Cotta v. City and County of San Francisco

• Decision Date: 18 December 2007
• Docket Number: No. A116583.,A116583.
• Citation: 157 Cal.App.4th 1550,69 Cal.Rptr.3d 612
• Court: California Court of Appeals Court of Appeals
• Parties: Alex COTTA et al., Plaintiffs and Appellants, v. CITY AND COUNTY OF SAN FRANCISCO et al., Defendants and Respondents.

69 Cal.Rptr.3d 612

157 Cal.App.4th 1550

Alex COTTA et al., Plaintiffs and Appellants, v. CITY AND COUNTY OF SAN FRANCISCO et al., Defendants and Respondents.

No. A116583.

Court of Appeal, First District, Division 2.

December 18, 2007.

Paul J. Steiner, Law Offices of Paul J. Steiner, Andrew H. Schwartz, Frank Sommers, Sommers & Schwartz LLP, San Francisco, for Appellants.

Dennis J. Herrera, City Attorney, Joanne Hoeper, Chief Trial Deputy, Scott D. Wiener, Deputy City Attorney, for Respondents.

HAERLE, J.

I. INTRODUCTION

In this appeal, we must determine whether the City and County of San Francisco (City)¹ may be liable for contract damages following a valid exercise of its police power. In March 2003, the San Francisco Airport Commission (Commission) passed a resolution granting certain benefits to drivers of clean-air taxis providing transit service at San Francisco International Airport (SFO). Thereafter plaintiffs and appellants Alex Cotta, Aloizio Costa, Majed Dajani, Andrew Lindemann, Isam Kayed, Mohamad Quitteineh, and Saleem Shaikh purchased compressed natural gas (CNG) taxicabs and operated them at SFO. In November 2003, the Commission adopted a new resolution that conferred reduced benefits, and appellants brought suit for breach of contract. On cross-motions for summary judgment, the trial court granted the City's motion and denied appellants' motion. Appellants challenge those rulings on theories of breach of contract, promissory estoppel, and inverse condemnation. We will affirm.

II. FACTUAL AND PROCEDURAL BACKGROUND²

In 1998, the Taxicab Alternative Fuels Working Group was formed for the purpose of encouraging the San Francisco taxicab industry to purchase cabs powered by CNG. The Commission initiated a pilot program of incentives to CNG cabs providing service at SFO in order to improve air quality at SFO while maintaining effective transit service for the public.

On October 3, 2000, to encourage the acquisition of new clean-air vehicles, the Commission adopted a clean vehicle incentive program for taxis serving SFO. The resolution provided: (1) the first 60 clean air cabs put into service would receive one front-of-the-line (FOL) privilege³ per driver shift for two years, with the trip fee waived; (2) the next 50 clean-air cabs put into service would receive one FOL privilege per driver shift for 18 months, with the trip fee waived; and (3) the next 50 clean-air cabs put into service would receive one FOL privilege per driver shift for 12 months, with the trip fee waived. The resolution provided that the trip fee waiver incentive was subject to modification by the Airport Director.

From October 3, 2000, through April 3, 2001, one additional CNG taxi was put into service for a total of 10 CNG taxis operating out of SFO.

On April 3, 2001, the Commission adopted a new resolution modifying the incentive program for CNG taxis to add one additional FOL privilege per driver shift, for a total of two FOL privileges per shift. The resolution also provided that, "The duration of this new incentive shall be determined by the Airport Director in consultation with Airport staff, CNG taxi owners, and CNG providers. The Airport Director shall have the sole authority to begin, end or reinstate this new incentive."

As of March 24, 2003, 31 CNG taxis were operating out of SFO, an increase of 21 since April 3, 2001.⁴

On March 25, 2003, to further encourage the acquisition of CNG cabs, the Commission adopted a resolution modifying the incentive program once again.

The resolution provided: "1. The first 60 clean air taxicabs put into service will receive [FOL] privileges four times per day for four years. For the first two years, no trip fee will be charged for two of these trips per day. [¶] 2. The subsequent 50 clean air taxicabs put into service will receive [FOL] privileges four times per day for eighteen months. No trip fee will be charged for two of these trips. After eighteen months, these vehicles will receive [FOL] privileges two times per day, for which the standard taxi trip fee will be charged. [¶] 3. The subsequent 50 clean air taxicabs put into service will receive [FOL] privileges four times per day for one year. No trip fee will be charged for two of these trips. After one year, these vehicles will receive [FOL] privileges two times per day, for which the standard taxi trip fee will be charged. [¶] 4. Clean air taxicabs put into service after the initial 160 vehicles will receive [FOL] privileges two times per day for one year. These trips will be subject to the standard taxi trip fee."

The resolution did not contain language regarding authority to determine the duration of the incentives or to begin, end, or reinstate the incentives. Between March 25, 2003, and November 4, 2003, an additional 72 CNG cabs were placed in service at SFO, an increase of 232 percent.

Within several months of the March 25, 2003, resolution, SFO became aware of logistical problems and growing conflict between driver/owners of CNG cabs and driver/owners of non-CNG cabs. In several memoranda to members of the Commission, the Airport Director described the success of the incentive program, particularly the FOL privileges, in increasing the number of CNG cabs, but also reported that demand for taxis at SFO had decreased (for a variety of reasons, including the economic downturn, the events of 9/11, and the start-up of BART service to SFO in June 2003). The result was a significant increase in wait times, significant adverse economic consequences for drivers of regular taxis, and increased congestion in the staging lots for cabs generally due to space constraints at SFO.

SFO tried to alleviate the problems through procedural changes, but the attempted modifications were not successful. On Labor Day weekend 2003, a non-CNG taxicab driver work stoppage at SFO caused major operational problems. SFO held several meetings with interested parties, including drivers of both CNG and non-CNG cabs, to resolve the problems that had developed since the March 25, 2003, resolution. These efforts were unavailing.

On November 4, 2003, the Commission rescinded the prior clean taxi incentive program resolutions dated October 3, 2000, April 3, 2001, and March 25, 2003, and adopted a new resolution providing incentives to drivers of CNG taxis as follows: the incentives would be limited to the four-year service life of the first 140 CNG cabs; all CNG cabs would have one FOL privilege per shift for four years, with different trip fee waiver provisions based on the order in which the cab was put into service. The resolution provided that the taxicab incentive program would be phased out as the original 140 CNG cabs were retired after four years of service. In addition, the resolution stated, "The Airport Commission reserves the right to eliminate or modify these incentives at any time to meet operational needs of the Airport or in the event the Board of Supervisors and/or the Taxi Commission approves legislation mandating that a percentage of San Francisco taxicabs be clean fuel vehicles with no further accommodation to program participants."

In connection with his analysis supporting his November 2003 recommendation to Airport Director John Martin that FOL privileges be curtailed, Deputy Airport Director for Operations and Security Trygg McCoy testified that he concluded that each lost FOL privilege was worth $35 to a cab driver.

On October .11, 2005, the Commission adopted a resolution continuing the FOL privileges under the November 4, 2003, resolution for CNG cab drivers who purchased a new CNG vehicle when their original CNG taxi reached the end of its service life under Taxi Commission regulations.

Of the 72 CNG cabs purchased between March 2003 and November 4, 2003, 56 were still in service as of the date the parties filed their summary adjudication and summary judgment motions on September 22, 2006. In addition, between November 4, 2003, and September 22, 2006, 56 more CNG cabs were placed in service at SFO.

On September 2, 2005, appellants filed their second amended complaint alleging causes of action for breach of contract, promissory estoppel, misrepresentation, negligent misrepresentation, and inverse condemnation. By order filed on January 3, 2006, the trial court sustained the City's demurrer to the causes of action for misrepresentation and negligent misrepresentation but overruled the demurrer as to the remaining causes of action.

Appellants filed their motion for summary adjudication on September 22, 2006. On the same day, the City filed its motion for summary judgment, summary adjudication, and/or judgment on the pleadings. The hearing was held on October 24, 2006, and the court took the matter under submission. On October 31, 2006, the court issued its order granting the City's summary judgment motion and denying appellants' summary adjudication motion.

Appellants filed a timely notice of appeal on December 26, 2006.

III. DISCUSSION

A. Standard of Review

"Summary judgment is granted only when the papers presented in support of the moving party establish that no issue of material fact exists to be tried and the moving party is entitled to judgment as a matter of law. [Citations.] On appeal, the reviewing court exercises its independent judgment, deciding whether the moving party established undisputed facts that negate the opposing party's claim or state a complete defense." (Romano v. Rockwell Internal, Inc. (1996) 14 Cal.4th 479, 486-487, 59 Cal.Rptr.2d 20, 926 P.2d 1114.) Summary judgment may be affirmed on any theory, regardless of the ground relied on by the trial court. (Kirby v. Sega of America, Inc. (2006) 144 Cal.App.4th 47, 54, 50 Cal.Rptr.3d 607.)

B. Contentions

Appellants contend that they entered into unilateral contracts with the City: they accepted the City's offer of the incentives described in the March 2003 resolution by purchasing and operating CNG taxis at SFO, i.e., by...