Candid Enterprises, Inc. v. Grossmont Union High School Dist.

• Decision Date: 21 December 1983
• Citation: 197 Cal.Rptr. 429,150 Cal.App.3d 28
• Parties: , 14 Ed. Law Rep. 1028 CANDID ENTERPRISES, INC., Respondent, v. GROSSMONT UNION HIGH SCHOOL DISTRICT, et al., Appellant. Civ. 28012.
• Court: California Court of Appeals Court of Appeals

Page 429

197 Cal.Rptr. 429

150 Cal.App.3d 28, 14 Ed. Law Rep. 1028

CANDID ENTERPRISES, INC., Respondent, v. GROSSMONT UNION HIGH SCHOOL DISTRICT, et al., Appellant.

Civ. 28012.

Court of Appeal, Fourth District, Division 1, California.

Dec. 21, 1983.

For Opinion on Hearing, see 218 Cal.Rptr. 303, 705 P.2d 876.

Fiore & Nordberg and Donald E. Smallwood, Newport Beach, for defendant and appellant.

Dorazio, Barnhorst, Goldsmith & Bonar, Joel Incorvaia, San Diego, and Louise M. Quintard, Oakland, for plaintiff and respondent.

COLOGNE, Acting Presiding Justice.

Grossmont Union High School District and its governing board appeal the judgment (order following a petition for writ of mandate) which ordered the refund of certain school impact fees assessed against Candid Enterprises, Inc., in connection with its proposed condominium development project in Santee.

Candid is a business engaged in developing condominiums and single family residences and was engaged in such a program within the Santana High School attendance boundaries. This development, known as Lakeview Carlton Hills No. 6 Project (Project), was originated by Carlton Santee Corporation (Carlton) but purchased by Candid on November 3, 1978. Candid's rights are as successor in interest to Carlton.

In February 1974, the County of San Diego adopted "Policy I-43" which provided:

"That the proponent of the development [must] present evidence satisfactory to the Planning Commission, at the time of its consideration of the matter, and to the Board of Supervisors at the time of its consideration of the matter that the required public school services will in fact be provided concurrent with the need."

The county would accept as evidence of compliance a letter from the local school district stating sufficient school facilities would be available.

In 1977, it was evident any new developments within the District would result in overcrowding in the high school. To meet the problem on November 21, 1977, the District revised its policy "FF" to read as follows:

"It is the responsibility of the Grossmont Union High School District to provide educational facilities for the programs offered to the students of the District. It is the intent of the Board to provide for additional facilities through taxation of the District as a whole as well as through assessment of specific groups or areas. Such assessment is to be levied against all new residential developments.

"District cooperation with developers and other public agencies is to be established and maintained within existing laws and Board policies."

Pursuant to this policy, the District began assessing all residential developments $1,000 per single family detached dwelling and $500 for all other types of dwelling. "Secured agreements" were executed with the District for payment of such fees to the District at the time the building permits were to be issued. A deed of trust was recorded as a lien on the land to guarantee payment. The monies collected under Policy I-43 secured agreements were used for both temporary and permanent school facilities.

On March 14, 1978, Carlton entered into such an agreement for this project and agreed to pay a total of $68,000.

Effective January 1, 1978, the California Legislature had enacted the School Facilities Act (Act) (Gov.Code, §§ 65970-65981). This Act authorized cities and counties to adopt ordinances requiring developers to pay fees for elementary and high school classrooms where overcrowded conditions existed in the area. Such fees were to be assessed for the limited purpose of providing interim, temporary school facilities (Gov.Code, §§ 65974, 65980). ¹

Pursuant to the Act, on March 28, 1978, the San Diego Board of Supervisors enacted Ordinance No. 5120 authorizing assessment of such fees beginning May 27, 1978. Following this enactment, the District began assessing fees and using the proceeds for temporary facilities as provided by law. However, it continued to collect and use fees which had been contracted for under the secured agreements signed earlier for construction of permanent as well as temporary school facilities.

Enrollment in the District began to decline in 1979 and, on December 19, 1979, the board rescinded its resolution regarding overcrowding and ceased collecting school fee assessments from developers as of February 1, 1980. ² Its action was stated to be without effect on existing agreements with developers and it reserved the right to require fees from future developments which might upset the balance of available facilities. At this time, the District had some 24 secured agreements outstanding with potential payments to the District amounting to $4,716,000. In November 1980, when Candid obtained building permits to begin the first 47-unit phase of its project, the District required it to pay the fees contracted for and, on February 18, 1981, Candid paid $23,500 under protest to the District. The payment was in accordance with the terms of their agreement. Candid's demand for refund was rejected by the District and the board. A writ of administrative mandamus (Code of Civil Procedure, § 1094.5) and a statutory writ proceeding (Code of Civil Procedure, § 1085) were filed with the superior court and, after hearing, the court held (1) the board abused its discretion in rejecting Candid's request for refund because the board did not receive proper evidence and thus denied Candid a fair trial; (2) that pursuant to the School Facilities Act, the proceeds had to be used for temporary facilities to alleviate overcrowding and, since no overcrowding existed at the time of collection and since other developers would not be assessed fees, the collection from Candid denied it equal protection of the law; (3) fees paid under protest should be returned; and (4) no further fees should be collected under Policy I-43.

The District appeals, contending first it was not required to give Candid an adjudicatory hearing so that review under Code of Civil Procedure section 1094.5 was improper.

The Education Code provides the board is a proper body to address issues directly relating to school district business (Ed.Code, § 35145.5) and, as such, is required to provide a forum for matters of school policy. Under due process requirements, the board is required to afford the public a full and fair hearing.

This court has held that when a government entity imposes an invalid condition in a building permit, the proper method to test the validity of the condition is in a proceeding in mandamus under Code of Civil Procedure section 1094.5 (Pfeiffer v. City of La Mesa, 69 Cal.App.3d 74, 76, 78, 137 Cal.Rptr. 804; see also Selby Realty Co. v. City of San Buenaventura, 10 Cal.3d 110, 128, 109 Cal.Rptr. 799, 514 P.2d 111). Here, the condition which the District sought to impose was a fee for additional school facilities ostensibly required because of overcrowding. The writ of mandamus, pursuant to Code of Civil Procedure section 1094.5, was an appropriate means of testing the validity of these fees being imposed on developers as a condition of granting the building permits.

The right to test the validity of a condition being imposed by the District is lost when the developer obtains the benefit offered by complying with the condition under protest and then seeks recovery of his damages. As we stated in McClain Western # 1 v. County of San Diego, 146 Cal.App.3d 772, at pages 776 to 777, 194 Cal.Rptr. 594:

"Ordinarily, the developer will not be permitted to obtain the benefit of going ahead with construction and subsequently litigating the validity of one of the conditions of the permit. There are critical distinctions from tax cases where the taxpayer may or must pay and sue for refund. The taxpayer does not pay the tax to obtain the permission of the government to go ahead with a project, make a sale, or realize a gain. A tax is imposed on an event, condition, or occurrence that exists or has taken place, and at the point in time the tax is imposed, the taxpayer has no further ability to make an election that the tax not be due. In the case of a condition of a permit, whether by payment or a fee, construction of offsite improvements, dedication, or otherwise, the applicant has the ability to elect to decline the benefits of the permit, and the fee, construction or dedication are not required. The County requires and is entitled to certainty in its fiscal affairs and budget procedures, and once the developer has accepted the benefits of the permit by constructing the project he will not be permitted to sue for refund or cancellation or reimbursement of the cost of compliance with the permit conditions.

"There is a further desirable effect of our continuing to adhere to the rule announced by this court in Pfeiffer [Pfeiffer v. City of La Mesa, 69 Cal.App.3d 74 . The decisions about fees to be imposed as conditions of permits are properly made by the County and the District, and the determination as to whether those decisions are lawful are most appropriately made under the standards and procedures applicable to a petition for mandamus rather than a suit at law potentially involving a jury trial."

In McClain, we found an exception where the county imposed the fee on a later phase of a development program when, from a practical economic point of view, the developer had committed himself to a program and could not wait to resolve, even by writ procedure, the legalities of the new fee imposed (id., at p. 777, 194 Cal.Rptr. 594). That is not the case here, since the fees were for the first phase of the project and the developer had from March 14, 1978, when it entered the agreement after the School Facilities Act became effective, to February 18, 1981, when it paid the fees under protest, to question the legality of the fee condition, but rather, chose to execute a contract to pay the fees and did so without undertaking any legal proceedings. It sat idly by when on December 19,...