Decision Date04 June 2001
Docket NumberNo. S082591.,S082591.
Citation107 Cal.Rptr.2d 369,25 Cal.4th 809,23 P.3d 601
CourtCalifornia Supreme Court
PartiesHOWARD JARVIS TAXPAYERS ASSOCIATION et al., Plaintiffs and Appellants, v. CITY OF LA HABRA et al., Defendants and Respondents.

Trevor A. Grimm, Los Angeles, Jonathan M. Coupal, Sacramento, and Timothy A. Bittle, for Plaintiffs and Appellants.

Harold W. Griffith III, for California Taxpayer and California Voter as Amici Curiae on behalf of Plaintiffs and Appellants.

Law Office of Richard D. Jones, Brea, Jones & Mayer, Richard D. Jones, Kimberly Hall Barlow, Fullerton, and Krista MacNevin Jee, for Defendant and Respondent City of La Habra.

Laurence M. Watson, County Counsel, Santa Ana, and Jim Persinger, Deputy County Counsel, for Defendant and Respondent County of Orange.

Markman, Arczynski, Hanson, Curley & Slough, James L. Markman, Brea, and Boyd L. Hill, Irvine, for 110 California Cities and the California State Association of Counties as Amici Curiae on behalf of Defendants and Respondents.

Richards, Watson & Gershon, James L. Markman, Brea, and Michael G. Colantuono, Los Angeles, for 82 California Cities and the California State Association of Counties as Amici Curiae on behalf of Defendants and Respondents.


In an action against a city for allegedly imposing and collecting a general tax on its residents without the voter approval mandated by Proposition 62 (Gov.Code, §§ 53720-53730), when does the statute of limitations begin to run? Defendant, the City of La Habra (the City), contends the statute started to run on the date the City enacted its ordinance authorizing the tax. Plaintiffs, three taxpayer advocacy groups and three La Habra taxpayers, argue the statute began to run when this court, in Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal.4th 220, 45 Cal.Rptr.2d 207, 902 P.2d 225 (Guardino),

declared Proposition 62 to be constitutional. In the alternative, plaintiffs argue the limitations period starts to run anew each month when the tax is collected. The lower courts agreed with the City and held untimely plaintiffs' action to establish the tax's invalidity and prevent its continued collection, which action was filed more than three years after the ordinance's enactment.

We agree with plaintiffs' second contention; we conclude that if, as alleged, the tax is illegal, its continued imposition and collection is an ongoing violation, upon which the limitations period begins anew with each collection. We therefore find the action for declaratory judgment and writ of mandate timely; consequently, we reverse the judgment of the Court of Appeal, which affirmed the trial court's dismissal of the action.


In November 1986, the voters approved Proposition 62, a statewide initiative providing, inter alia, that local governments may not impose any general tax until that tax is submitted to the electorate and approved by a majority of voters. (Gov. Code, § 53723.) A few years after the passage of Proposition 62, an appellate court declared its voter approval requirements unconstitutional. (City of Woodlake v. Logan (1991) 230 Cal.App.3d 1058, 1064-1068, 282 Cal.Rptr. 27 [provisions requiring submission of new local taxes to voters unconstitutionally imposed referendums on tax measures].)

In December 1992, the City adopted La Habra Ordinance No. 1445 (the Ordinance), establishing a utility users tax to raise revenue for general governmental purposes. The Ordinance became effective immediately upon its enactment, though it was not operative until May 1, 1993. The City did not submit the Ordinance to the voters for approval.

In September 1995, we issued our opinion in Guardino, supra, 11 Cal.4th 220, 45 Cal.Rptr.2d 207, 902 P.2d 225. Rejecting claims that the voter approval requirements of Proposition 62 established an unconstitutional referendum system for tax enactments (see Cal. Const., art. II, § 9, subd. (a)), we held invalid a tax imposed without the required voter approval. (Guardino at pp. 238-254, 261, 45 Cal. Rptr.2d 207, 902 P.2d 225.)

On March 26, 1996, more than three years after the Ordinance was adopted, plaintiffs—Howard Jarvis Taxpayers Association, Against City Tax, Paul Gann's Citizens Committee, and three individuals described as "citizens, voters and taxpayers of the City of La Habra"—filed the instant action against the City and the Auditor Controller of the County of Orange (the County) for declaratory relief (Code Civ. Proc., § 1060), taxpayers' injunctive relief (Code Civ. Proc., § 526a), and ordinary mandamus (Code Civ. Proc., § 1085). The complaint sought a declaration that the City's utility tax was invalid under Government Code section 53723, an injunction against its enforcement, and a writ of mandate compelling the City to cease collecting the tax until approved by a majority of the voters. It also sought to compel the County to withhold from the City's share of property tax revenues the amounts collected under the utility tax. (See Gov.Code, § 53728.) Finally, plaintiffs prayed for any other relief deemed proper, "including, but not limited to, refunds of past taxes collected in violation of law."

The City demurred on the grounds the action was barred by the three-year statute of limitations applicable to a liability created by statute (Code Civ. Proc., § 338, subd. (a)), and the taxpayers' injunctive relief cause of action failed to allege an illegal expenditure of public funds (Code Civ. Proc., § 526a). The trial court sustained the demurrer without leave to amend and entered judgment in favor of the City. Although it decried the City's conduct in not having held an election, the court concluded the limitations period commenced when the Ordinance was enacted in December 1992.

The Court of Appeal affirmed, agreeing with the City and the trial court that the three-year limitation period commenced with the Ordinance's enactment.1 First, expressly disagreeing with the decision in McBrearty v. City of Brawley (1997) 59 Cal.App.4th 1441, 69 Cal.Rptr.2d 862, the appellate court rejected plaintiffs' argument that accrual of plaintiffs' causes of action was deferred until the filing of Guardino, supra, 11 Cal.4th 220, 45 Cal. Rptr.2d 207, 902 P.2d 225, due to the existence, before that time, of appellate decisions holding Proposition 62 unconstitutional. Second, the lower court disagreed with plaintiffs' contention that their causes of action accrue continually as the tax is collected and paid. "The gravamen of [plaintiffs'] complaint is the legality of the adoption of an ordinance imposing a utility tax without complying with the voter approval requirements of Proposition 62. The legality of that act must be timely challenged and cannot be said to accrue continuously with each month's utility bill." The Court of Appeal affirmed the dismissal on demurrer.

We granted plaintiffs' petition for review.


In reviewing a judgment of dismissal after a demurrer is sustained without leave to amend, we must assume the truth of all facts properly pleaded by the plaintiffs, as well as those that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) Here the issue is purely legal: The City argues the statute of limitations began to run on the date the Ordinance was adopted; plaintiffs argue for a later date of accrual or for continuous accrual.

Government Code section 53723 provides: "No local government ... may impose any general tax unless and until such general tax is submitted to the electorate of the local government ... and approved by a majority vote of the voters voting in an election on the issue." That this is a general tax, imposed for general fund purposes, is undisputed (Gov.Code, § 53721); nor is there any dispute that the City failed to comply with the statutory mandate before it imposed its utility tax.

Also undisputed is that this action is one "upon a liability created by statute," to which a three-year limitation period applies. (Code Civ. Proc., § 338, subd. (a).) As no different time of commencement is stated, the limitations period began when plaintiffs' cause of action accrued. (Code Civ. Proc., § 312.) "Generally, a cause of action accrues and the statute of limitation begins to run when a suit may be maintained. [Citations.] `Ordinarily this is when the wrongful act is done and the obligation or the liability arises, but it does not "accrue until the party owning it is entitled to begin and prosecute an action thereon."' [Citation.] In other words, `[a] cause of action accrues "upon the occurrence of the last element essential to the cause of action."' [Citations.]" (County of San Diego v. Myers (1983) 147 Cal.App.3d 417, 421, 195 Cal. Rptr. 124.)

I. Delayed Accrual

It would appear a cause of action to challenge the validity of the City's utility tax first arose when the Ordinance was adopted, that being the first act allegedly in violation of Government Code section 53723. Plaintiffs, however, contend that accrual of the cause of action was delayed until the filing of Guardino, supra, 11 Cal.4th 220,45 Cal.Rptr.2d 207,902 P.2d 225, when "the sole justification for not submitting [the City's] utility tax to the voters for approval—the supposed unconstitutionality of Proposition 62[was] removed." At that time, plaintiffs assert, "the City became obligated to hold an election."

Plaintiffs find support in McBrearty v. City of Brawley, supra, 59 Cal.App.4th 1441, 69 Cal.Rptr.2d 862 (McBrearty), for their contention that they had no cause of action against the City until this court issued its opinion in Guardino, supra, 11 Cal.4th 220, 45 Cal.Rptr.2d 207, 902 P.2d 225. In McBrearty, as here, the defendant city adopted a utility tax ordinance without seeking voter approval. At the time of adoption, the Court of Appeal in City of Woodlake v. Logan, supra, 230 Cal.App.3d 1058, 282 Cal.Rptr. 27,...

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