Genesis Environmental Services v. District

• Full Citation: Genesis Environmental Services v. District, 6 Cal.Rptr.3d 574, 113 Cal.App.4th 597 (Cal. App. 2003)
• Decision Date: 20 November 2003
• Citation: 113 Cal.App.4th 597,6 Cal.Rptr.3d 574
• Docket Number: No. F039948,F039948
• Parties: GENESIS ENVIRONMENTAL SERVICES, Plaintiff and Appellant, v. SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

6 Cal.Rptr.3d 574

113 Cal.App.4th 597

GENESIS ENVIRONMENTAL SERVICES, Plaintiff and Appellant, v. SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT, Defendant and Respondent.

No. F039948

Court of Appeal, Fifth District

November 20, 2003

Law Offices of Ralph B. Wegis, Ralph B. Wegis, Michelle D. Palla and Barry

Rosenberg, Bakersfield, for Plaintiff and Appellant.

Clifford & Brown, Patrick J. Osborn and T. Mark Smith, Bakersfield, for Defendant and Respondent.

OPINION

CORNELL, J.

This appeal involves a general demurrer sustained without leave to amend and raises the question of whether the allegations made were sufficient to state a cause of action under any legal theory. Appellant, Genesis Environmental Services (Genesis), alleges that the negligence of the respondent, San Joaquin Valley Unified Air Pollution Control District (the District), prevented it from remaining eligible to pursue the business of testing emissions for companies and other sources subject to mandatory emissions testing. The District contends it owed no duty to see that Genesis remained eligible and it is immune from liability for negligence. In addition to the negligence theories, we consider whether the allegations state a violation of Genesis's constitutional right to equal protection.

We conclude Genesis's allegations regarding the unequal application of certain guidelines state a violation of the equal protection clause of the Fourteenth Amendment under the standards for a claim by a "class of one" set forth in Village of Willowbrook v. Olech (2000) 528 U.S. 562, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (Olech). Therefore, Genesis has stated a cause of action under section 1983 of title 42 of the United States Code. Accordingly, we reverse the judgment and remand the matter for further proceedings.

FACTUAL AND PROCEDURAL SUMMARY

In California, parties responsible for major and certain other stationary sources of air pollution generally are required by federal and state law to obtain a permit and meet specified emission standards. Compliance with emission standards is monitored through mandatory testing conducted by (1) the California Air Resources Board (CARB), (2) an independent contractor acting on behalf of CARB, or (3) an independent tester requested by the enterprise, provided certain requirements are met. If a contractor wishes to conduct compliance source testing on behalf of CARB pursuant to California Code of Regulations, title 17, sections 91200-91220, the contractor must obtain CARB approval.

In addition to the regulations adopted by CARB concerning independent contractors and source testing, guidelines adopted by the District include information about the requirements applicable to independent contractors. These "Source Test Guidelines" approved May 4, 1998 (Guidelines),¹ also included information on the formulae for emission calculations and the policies for conducting tests that deviate from standard methods.

The Guidelines state that CARB "certifies contractors to conduct source tests [using] CARB and EPA emission test methods. Contractors must be certified by CARB prior to conducting CARB test methods and other related EPA tests within the District. Contractors wishing to have their test protocols and test results accepted by the District must be CARB certified in accordance with the criteria specified in Appendix A."

Table 1 of Appendix A of the Guidelines identifies the test methods that require CARB certification. Table 2 of Appendix A indicates the test methods to be used in testing for specific pollutants.

Genesis participated in the independent contractor program and tested pollutant levels in emissions from stationary sources on behalf of the District² since 1987.

CARB publishes an alphabetized list of independent contractors it has approved pursuant to California Code of Regulations, title 17, section 91207. Lists dated September 11, 2000, and November 15, 2000, included Genesis and indicated that (1) Genesis was approved for Method 1 and Method 2, and (2) each approval would expire on June 30, 2001.³ The September 21, 2001, list of independent contractors approved by CARB did not include Genesis.

On September 26, 2000, Chris Addis was informed that Genesis would no longer be allowed to perform emission testing for the District because Genesis did not meet the local District's testing certification requirements. When Chris Addis spoke by telephone to the District's air quality inspector, Harvey Lopez, demanding evidence to substantiate the inability of Genesis to perform source tests locally, Mr. Lopez explained that the District's policies were not public information and refused to provide Chris Addis with a copy of the District's guidelines.

In November 2000, Genesis filed its initial complaint against the District. On June 28, 2001, after the parties entered a stipulation, Genesis filed a first amended complaint (FAC) for damages against the District. The FAC alleged negligent and careless mismanagement of the District's pollutant emissions testing program and policies.

The FAC specifically alleges that the District oversees and audits compliance source testing to ensure that permitted sources and emission control equipment meet federal, state and local rules. It employs properly educated, trained, credentialed, certified and responsible personnel to (i) oversee, supervise and audit compliance of source testing, (ii) witness source testing performed by independent testers, such as Genesis, (iii) enforce compliance with source test standards, and (iv) ensure independent testers meet the requirements for source test reporting and test methodologies.

The FAC also alleges that the District had a legal duty to use reasonable care in staying informed and implementing and overseeing the independent contractor program, and a breakdown in the operations of the District and its administration of its policies occurred such that the District could not carry out its ministerial duties. This resulted in certain participants who had been in compliance with all of the District's imposed guidelines arbitrarily being denied, without notice or warning, the opportunity to continue to perform source testing for their clients, while other participants in the program that were cited for the same type of noncompliance were allowed to continue testing until they could validate compliance. The District knew, or should have known, that the emissions testing program was mismanaged because the District had failed properly to supervise and train the individuals who oversaw the independent contractor program so as to place Genesis and other participants in a vulnerable position. This failure properly to administer and manage the District's programs caused Genesis to sustain damages.

The District demurred to the FAC on the grounds that the FAC did not allege a statutory basis for liability against the District and, as a public entity, the District was immune from liability. The trial court sustained the demurrer on the ground that Genesis failed to allege a statutory basis for liability on the part of the District, granted leave to amend, and otherwise overruled the demurrer.

Genesis filed a second amended complaint (SAC) that was similar to the FAC and added the following: "[Genesis] brings this action against the DISTRICT for damages under the California Tort Claims Act (Gov.Code, Section 810 et seq.), Government Code Section 815.2, and Civil Code Section 1714(a)." The SAC sought special and general damages according to proof, costs of suit, and such other relief as was proper under the circumstances.

In paragraph 10 of the SAC, Genesis alleged that, as a result of the District's administration of the source testing program, "certain participants, including [Genesis], who had been in compliance with all of the DISTRICT's imposed guidelines, ... arbitrarily, and without notice or warning, [were] denied the opportunity to continue to perform source testing for [their] clients pursuant to the DISTRICT program, while other participants in said program, cited for non-adherence and / or non-compliance with the DISTRICT's rigid standard as aforementioned, [were] allowed to continue testing in an effort to, and until said participants could, validate compliance with the permit requirements for controlling air emissions."

The District again demurred on the ground the SAC, "and each and every cause of action alleged therein, does not state a cause of action."⁴ The District argued that the SAC failed to state facts sufficient to constitute a cause of action, immunities protected the District, and the statutes referenced in the SAC did not create a basis for liability on the part of the District.

On November 26, 2001, the trial court issued a minute order sustaining the demurrer without leave to amend. An order and judgment thereon was filed on December 7, 2001. Genesis filed a motion for reconsideration on December 21, 2001, which addressed its ability to plead a statutory basis for liability and allege a duty owed to it by the District. In connection with this motion, Genesis filed declarations from each of its owners, Chris Addis and Anne Addis.

The trial court denied the motion for reconsideration because no satisfactory reason was given for why the new matter could not have been presented earlier and because California's Administrative Procedures Act did not impose a duty on the District in favor of Genesis.

DISCUSSION

I. Standard of Review

In an appeal from a judgment dismissing an action after a general demurrer is sustained without leave to amend, our Supreme Court has imposed the following standard of review. "The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. [Citations.] The court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.] The judgment must be affirmed `if any one...