Cal.App.4th 449, 89 Cal.Rptr.2d 333 (Jordan), the case that held the smog impact fee was unconstitutional. We also address a challenge to the validity of Revenue and Taxation Code section 6909, subdivision (b) (section 6909(b)), the statute that authorized the arbitration.
Although we recognize the limited scope of judicial review of an arbitration award under Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10 Cal.Rptr.2d 183, 832 P.2d 899 (Moncharsh), we find this case falls in the limited and exceptional circumstance justifying judicial review of an award that violates an explicit expression of public policy. An award of over $88 million in public monies pursuant to statutory authority for an arbitration "in the settlement of an $18 million dispute is an unconstitutional gift of public funds. As such it violates both section 6909(b), which authorizes the arbitration, and the public policy set forth in article XVI, section 6 of the California Constitution, prohibiting gifts of public funds. We affirm the judgment vacating the arbitration award.
Subject to the implicit limitation that the arbitration award not exceed $18 million, we find section 6909(b) is not unconstitutional as a delegation of the Legislature's power to appropriate money. We affirm the judgment dismissing the declaratory relief action.
In 1990, the Legislature enacted Revenue and Taxation Code sections 6261 through 6263, creating the motor vehicle smog impact fee. (Stats. 1990, ch. 453, § 1, pp.1955-1956.) Under this statutory scheme, a $300 fee was imposed to register motor vehicles in California if the vehicle was last registered in another state, unless the vehicle was California certified. (Former Rev. & Tax.Code, § 6262, subd. (a).)
Four individuals (the Jordan plaintiffs) moved to California, registered their out-of-state vehicles, and each paid the $300 smog impact fee. Challenging the constitutionality of the smog impact fee, they sought refunds which were denied. They filed a complaint seeking refunds of the smog impact fees and a declaration that the smog impact fee was unconstitutional. (Jordan, supra, 75 Cal.App.4th at p. 456, 89 Cal.Rptr.2d 333.)
The trial court declared the motor vehicle smog impact fee unconstitutional under the commerce clause of the United States Constitution and under article XIX of the California Constitution. It ordered the State to refund the fee to the Jordan plaintiffs, to enter a claim for refund for those who paid the fee after entry of judgment, and to file claims for refund or to set up and file a class action for those who paid the fee on or after September 19, 1992 (three years before the initial complaint), but prior to entry of judgment. (Jordan, supra, 75 Cal.App.4th at p. 459, 89 Cal.Rptr.2d 333.)
In a subsequent proceeding, the trial court found the efforts of the Jordan plaintiffs and their counsel resulted in creation of a common fund of $363,886,398.44. The court awarded counsel five percent of this fund or $18,194,319.92 in fees and expenses. (For ease of reference we shall refer to this amount as simply $18 million.)
On appeal, this court upheld the trial court's finding that the motor vehicle smog impact fee was unconstitutional. (Jordan, supra, 75 Cal.App.4th at pp. 464, 466, 89 Cal.Rptr.2d 333.) We found, however, that the trial court exceeded its jurisdiction in fashioning a remedy for taxpayers who were not properly before it. (Id. at p. 468, 89 Cal.Rptr.2d 333.) The judgment was reversed with respect to orders that refunds be filed or paid to anyone other than the four Jordan plaintiffs. (Id. at p. 470, 89 Cal.Rptr.2d 333.)
In response to the Jordan decision, supra, 75 Cal.App.4th 449, 89 Cal.Rptr.2d 333, the Governor announced: He further announced he had asked the Department, of Motor Vehicles and the Department of Finance to prepare and present to the Legislature a workable plan to refund the fees collected. "I believe everyone who paid the fee is entitled to a refund."
In the meantime, the State appealed from the fee award. Neither the Jordan plaintiffs nor their attorneys cross-appealed. The matter was fully briefed and set for oral argument on February 18, 2000. At the request of the parties, argument was continued to allow the parties to settle the matter through mediation. On May 9, 2000, the parties wrote this court, requesting a second continuance because the parties had agreed to arbitration. The letter stated: "They are currently in the process of working out the detailed terms of the arbitration."
On June 8, 2000, the Governor signed two bills passed by the Legislature: Assembly Bill No. 809 (1999-2000 Reg. Sess.) and Senate Bill No. 215 (1999-2000 Reg. Sess.). (Stats.2000, chs. 31 & 32.) The Legislature found and declared that approximately 1,700,000 vehicle owners paid the smog impact fee, for a total of approximately $500,000,000. In Jordan, supra, 75 Cal.App.4th 449, 89 Cal.Rptr.2d 333, the court declared the smog impact fee unconstitutional. The Governor announced the State would not appeal the Jordan decision and would refund the smog impact fee plus interest to all who paid it.
The express legislative intent of these two bills was to do all of the following: (Stats. 2000, ch. 31, § 1(e); Stats.2000, ch. 32, § 1(e).)
Senate Bill No. 215 added Revenue and Taxation Code section 6909. (Stats.2000, ch. 32, § 5.) That section provided for the creation of the Smog Impact Fee Refund Account in the amount of $665,261,000. (Rev. & Tax.Code, § 6909, subd. (a).) Section 6909(b) provides: Any amounts remaining in the account on or after June 30, 2004, shall revert to the General Fund. (Rev. & Tax. Code, § 6909, subd. (d).)
Counsel for the Jordan plaintiffs (Attorneys) and the State entered into an agreement, entitled "Agreement To Arbitrate Amount Of Attorneys' Fees." The agreement recites that fees and expenses (Fees) were awarded in the superior court and that award is the subject of an appeal by the State. "Rather than pursue that appeal and possible...
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