McBail & Co. v. Solano County Local Agency Formation Com'n

• Decision Date: 06 April 1998
• Docket Number: No. A078417,A078417
• Citation: 72 Cal.Rptr.2d 923,62 Cal.App.4th 1223
• Court: California Court of Appeals Court of Appeals
• Parties: , 98 Cal. Daily Op. Serv. 2521 McBAIL & COMPANY et al., Plaintiffs and Respondents, v. SOLANO COUNTY LOCAL AGENCY FORMATION COMMISSION, Defendant and Appellant.

Page 923

72 Cal.Rptr.2d 923

62 Cal.App.4th 1223, 98 Cal. Daily Op. Serv. 2521

McBAIL & COMPANY et al., Plaintiffs and Respondents, v. SOLANO COUNTY LOCAL AGENCY FORMATION COMMISSION, Defendant and Appellant.

No. A078417.

Court of Appeal, First District, Division 3, California.

April 6, 1998.

Rehearing Denied April 30, 1998.

Dennis Bunting, County Counsel and James W. Laughlin, Deputy County Counsel, for Defendant and Appellant.

Gary M. Funamura, Brooke B. Domich and Trainor Robertson, Sacramento, for Plaintiffs and Respondents.

WALKER, Associate Justice.

By this opinion we decide that a Local Agency Formation Commission's (LAFCO) denial of a petition for annexation must be based upon articulated reasons which have a rational connection to the purposes of the Cortese-Knox Local Government Reorganization Act of 1985 (Cortese-Knox Act or Act) ¹ and that those reasons, in turn, be supported by substantial evidence in the record of the administrative hearing. In the matter before us we find that appellant Solano County LAFCO's reason for denying respondents' annexation petition--that it did not enhance the mission of Travis Air Force Base--was not rationally related to the purposes of the Act. We therefore affirm the trial court's issuance of a peremptory writ of mandate remanding the matter to LAFCO ² for further proceedings. We reverse, however, to the extent that the trial court's writ purports to limit LAFCO's discretion in denying the petition on reconsideration.

PROCEDURAL BACKGROUND

Respondents McBail & Company, Comstock Financial Chartered and Baumeister Von Altdorf, Ltd. (collectively referred to in the singular as McBail) are owners of real property located in unincorporated Solano County. They, along with the owners of adjacent property, sought to have land totaling approximately 153 acres approved for annexation to the City of Fairfield. To that end, they filed a petition for proceedings pursuant to the Cortese-Knox Local Government Reorganization Act of 1985 with appellant, Solano County LAFCO. Following a public hearing on April 1, 1996, LAFCO denied the petition and a subsequent request for reconsideration, and on May 6, 1996, issued LAFCO Resolution No. 96-12, which stated in relevant part as follows: "WHEREAS, this Commission has received an Executive Officer's Report which analyzes each of the Standards for the Factors to be Considered; and [p] WHEREAS, this Commission finds that Travis Air Force Base[ ] is an important and viable economic asset of Solano County; and [p] WHEREAS, further urbanization east of Peabody Road that does not enhance the mission of Travis Air Force Base should be denied; and [p] WHEREAS, the proposed annexation is located east of Peabody Road. [p] NOW, THEREFORE, BE IT RESOLVED AND ORDERED by the Local Agency Formation Commission of Solano County that the annexation of land known as Grill/McBail ..., to the City of Fairfield is hereby DENIED."

McBail filed a petition for writ of mandate in the Solano County Superior Court, seeking to vacate the denial of the petition, the request for reconsideration and the adoption of Resolution No. 96-12, and asking that the matter be remanded to LAFCO for further proceedings. ³ After hearing, the court issued its peremptory writ of mandate finding that LAFCO had "abused [its] discretion in that [its] express or implied finding that anything east of Peabody Road does not enhance the mission of Travis Air Force Base is not supported by substantial evidence[.]" The court ordered that Resolution No. 96-12 be vacated and that McBail's petition for annexation be reconsidered. It further ordered that "[u]pon such reconsideration, LAFCO shall not deny Petitioners' application for annexation until LAFCO has reconsidered this matter and makes a finding supported by substantial evidence that Petitioners' project interferes with the mission of Travis Air Force Base." LAFCO appeals from the trial court's issuance of a peremptory writ of mandate. (See fn. 3, ante.)

DISCUSSION

LAFCO contends that the trial court prejudicially abused its discretion in issuing the writ because both the decision to deny the annexation and the finding that the proposed annexation did not enhance the mission of Travis Air Force Base were supported by substantial evidence. We do not reach the issues posed by appellant since we find fundamental error on LAFCO's part by its failure to state a valid reason or basis for its decision. Having no legitimate statement of basis there is nothing against which to scrutinize the substantiality of the evidence.

We hold that in order for the trial court to intelligently evaluate whether substantial evidence supports the decision to deny the petition, LAFCO must first articulate the basis or reason for that decision. This is so because evidence does not relate to a decision in the abstract, but must be connected to the basis or reason for that decision. Because the court cannot apply the substantial evidence rule in a vacuum, logic and reason dictate that for purposes of meaningful review the administrative agency must state its reason for a decision in order to provide the framework within which the reviewing court can apply the substantial evidence test. We hold further that the stated basis for the decision must have a rational connection to the purposes of the enabling statute. If it does not, a determination by the administrative agency will not withstand the scrutiny of judicial review regardless of the substantiality of the evidence.

1. Jurisdiction of the Reviewing Court and Scope of Review

Appellant's threshold argument attacks the trial court's jurisdiction to review the decision denying annexation, which LAFCO characterizes as a legislative act beyond the scope of judicial review. To the contrary, if an agency acts pursuant to legislative authority, the action is reviewable by ordinary mandamus. (Code Civ. Proc., § 1085; Shapell Industries, Inc. v. Governing Board (1991) 1 Cal.App.4th 218, 1 Cal.Rptr.2d 818; California Hotel & Motel Assn. v. Industrial Welfare Com. (1979) 25 Cal.3d 200, 157 Cal.Rptr. 840, 599 P.2d 31 (California Hotel ).) "The courts exercise limited review of legislative acts by administrative bodies out of deference to the separation of powers between the Legislature and the judiciary, to the legislative delegation of administrative authority to the agency, and to the presumed expertise of the agency within its scope of authority. Although administrative actions enjoy a presumption of regularity, this presumption does not immunize agency action from effective judicial review." (California Hotel, supra, 25 Cal.3d at pp. 211-212, 157 Cal.Rptr. 840, 599 P.2d 31, fns. omitted.)

Indeed, section 56107 of the Government Code ⁴ recognizes the judiciary's authority to independently review a LAFCO decision. By that section, the Act delimits the extent of the trial court's review of a LAFCO's determination by specifying that an administrative decision will be upheld in the absence of prejudicial abuse of discretion, which shall be established if the court finds that a determination was not supported by substantial evidence in the record. (§ 56107.) ⁵ In addition to scrutinizing the agency's use of its discretion, "[a] court must ensure that an agency has adequately considered all relevant factors, and has demonstrated a rational connection between those factors, the choice made, and the purposes of the enabling statute." (California Hotel, supra, 25 Cal.3d at p. 212, 157 Cal.Rptr. 840, 599 P.2d 31, fn. omitted.)

2. Local Agency Formation Commissions Must State Reasons for Their Decisions

LAFCO's were first established by the Knox-Nisbet Act of 1965, for purposes which included discouraging "urban sprawl," and forming and developing "orderly ... local government agencies." (See Knox-Nisbet Act, former § 54773 et seq., repealed by Stats.1985, ch. 541, § 2, p. 1920.) To achieve these goals, which endure today in the Cortese-Knox Act (§§ 56300, 56301 and 56425), each county LAFCO is granted the power to approve or disapprove petitions for annexation. (§ 56375; City of Agoura Hills v. Local Agency Formation Com. (1988) 198 Cal.App.3d 480, 485, 243 Cal.Rptr. 740; City of Santa Clara v. Local Agency Formation Com. (1983) 139 Cal.App.3d 923, 928, 189 Cal.Rptr. 112.)

The factors to be considered by the commission in reaching its decision are enumerated in section 56841. In addition, LAFCO may adopt its own procedures and written standards for consideration of any of the factors enumerated in section 56841. (§ 56375, subd. (i).) Here, LAFCO has adopted "Standards and Procedures for the Evaluation of Annexation Proposals Submitted to the Solano County Local Agency Formation Commission." The document, which details 11 standards ⁶ to be considered when evaluating an annexation petition states: "In the final analysis, the reasoned judgment of LAFCO will be required to determine compliance with each Standard. In deciding on annexation proposals, LAFCO shall make findings on the degree of compliance or non-compliance for each Standard citing facts to support each finding.... LAFCO will make a determination, based on findings supported by factual analysis, on the approval or denial of the annexation proposal." (Italics added.) Thus, LAFCO's own procedures require it to make reasoned findings to support a denial of an annexation petition.

Even if we read LAFCO's own standards and procedures narrowly so as to not require a statement of reasons, logic and reason demand that the agency explain the basis for its decision. As stated by the court in California Hotel, supra, 25 Cal.3d on pages 210-211, 157 Cal.Rptr. 840, 599 P.2d 31, "the statement facilitates meaningful judicial review of agency action[;] ... the exposition requirement subjects the agency, its decision-making processes, and its decisions to more informed scrutiny by the Legislature, the regulated public, lobbying and public interest groups, the...