City of Pasadena v. Cohen, C073654

• Court: California Court of Appeals
• Writing for the Court: BUTZ
• Citation: 228 Cal.App.4th 1461,176 Cal.Rptr.3d 729
• Parties: CITY OF PASADENA et al., Plaintiffs and Respondents, v. Michael COHEN, as Director, etc., Defendant and Appellant.
• Docket Number: C073654
• Decision Date: 19 August 2014

228 Cal.App.4th 1461
176 Cal.Rptr.3d 729

CITY OF PASADENA et al., Plaintiffs and Respondents,
v.
Michael COHEN, as Director, etc., Defendant and Appellant.

C073654

Court of Appeal,
Third District, California.

Filed August 19, 2014

See 12 Witkin, Summary of Cal. Law (10th ed. 2005) Real Property, § 827.

APPEAL from a judgment of the Superior Court of Sacramento County, Shelleyanne W.L. Chang, Judge. The order granting a preliminary injunction is vacated, and the matter is remanded with directions. (Super. Ct. No. 34–2012–00134585–CU–MC–GDS)

Kamala D. Harris, Attorney General, Douglas J. Woods, Assistant Attorney General, Marc A. LeForestier, Stephanie F. Zook and Seth E. Goldstein, Deputy Attorneys General, for Defendant and Appellant.

Kane, Ballmer & Berkman, Murray O. Kane, Guillermo A. Frias; and R. Bruce Tepper for Plaintiffs and Respondents.

BUTZ, J.

[228 Cal.App.4th 1463]

Given the dire condition of state finances, in the summer of 2011 the Legislature enacted legislation (Stats.2011, 1st Ex.Sess.2011–2012, ch. 5X (hereafter chapter 5X)), primarily within the Health and Safety Code, ¹ that barred any new redevelopment agency obligations, and established procedures for the windup and dissolution of the obligations of the nearly 400 redevelopment agencies then existing. ( California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 241, 246, 250–251, 253, 135 Cal.Rptr.3d 683, 267 P.3d 580 ( Matosantos ).) ² This case stems from a dispute arising out of a process we might call the “Great Dissolution.”

Defendant Department of Finance (the Department) disapproved two items included in the “Recognized Obligation Payment Schedule” (ROPS) ³ of plaintiff City of Pasadena (the City).⁴ The City acts as “successor agency” to the Pasadena Community Development Commission ⁵ (§§ 34171, subd. (j), 34173), determining that these were not enforceable obligations of the Pasadena redevelopment agency. Both obligations expire in 2014; the first apparently involved reimbursement for pension bonds and the other for subsidized housing bonds, both pursuant to a 1987 legislative imprimatur well antedating the Great Dissolution. (§ 33608.) The Department previously had approved these two items in ROPS I and II.

[228 Cal.App.4th 1464]

The City filed the present action, seeking injunctive and declaratory relief against defendant Ana Matosantos in her official capacity as director of the Department.⁶ The trial court granted the City's application for a preliminary injunction, finding that the City had some likelihood of prevailing on the merits, and had a significant risk of irreparable harm otherwise. The trial court ordered defendant Auditor–Controller of Los Angeles County (L.A. Auditor–Controller) to sequester the funds for the two disapproved obligations pending a trial on the merits, and to refrain from distributing them to the taxing entities that are otherwise entitled to the remainder of the property tax proceeds payable to the successor agency. (§§ 34171, subd. (k) [defining “ ‘[t]axing entities' ”], 34182, subd. (c) [“county auditor-controller[s]” are administrators of trust funds for property taxes formerly payable to redevelopment agencies] & 34183, subd. (a) [establishing entitlement of taxing entities to remainder of distribution of property taxes after payment of enforceable obligations].) Defendant Matosantos alone filed the March 2013 notice of appeal.⁷

In something of an afterthought, the Department makes what should be a threshold claim that the City was required to seek relief in traditional mandate from the Department's ruling that the two ROPS payments were not enforceable obligations, rather than in an action for declaratory relief. On the merits, the Department argues that the City in fact does not have any likelihood of prevailing under a proper interpretation of the pertinent statutes involved. The Department additionally argues the trial court incorrectly found that there was a risk of irreparable harm to the City. In our preliminary review of this case, we had questions about whether the Department had standing to appeal the ruling, and solicited supplementary briefing on the issue.

On plenary review, we conclude that regardless of the Department's standing to pursue this appeal, the interests of judicial economy would require us in any event to determine if the trial court should have ruled that it was incorrect to yoke declaratory and injunctive relief together. We shall vacate the order with directions either to dismiss the action (with or without leave to amend) or to construe the City's pleading as one for traditional mandate and proceed accordingly.

[228 Cal.App.4th 1465]

Given the disposition of this appeal, there are only a limited number of relevant background facts beyond those stated in the introduction. We will incorporate them in the Discussion rather than set them out separately.

DISCUSSION I. Standing

In its initial application for a temporary restraining order and an order to show cause on a preliminary injunction, the City sought only to restrain the L.A. Auditor–Controller from distributing the funds to the taxing entities that were the subject of the Department's administrative disallowance of the two obligations in the ROPS III. The trial court's ensuing order directed the L.A. Auditor–Controller to sequester the funds, and prohibited either defendant “from taking any action regarding ROPS III Items 1 and 14.”

In its order granting the preliminary injunction that is the subject of this appeal, the trial court directed only that defendants refrain from making any disbursement of the sequestered ROPS III funds. This order did not in any respect rule on the merits of the Department's disallowance or direct the Department to take any action with respect to its administrative determination; indeed, the trial court noted “it remains entirely possible defendants could ultimately prevail in this action,” but the City had presented three arguable grounds for judgment in its favor and, unlike the Department, was at risk of significant and irreparable injury.

Thus, while the Department is nominally subject to the preliminary injunction, it has not been ordered to take any action with respect to its administrative disallowance of the inclusion of the two items in ROPS III, which is still in effect. The Department does not play any role in the administration of the property tax trust fund; as noted, this is the responsibility solely of the L.A. Auditor–Controller, who administers it on behalf of both the holders of enforceable obligations and the taxing authorities. (§ 34182, subd. (c).)

In response to our query regarding its standing to appeal in these circumstances, the Department attempts to...