Cal. Rest. Mgmt. Sys. v. City of San Diego, D056695.
| Decision Date | 24 August 2011 |
| Docket Number | No. D056695.,D056695. |
| Citation | 11 Cal. Daily Op. Serv. 6564,2011 Daily Journal D.A.R. 7913,126 Cal.Rptr.3d 160,195 Cal.App.4th 1581 |
| Court | California Court of Appeals Court of Appeals |
| Parties | CALIFORNIA RESTAURANT MANAGEMENT SYSTEMS, Plaintiff and Appellant, v. The CITY OF SAN DIEGO, Defendant and Respondent. |
OPINION TEXT STARTS HERE
Harrison Patterson & O'Connor, Harry W. Harrison, James R. Patterson, San Diego, and Alisa A. Martin for Plaintiff and Appellant.
Jan I. Goldsmith, City Attorney, Donald Worley, Assistant City Attorney, and David J. Karlin, Deputy City Attorney, for Defendant and Respondent.
In March 2004 The City of San Diego (City) publically announced that the rate structure it had been using to bill users of City's wastewater system had resulted in excessive charges to several classes of users, including residential customers and some commercial and industrial customers. A residential customer, Mr. Shames, timely filed a governmental claim seeking a refund on behalf of residential customers who were overcharged and, after the claim was denied, filed a proposed class action lawsuit on behalf of that class (the Shames action).
After the Shames action was settled and dismissed, California Restaurant Management Systems (CRMS) filed its own governmental claim and then filed the instant putative class action on behalf of restaurant owners. City moved for summary judgment, contending CRMS's governmental claim was not timely filed and the failure to satisfy the jurisdictional prerequisite required dismissal of CRMS's proposed class action lawsuit. CRMS opposed the summary judgment motion, arguing the pendency of the Shames action tolled all limitations periods, including the period for filing a governmental claim. The trial court disagreed, and entered judgment in favor of City.
This appeal presents a question of first impression: whether the “equitable tolling” principles outlined in American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713( American Pipe ) and Crown, Cork & Seal Co., Inc. v. Parker (1983) 462 U.S. 345, 103 S.Ct. 2392, 76 L.Ed.2d 628( Crown Cork ) apply to extend the period within which a claim must be filed under the Government Claims Act (Gov.Code, § 810 et seq.). 1 We conclude, on the facts presented here, CRMS's time to file its governmental claim on behalf of restaurants was not tolled by the Shames action, and therefore we affirm the judgment.
City operates a regional wastewater treatment and disposal system. In late March 2004 City issued a report that its wastewater user rate charge system did not include any specific cost recovery component for organic materials. The report stated that, as a result of this omission, residential customers and certain commercial and industrial customers who discharged lower levels of organic materials into the sewer system were paying “a disproportionately high percentage of the overall costs of the Wastewater System than is appropriate.”
On April 30, 2004, Mr. Shames filed a governmental claim pursuant to sections 910 and 945.4, on behalf of himself and a putative class composed of “residential property owners who are, or have been, customers of the City's water and sewer services (‘the putative class').” The claim asserted a demand for a refund for alleged overcharges paid by the putative class, alleging that “certain commercial and industrial customers discharge wastewater with relatively higher concentration of organic matters than residential customers do,” and that “[b]ecause the [wastewater] rates charged by the City do not account for organics, ... residential customers have been charged disproportionately higher rates than commercial customers” in violation of the California Constitution.
The City denied the claim on May 14, 2004. Shames promptly filed his class action seeking refunds for residential property owners. The Shames action alleged that “[c]ommercial and industrial customers discharge wastewater with relatively higher concentration of organic pollutants than residential customers,” that “[r]esidential property owners impact the City's sewer system at lower rates than commercial users because they discharge less organic pollutants,” and that City “does not account for this disproportionate impact when charging sewer fees.” Shames, defining the class as “[a]ll persons who own or have owned residential property [during the class period] and who have been charged sewer fees,” alleged there were common issues of fact and law as to residential property owners' rights and sought a refund on their behalf. The Shames action alleged he had satisfied the governmental claim requirements because he had filed a claim “on behalf of himself and all City of San Diego residential property owners seeking a refund of sewer fee overcharges [which] met the requirements of [Government Code sections 910 and 945.4].”
In mid–2004 the California Restaurant Association (CRA), a trade association that advocates on behalf of restaurants and related businesses, contacted Shames's attorney (Mr. Benink) to ask whether Benink could amend the Shames action to include food establishments within the class action.2 Benink replied that it appeared that “some segments of commercial customers may have been overcharged in the same manner [as residential customers],” and that Benink had decided to amend the complaint to expand the class “to include all customers who were overcharged, rather than limiting it to residential customers.” Benink observed that CRA's members “may be part of that class, if and when it is certified, and may potentially participate in any benefit we achieve for the class through this lawsuit.” However, Benink cautioned his firm was not agreeing to specifically represent either CRA or any of its members, and they should seek their own attorney if they wanted representation.
In September 2004 Shames filed an amended complaint. He alleged that “[c]ommercial and industrial customers discharge wastewater with relatively higher concentration of organic pollutants than residential and other commercial customers do,” and that because the rates charged by City “do not account for organic pollutants, ... some customers have been charged disproportionately higher rates than commercial and industrial customers with higher usage.” The amended complaint proposed an expanded class definition to define the putative class as “[c]ustomers ... who, based on their relative contributions to overall system handling and processing requirements, ... have paid or are paying, during the time period June 16, 2000[,] through October 1, 2004, a disproportionately higher percentage of the costs” (fn. omitted) of the wastewater system. However, Shames did not file an amended governmental claim seeking a refund on behalf of the newly defined class, and did not file a new governmental claim seeking a refund on behalf of the expanded class.
In April 2005 Shames filed his motion for class certification. Shames sought certification of a class defined only as single family residential sewer customers.3 While the certification motion was pending, Shames and City commenced and pursued a lengthy mediation process that in late 2006 resulted in a tentative settlement. Shames filed a motion for preliminary approval of the settlement in December 2006, and posted a notice to the class in February 2007.
In the spring of 2007, prior to the court's ruling on the final approval of the class settlement, CRA sought leave to amend the Shames action to (1) add CRA as a class representative and (2) have new attorneys appointed as class counsel. After the court denied that motion,4 CRMS filed a motion for leave to amend the Shames action to allow CRMS to be a class representative. CRMS (along with CRA) also filed objections to the proposed settlement because it would prejudice the remaining putative members of the class not included in the settlement class. The court certified the class for residential customers, and then approved the settlement and dismissed the Shames action.
Four days after dismissal of the Shames action, CRMS filed a governmental claim for wastewater rate refunds alleging City overcharged food establishments for sewer services. The claim alleged that food establishments were required to use grease traps and were barred from using food grinders/garbage disposals, but that wastewater loadings for food establishments were not adjusted to recognize these pretreatment measures, and therefore food establishments paid a disproportionately higher cost for sewer services. CRMS asserted that, as a member of the putative class in the Shames action, its claim was included within the Shames action and its cause of action was tolled during its pendency. It also asserted it had substantially complied with the administrative claim requirement via the claim asserted by Shames, and that City had waived the administrative claim requirement or, in the alternative, that any administrative claim time requirement was tolled during the pendency of the Shames action under principles of equitable estoppel. City denied the claim because it was not filed within one year of the accrual of CRMS's cause of action.
CRMS filed the present action in August 2007 as a putative class action on behalf of itself and other food establishments. The action asserted (1) any administrative claim requirement had been substantially complied with; (2) in the alternative, City waived and/or was equitably estopped from asserting a defense based on failure to exhaust administrative remedies because City had not raised that argument when the Shames complaint was amended to expand the class definition; and (3) in the alternative, any administrative claim requirement had been equitably tolled during the pendency of the Shames action. 5
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