City of Brentwood v. Dep't of Fin.

• Decision Date: 11 August 2020
• Docket Number: C086344
• Citation: 268 Cal.Rptr.3d 9,54 Cal.App.5th 418
• Parties: CITY OF BRENTWOOD et al., Plaintiffs and Appellants, v. DEPARTMENT OF FINANCE et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

54 Cal.App.5th 418

268 Cal.Rptr.3d 9

CITY OF BRENTWOOD et al., Plaintiffs and Appellants,

v.DEPARTMENT OF FINANCE et al., Defendants and Respondents.

C086344

Court of Appeal, Third District, California.

Filed August 11, 2020

Burke, Williams & Sorensen, J. Leah Castella, Megan A. Burke, Oakland; and Damien Brower, City Attorney, for Plaintiffs and Appellants.

Xavier Becerra, Attorney General, Thomas S. Patterson, Assistant Attorney General, Tamar Pachter and Anna Ferrari, Deputy Attorneys General, for Defendants and Respondents.

RAYE, P. J.

This case involves another effort by the City of Brentwood (Brentwood) to obtain reimbursement for construction costs incurred in five redevelopment projects. In City of Brentwood v. Campbell (2015) 237 Cal.App.4th 488, 188 Cal.Rptr.3d 88 ( Brentwood I ), we rejected Brentwood's contention that a statutory exception to the redevelopment dissolution statutes allowed the city to retain funds previously reimbursed under five public improvement agreements (PIA's) between Brentwood and its former redevelopment agency (RDA). ( Id. at pp. 500-505, 188 Cal.Rptr.3d 88.) In this case, Brentwood seeks payment for expenses as yet unreimbursed, contending that the PIA's are "enforceable obligations" under Health & Safety Code section 34191.4, subdivision (b)(1),¹ a 2015 amendment to the dissolution statutes. Under section 34171, subdivision (d)(2), a reimbursement agreement between a city and a former RDA would not be an enforceable obligation. The amendment created an exception for a "loan agreement" ( § 34191.4, subd. (b)(2) ), defined to include an agreement "under" which the city "contracted with a third party on behalf of the former redevelopment agency for the development of infrastructure" and "the former redevelopment agency was obligated to reimburse the city ... for the payments made by the city ... to the third party." ( § 34191.4, subd. (b)(2)(C)(i).)²

Brentwood contends that third party construction contracts for the five projects—all but a small fraction of which preceded execution of the PIA's—were "under" the PIA's within the meaning of section 34191.4, subdivision (b)(2)(C)(i). The trial court ruled that "[i]n order for the contracts to have been ‘under’ the PIAs and on behalf of the RDA, the PIAs needed to already exist." We agree. In this context, "under" means "pursuant to" or "by reason of the authority of," which calls for the construction contracts to follow the reimbursement agreement. The 2015 amendment provides an exception to the general rule that agreements between a city and its former RDA are not "enforceable obligations" where a city has executed third party construction contracts for redevelopment projects in reliance on a prior agreement with its former RDA to reimburse construction costs. That scenario did not occur here. Brentwood adopted resolutions to fund construction of the five projects, entered into construction contracts, and then sought to create reimbursement agreements after the fact in the form of the PIA's.

Brentwood also relies on the principle stated in Civil Code section 1642 that "[s]everal contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together." Brentwood argues that (1) the initial cooperation agreement between the former RDA and the city executed in 1981, (2) the findings resolutions mandated by the redevelopment law that the city and RDA adopted for the five projects from 2007 through 2011, (3) the amended and restated cooperation agreement executed in February 2011, and (4) the PIA's executed in February and March 2011, are one agreement that initially arose before the PIA's were executed. In short, Brentwood argues that dozens of documents executed over 30 years constitute one agreement. We disagree. To begin with, Civil Code section 1642 states a contract principle which does not apply to statutory interpretation. Assuming it did, whether multiple documents constitute a single transaction is a question of fact for resolution by the trial court, which we review for substantial evidence. Where the order is silent on the matter, as here, we presume that the trial court made sufficient findings to support the order. Suffice it to say that Brentwood has not carried its burden to overcome that presumption.

In a similar vein, Brentwood contends that the PIA's ratified and incorporated the prior cooperation agreement and findings resolutions that predated third party construction contracts. Ratification is an agency doctrine in which an agent's unauthorized act becomes authorized by adoption by the principal, a scenario that also did not occur here. In any event, ratification cannot change the terms of a contract, which is what Brentwood seeks to do. No agreement or resolution prior to the PIA's committed the RDA to reimburse Brentwood for the construction costs of the five redevelopment projects. Ratification cannot import the terms of the PIA's into the cooperation agreement and findings resolutions.

We will affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

We will not again recount the process of dissolution of RDA's in California and the statutes involved, covered in our prior decisions. ( City of Grass Valley v. Cohen (2017) 17 Cal.App.5th 567, 573-574, 226 Cal.Rptr.3d 543 ( Grass Valley ); Brentwood I, supra , 237 Cal.App.4th at pp. 494-495, 188 Cal.Rptr.3d 88 ; County of San Bernardino v. Cohen (2015) 242 Cal.App.4th 803, 807-809, 195 Cal.Rptr.3d 439 ( San Bernardino ); City of Tracy v. Cohen (2016) 3 Cal.App.5th 852, 855-856, 208 Cal.Rptr.3d 128 ( Tracy ).) As we observed in Grass Valley , "[g]iven the many RDA cases this court has decided, due to the designation of Sacramento County as the venue for such disputes [citations], its basic implementing mechanisms are well understood by the parties." ( Grass Valley, supra , 17 Cal.App.5th at p. 573, 226 Cal.Rptr.3d 543, fn. omitted.)

This appeal concerns the interpretation and application of the 2015 amendment to the dissolution statutes, which included section 34191.4, subdivision (b)(2)(C)(i). We will confine our discussion to matters relevant to that statute, which prompted Brentwood's petition for writ of mandate and this appeal.

On August 20, 1981, Brentwood created an RDA and designated the city council as the governing board.³ ( Brentwood I, supra , 237 Cal.App.4th at p. 493, 188 Cal.Rptr.3d 88.)

On September 22, 1981, Brentwood executed a cooperation agreement with its RDA. The cooperation agreement provided that the city "may, but is not required to, advance necessary funds to the [RDA] or to expend funds on behalf of the [RDA] for the preparation and implementation of a redevelopment plan, including, but not limited to, the costs of surveys, planning, studies and environmental assessments for the adoption of a redevelopment plan, the costs of acquisition of property within the project area, demolition and clearance of properties acquired, building and site preparation, public improvements and relocation assistance to displaced residential and nonresidential occupants as required by law."

Brentwood agreed to provide services to the RDA and submit an annual statement of costs incurred by the city in rendering such services. The RDA agreed "to reimburse the City for all costs incurred by the City pursuant to this Agreement ...." The agreement also provided that the "obligations of the [RDA] under this Agreement shall constitute an indebtedness of the [RDA]" within the meaning of the redevelopment law.

The cooperation agreement did not refer to any existing or future redevelopment project or any cost incurred or projected in connection with a redevelopment project. In Grass Valley , we noted that the trial court aptly called such an agreement, in which "no specific loans or services were identified," an " ‘umbrella’ " agreement. ( Grass Valley, supra , 17 Cal.App.5th at p. 575, 226 Cal.Rptr.3d 543.)

From 2008 through 2011, Brentwood and the RDA adopted the findings resolutions for a capital improvement program to include five projects: a parking structure, community center, downtown infrastructure, downtown streetscape, and a city park. Brentwood explains that the resolutions were adopted to make "the required section 33445 findings to allow the RDA to reimburse the City for its costs incurred to construct each of the Projects."⁴ (Italics added.) All told Brentwood adopted over a dozen resolutions. None of Brentwood's resolutions referred to the cooperation agreement. In the same period, the RDA also adopted multiple resolutions to budget for and fund the capital improvement projects. None of the RDA's resolutions referred to the cooperation agreement.

From January 29, 2007, through November 29, 2011, Brentwood adopted resolutions approving third party construction contracts and executed contracts for the five projects. None of these resolutions referred to the cooperation agreement.

In January 2011 the Governor announced his intention to dissolve the RDA's, leading to the so-called "fire sale" period in which the agencies and their sponsoring cities sought to transfer or encumber assets before the dissolution law went into effect in June 2011. ( Grass Valley, supra , 17 Cal.App.5th at p. 574 & fn. 2, 226 Cal.Rptr.3d 543 ; Brentwood I, supra , 237 Cal.App.4th at pp. 499, 502, 188 Cal.Rptr.3d 88.)

On February 7, 2011, Brentwood and the RDA entered in an amended and restated cooperation agreement (amended cooperation agreement). The amended cooperation agreement provided that "[t]he City agrees to design and cause the construction and installation of and carry out" the redevelopment projects described in an exhibit attached to the agreement, which included estimated costs for the five redevelopment projects. The amended cooperation agreement further provided that the RDA "agrees to reimburse the City the amounts set forth" in the exhibit and that "[t]his Agreement constitutes an indebtedness of...