Isaac v. City of Los Angeles
| Decision Date | 21 August 1998 |
| Docket Number | No. B109234,B109234 |
| Citation | 66 Cal.App.4th 586,77 Cal.Rptr.2d 752 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , 98 Cal. Daily Op. Serv. 6568, 98 Daily Journal D.A.R. 9076 William G. ISAAC, et al., Plaintiffs and Respondents, v. CITY OF LOS ANGELES, et al., Defendants and Appellants. |
James K. Hahn, City Attorney, Thomas C. Hokinson, Chief, Assistant City Attorney for Water and Power, Renee J. Laurents, Deputy City Attorney, for Defendant and Appellant City of Los Angeles.
Michael D. Berk, Pircher, Nichols & Meeks, Los Angeles, Aaron M. Peck, Arter & Hadden, Los Angeles, for Plaintiff and Respondent Great Western Bank, FSB.
William A. Kerr, Malibu, for Plaintiffs and Respondents Seymour G. Jacoby, Florence Jacoby and B.B.O., Inc., a California corporation.
Walter J. Lack, Cynthia J. Emry, Engstrom, Lipscomb & Lack, Los Angeles, for Plaintiffs and Respondents William B. Isaac and Zaki Mansour.
Leanne J. Fisher, Office of the General Counsel, Home Savings of America, Irwindale, for Plaintiff and Respondent Coast Federal Bank, FSB.
The City of Los Angeles (City) appeals from a judgment entered in favor of plaintiffs William G. Isaac, et al., on their complaints seeking a refund of special assessments levied by the City of Los Angeles against plaintiffs'
master-metered real properties on account of delinquent utility bills. The trial court held the ordinance empowering the City to make the assessments and record a super-priority lien on plaintiffs' real properties violated the California and federal constitutions and state statutes governing the priority of liens. On appeal, the City contends the trial court improperly granted summary judgment because the ordinance is constitutional and material issues of fact exist.
In May 1987, the City Council of the City of Los Angeles adopted an ordinance providing for the imposition of special assessment liens on master-metered apartment buildings for the collection of past due and estimated future billings for water and electric power. 1 (L.A. City Admin. Code, § 6.500, et seq., effective July 23, 1987.) 2 The ordinance permits the City to levy the assessments and record a lien securing such assessment against the subject real property. The ordinance also provides such liens have priority over previously recorded deeds of trust and other liens and encumbrances against the property. Essentially, the purpose of the ordinance is to provide a mechanism for collecting unpaid utility bills on master-metered apartment buildings.
The ordinance states it is based upon the City Council's finding the provision of essential public utilities (water and electricity) to residential real properties is essential to the health and welfare of the residents of such properties. The City Council further found the failure to provide such essential utilities jeopardizes the health and welfare of the residents and renders the premises not only uninhabitable as a matter of law (Cal. Civ.Code, § 1941) but creates a public nuisance (L.A. Mun.Code, § 91.8902). The City Council further found the tenants of master-metered apartment buildings pay rent with the expectation the property owner would pay for essential utilities. The ordinance also declares the provision of essential public utilities constituted a "special benefit" to master-metered real properties and the owners thereof. (Ordinance, § 6.500.)
The ordinance provides a lien may be assessed for an unpaid utility service charge that is more than 75 days past due. The ordinance sets forth the procedure by which a lien is assessed: An application for assessment is filed with the city clerk and forwarded to the city engineer, who advises the City Council an application had been made. The city engineer prepares an assessment roll listing. (Ordinance, § 6.503.) A hearing on assessment applications is conducted before an officer or panel of officers selected by the Board of Public Works, and notice of any hearing is given by mail and publication no later than 15 days before the hearing to the property owner, each person last billed for utility services (if different from the owner), and each lender of record. 3 (Ordinance, ss6.504, 6.505.)
Upon confirmation of the assessment, the city engineer records a lien with the county recorder "in such forms as to give suitable notice of the assessment lien to any potential buyer." (Ordinance, s6.507.) The City entered into an agreement with the County of Los Angeles (County) for the collection of this assessment by the recordation of this assessment lien against the subject real properties, which is then collected with the property taxes. The assessment lien thus becomes a lien for real property taxes, and upon collection by the County was turned over to the city engineer for the City. The assessment accrues interest and penalties "to the same extent and on the same conditions as ad valorem taxes bear interest and carry penalties." (Ordinance, §§ 6.508-6.510.) Finally, the assessment lien is given priority over all other encumbrances and liens on the subject property except for liens of special assessments separately billed, and as to such assessments it enjoys equal parity. The Pursuant to the ordinance, the City began to assess the owners of master-metered residential real property in the City the cost of providing essential public utility services when the owners of such properties were either unwilling or unable to pay for such utilities. Some of the liens were for past due or overdue utility charges and sewer costs; some of the liens were for future water and electricity billings.
utility lien thus acquires the same priority as a lien for property taxes, and has priority over even previously recorded deeds of trust on the property. (Ordinance, § 6.513.)
The plaintiffs in this action were all the owners or lenders of record of master-metered property upon which the City caused an assessment lien to be recorded. 4 Due to the recordation of the liens, title to the subject properties was clouded. The plaintiffs were required upon a transfer of the property to pay off the liens in order to remove the cloud on title the liens created. The effect of the ordinance in some cases was to place the burden of paying the utility charges on non-owners of the property or persons who were not responsible for incurring the indebtedness. Pursuant to the terms of the ordinance, holders of deeds of trust, such as plaintiff Great Western Bank, were not given notice of the assessment or recordation of the lien. 5
After the plaintiffs were forced to pay off these liens in order to clear up title to their property, they filed claims with the City, which were denied. The plaintiffs then commenced seven separate lawsuits against the City and County of Los Angeles 6 seeking a refund of the payments made and a declaration the ordinance was invalid on state and federal constitutional grounds and on the grounds it impermissibly created a "super-priority" lien. These actions were consolidated and the plaintiffs filed separate motions for summary judgment, arguing the ordinance violated their due process and equal protection rights under the California and United States Constitutions and the ordinance violated California statutory law governing lien priority. The City filed a cross-motion for summary judgment, arguing the statute was valid.
The trial court ruled in favor of the plaintiffs, holding (1) the ordinance, as applied, violated the plaintiffs' due process and equal protection rights because the ordinance failed to achieve a reasonable degree of equality between the plaintiffs and other similarly-situated persons; (2) the ordinance violated Revenue & Taxation Code section 2192.1 because it conferred "super-priority" status to the assessment lien over prior recorded deeds of trust; (3) the ordinance violated the California Constitution because the special assessments constituted a "special property tax" prohibited by article XIII, section 1 and article XIII-A, sections 1, 2 (a); (4) the ordinance violated procedural due process because no prior actual notice was given to the plaintiffs of the imposition of the assessments, and (5) the City wrongfully included in the assessment charges not authorized by the ordinance, such as sewer charges. 7 Appellant timely appeals.
At issue in this appeal is whether the trial court improperly granted summary judgment We hold the ordinance is invalid on the grounds it is preempted by the statewide statutory scheme governing the priority of liens upon real property. Because we find the statute invalid on these grounds, we do not address respondents' arguments the ordinance violates due process or equal protection, or appellant's argument that factual issues exist precluding summary judgment.
finding the ordinance invalid on the grounds it (1) violated due process and equal protection under both the California and federal constitutions (Cal. Const., art. I, § 19; U.S. Const., Amd. XIV), (2) violated California statutory law establishing the priority of liens (see, e.g., Cal. Rev. & Tax.Code, § 2192.1), and (3) violated the California constitution's prohibition against special taxes (Cal. Const., art. XIIIA, §§ 1, 2(a).) The City also contends factual issues exist with respect to the issue of whether proper notice of the assessment liens was given
A trial court's grant of summary judgment is reviewed de novo for error; we review the trial court's ruling, not its rationale, and will uphold the judgment if it is correct on any theory. (See Code Civ. Proc., § 437c, subd. (g); Sacks v. FSR Brokerage, Inc. (1992) 7 Cal.App.4th 950, 960-961, 9 Cal.Rptr.2d 306.) Thus, in spite of our affirmance, we rely on a different rationale...
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