Malott v. Summerland Sanitary Dist.

• Decision Date: 19 October 2020
• Docket Number: 2d Civ. No. B298730
• Citation: 270 Cal.Rptr.3d 76,55 Cal.App.5th 1102
• Court: California Court of Appeals Court of Appeals
• Parties: Lucinda MALOTT, as Successor Trustee, etc., Plaintiff and Appellant, v. SUMMERLAND SANITARY DISTRICT, Defendant and Respondent.

55 Cal.App.5th 1102

270 Cal.Rptr.3d 76

Lucinda MALOTT, as Successor Trustee, etc., Plaintiff and Appellant,

v.SUMMERLAND SANITARY DISTRICT, Defendant and Respondent.

2d Civ. No. B298730

Court of Appeal, Second District, Division 6, California.

Filed October 19, 2020

The Law Office of Herb Fox and Herb Fox for Plaintiff and Appellant.

Jonathan M. Coupal, Timothy A. Bittle, and Laura E. Dougherty for Howard Jarvis Taxpayers Association as Amicus Curiae on behalf of Plaintiff and Appellant.

Musick, Peeler & Garrett, Gregory J. Patterson, William H. Hair and Cheryl A. Orr for Defendant and Respondent.

GILBERT, P. J.

Article XIIID, section 6 of the California Constitution memorializes Proposition 218 limiting assessments and property-related fees governmental agencies may impose. After a public hearing, a sanitary district imposed wastewater disposal fees. Plaintiff did not attend the hearing but filed an administrative mandamus petition to challenge the fees under Proposition 218. The trial court dismissed the petition because plaintiff did not exhaust her administrative remedies.

Plaintiff should have been given leave to rename her petition, which was, in essence, a complaint for declaratory relief. Plaintiff may proceed in her action against the sanitary district to allege that rates charged residential customers are disproportionate and unlawful.

Lucinda Malott is successor trustee of the Carol Nantker Family Trust. She appeals a judgment denying her petition for a writ of administrative mandamus ( Code Civ. Proc., § 1094.5 ) against the Summerland Sanitary District (District).¹ She claims the District imposed an excessive wastewater service charge for her property "without regard to ... the proportional cost of providing Wastewater Service" for her parcel in violation of the California Constitution.

We conclude, among other things, that the trial court erred by preventing Malott from presenting evidence from an expert to support her claims. The court reasoned that the expert's evidence was inadmissible as "improper extra-record evidence" under the administrative remedy exhaustion doctrine because it had not first been presented at a District public hearing on a rate increase. We reverse and remand for further proceedings.

FACTS

Malott owns a 30-unit apartment building within the District. The District provides wastewater collection, treatment and disposal services for commercial and residential property in the service area and charges service rates for its customers.

In 2017, the District distributed a notice of public hearing to property owners for a service rate increase. At a public hearing in February 2018, the District board approved an ordinance which, among other things, authorized a 3.5 percent annual rate increase. Malott did not attend that hearing nor file a written protest for that hearing.

On April 17, 2018, Malott filed a petition for a writ of administrative mandamus ( § 1094.5 ) against the District. She alleged she was excused from exhausting the administrative remedy of the public hearing because it was an inadequate remedy.

Malott alleged the District uses a classification for service rate fees "for all residential parcels" that are "based upon a Schedule of Equivalent Dwelling Units" (EDU's). She claimed, "The District's Schedule of EDU's arbitrarily assigns EDU values to parcels within the District's boundaries without regard to: (1) actual wastewater discharged from the Parcel; nor (2) the proportional cost of providing Wastewater Service to that parcel." She claimed the District's conduct of calculating rates "based solely on EDU's without regard to the proportional cost of the service attributable to a parcel" violates article XIIID, section 6, subdivision (b)(3) of the California Constitution.

In September 2018, Malott filed a notice of motion and motion for judgment on a writ of administrative mandamus. Included in the motion, among other things, was a declaration of Lynn Takaichi, an expert on utility and wastewater service rates. Takaichi's declaration included facts and an assessment that: 1) the District's calculation of fees did not comply with current law; 2) the District improperly placed all residential users, whether single family homes or residents in multi-unit apartment buildings, within a single rate EDU category; 3) apartment buildings containing multiple units use 40 percent lower amounts of water than the actual water use of single family homes; and 4) the District was overcharging apartment buildings, such as Malott's, and undercharging single-family residences.

The District filed a motion to strike Takaichi's declaration because it had not been filed at the public hearing.

The trial court granted the motion to strike, finding the declaration was "improper extra-record evidence." The court subsequently denied the petition. It ruled the District's single "uniform per-EDU rate for residential customers" was valid.²

DISCUSSION

The Administrative Remedy Exhaustion Doctrine

Under section 1094.5, " ‘[t]he general rule is that a hearing on a writ of administrative mandamus is conducted solely on the record of the proceeding before the administrative agency.’ " ( Cooper v. Kizer (1991) 230 Cal.App.3d 1291, 1300, 282 Cal.Rptr. 492.) It is normally " ‘ "error for the court to permit the record to be augmented, in the absence of a proper preliminary foundation ... showing ... one of [the] exceptions [to this rule]." ’ " ( Ibid . ) " ‘ "Public policy requires a litigant to produce all existing evidence on his behalf at the administrative hearing ...." ’ " ( Ibid . )

The District contends the administrative exhaustion doctrine applies here. Because Malott did not attend the public hearing on the rate increase or present evidence there, Takaichi's declaration was properly stricken.

The District's administrative exhaustion argument generally applies in a typical administrative hearing before a public agency. Malott claims the public hearing in question here is not one that would provide her with an adequate forum to decide claims concerning the underlying rate structure.

In Plantier v. Ramona Municipal Water Dist. (2019) 7 Cal.5th 372, 376, 247 Cal.Rptr.3d 619, 441 P.3d 870, our Supreme Court stated, "Before a local governmental agency may impose or increase certain property related fees and charges, it must notify affected property owners and hold a public hearing." This hearing requirement "arises from article XIIID, section 6 of the California Constitution, which was added in 1996 by Proposition 218." ( Ibid ., fn. omitted.) Under Proposition 218, the amount of a governmental imposed fee "shall not exceed the proportional cost of the service attributable to the parcel ." ( Plantier , at p. 382, 247 Cal.Rptr.3d 619, 441 P.3d 870.)

In Plantier , the plaintiffs alleged the method selected by the water district "does not properly allocate costs among parcels served." ( Plantier v. Ramona Municipal Water Dist. , supra , 7 Cal.5th at p. 382, 247 Cal.Rptr.3d 619, 441 P.3d 870.) None of the plaintiffs "participated in the Proposition 218 rate increase hearings by either submitting a written protest or speaking at a hearing." ( Id . at p. 379, 247 Cal.Rptr.3d 619, 441 P.3d 870.) The water district sought to bar their action for not first exhausting their administrative remedies.

In Plantier , our Supreme Court asked and answered this question, "When an agency considers increasing a property-related fee, must a fee payor challenging the method of fee allocation first exhaust ‘administrative remedies’ by participating in a Proposition 218 hearing that addresses only a proposed rate increase? The answer is no." ( Plantier v. Ramona Municipal Water Dist. , supra , 7 Cal.5th at p. 376, 247 Cal.Rptr.3d 619, 441 P.3d 870.) "Even if a Proposition 218 hearing could be considered an administrative remedy, it would not provide an adequate remedy for a challenge to the method used to allocate the fee burden in this case." ( Ibid . ) "[A] Proposition 218 rate increase hearing is not a forum to protest an existing rate structure ...." ( Id . at p. 387, 247 Cal.Rptr.3d 619, 441 P.3d 870.)

Does Plantier Apply to Section 1094.5 Administrative Mandamus Cases?

The District contends Plantier involved a declaratory relief action, but this case is distinguishable because it was filed as an administrative mandamus petition. It argues the administrative remedy exhaustion doctrine that did not apply in Plantier still applies here as a matter of law.

But Malott's election to file a section 1094.5 administrative mandamus petition, instead of a declaratory relief action, does not prevent Malott from challenging the District's residential rate structure. Here the adage concerning a rose or a duck is apt.

The amicus claims most Proposition 218 utility rate challenge cases are filed as declaratory relief actions. But Proposition 218 did not specify a particular type of action to challenge a utility rate. Its goal was not to restrict challenges, but rather to liberally facilitate them. "Proposition 218 specifically states that ‘[t]he provisions of this act shall be liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent.’ " ( Silicon Valley Taxpayers’ Assn., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 448, 79 Cal.Rptr.3d 312, 187 P.3d 37, italics added.)

Parties challenging governmental actions often do so using a variety of causes of action, including mandamus, injunctive relief, or declaratory relief. ( Woods v. Superior Court (1981) 28 Cal.3d 668, 672-674, 170 Cal.Rptr. 484, 620 P.2d 1032 ; North Pacifica LLC v. California Coastal Com. (2008) 166 Cal.App.4th 1416, 1428, 83 Cal.Rptr.3d 636.) There are also two types of mandamus actions used to challenge governmental actions – traditional mandamus and administrative mandamus. ( §§ 1085, 1094.5.) In certain cases, both may apply. ( Woods , at pp. 672-674, 170 Cal.Rptr. 484, 620 P.2d 1032.)

The amicus...