Mezzetta v. City of American Canyon

• Decision Date: 03 March 2000
• Docket Number: No. A085136.,A085136.
• Citation: 78 Cal.App.4th 1087,93 Cal.Rptr.2d 292
• Court: California Court of Appeals Court of Appeals
• Parties: G.L. MEZZETTA, INC., Plaintiff and Appellant, v. CITY OF AMERICAN CANYON, Defendant and Respondent.

93 Cal.Rptr.2d 292

78 Cal.App.4th 1087

G.L. MEZZETTA, INC., Plaintiff and Appellant, v. CITY OF AMERICAN CANYON, Defendant and Respondent.

No. A085136.

Court of Appeal, First District, Division 2.

March 3, 2000.

Certified for Partial Publication.^*

Donald F. Drummond, Lukens and Drummond, San Francisco, for Appellant.

William D. Ross, Lisabeth D. Rothman, Barbara J. Higgins, Law Offices of William D. Ross, Los Angeles, for Respondent.

KLINE, P.J.

G.L. Mezzetta, Inc. (Mezzetta) sued the City of American Canyon (City) for breach of oral and written contract, inverse condemnation, and civil rights violations after the City allegedly failed to honor its agreement to provide Mezzetta with a connection to a wastewater discharge system that could accept Mezzetta's high salinity wastewater. The trial court ultimately sustained the City's demurrers without leave to amend as to all causes of action and Mezzetta now challenges the trial court's rulings. In the published portion of this opinion, we shall affirm the trial court's order as to the oral contract cause of action because we find that the relevant statutory provisions preclude the City from entering into oral agreements. In the unpublished portion of this opinion, we shall affirm the trial court's order as to all other causes of action.

FACTUAL BACKGROUND

The facts pleaded in Mezzetta's complaint and first amended complaint are as follows. Mezzetta is a leading producer of pickled and roasted peppers, olives, and condiments. Mezzetta moved its processing plant to the City based on a 1995 agreement—primarily verbal—between Mezzetta and the City's manager and public works director, pursuant to which the City agreed to provide Mezzetta with a connection to a wastewater discharge system by October 1997 that was capable of accepting Mezzetta's high salinity wastewater. Although at the time of the agreement, the City was utilizing the services of the Napa Sanitary District (Napa) for both domestic and industrial wastewater discharge, the City represented that it had contracted with the Vallejo Sanitation and Flood Control District (Vallejo), which would accept higher levels of salinity than could Napa and at a more economic rate, to provide wastewater treatment for the City after February 1997.

The City agreed that Mezzetta's industrial wastewater connection, with fees not to exceed $50,000 for up to 26,000 gallons of pretreated wastewater discharge with a salinity level of up to 20,000 milligrams per liter, would be accomplished by one of the following methods: "(1) connection to the Vallejo Sanitation District, with which the City then had a contract to accept wastewater discharge, including wastewater with salinity levels in excess of 2%; (2) timely construction of the City's own wastewater treatment plant, which would accept Mezzetta's discharge; and/or (3) service could be provided through [Napa] by producing sufficient dilution that Mezzetta's discharge would be acceptable to [Napa]."

In September 1997, after Mezzetta had purchased property, obtained the necessary permits, and commenced operations, Mezzetta learned that the City had rejected the contract with Vallejo and intended to attempt to obtain approval and financing for its own wastewater discharge system, which might be able to accept Mezzetta's discharge, but which would not be available for hookup until at least the fall of 1999.

PROCEDURAL BACKGROUND

On March 18, 1998, Mezzetta filed its original complaint for damages against the City alleging six causes of action including breach of written contract; breach of oral contract, estoppel, and ratification; three causes of action for inverse condemnation; and civil rights violations. On June 18, 1998, the trial court sustained the City's demurrer without leave to amend as to the inverse condemnation causes of action, finding that Mezzetta did not have any legally recognized vested right that could support those causes of action, that Mezzetta's discharge plan was not "property," and that Mezzetta's reasonable investment-backed expectations were not substantially interfered with. The court also sustained a demurrer to the civil rights violation cause of action without leave to amend, finding that the City's decision regarding the Vallejo contract was rationally related to the legitimate government interest in discharging wastewater.

In addition, the trial court sustained the demurrer, with leave to amend, as to the written contract cause of action, finding that Mezzetta should have the opportunity to attempt to state a cause of action for breach of contract, which pleading would include a copy of the written contract or recitation of the contract in haec verba. Finally, the court sustained, also with leave to amend, the oral contract, estoppel, and ratification cause of action, finding that Mezzetta should have the opportunity to attempt to state such a cause of action, which pleading would be sufficiently specific to withstand a demurrer for vagueness.¹

On July 7, 1998, Mezzetta filed a first amended complaint for damages, alleging two causes of action, including (1) breach of written contract and (2) breach of oral contract, promissory estoppel, and ratification. On October 8, 1998, the trial court sustained the City's demurrer without leave to amend as to both causes of action. On October 26, 1998, the trial court entered an order dismissing the first amended complaint. Mezzetta filed a notice of appeal on November 20, 1998, and an amended notice of appeal on December 2, 1998.

DISCUSSION

I. Standard of Review

"A demurrer tests the legal sufficiency of the complaint, and the granting of leave to amend involves the trial court's discretion. Therefore, an appellate court employs two separate standards of review on appeal. [Citations.] First, the complaint is reviewed de novo to determine whether it contains sufficient facts to state a cause of action. [Citation.] In doing so, we accept as true the properly pleaded material factual allegations of the complaint, together with facts that may be properly judicially noticed. Reversible error exists only if facts were alleged showing entitlement to relief under any possible legal theory. [Citations.] [¶] Second, where the demurrer is sustained without leave to amend, reviewing courts determine whether the trial court abused its discretion in doing so. [Citations.] On review of the trial court's refusal to grant leave to amend, we will only reverse for abuse of discretion if we determine there is a reasonable possibility the pleading can be cured by amendment. Otherwise, the trial court's decision will be affirmed for lack of abuse. [Citations.]" (Hernandez v. City of Pomona (1996) 49 Cal.App.4th 1492, 1497-1498, 57 Cal.Rptr.2d 406.)

II. Contract Causes of Action

The Government Code classifies cities as either "general law cities" (cities organized under the general law of California) or "chartered cities" (cities organized under a charter). (Gov.Code, §§ 34100, 34101, 34102;² see also First Street Plaza Partners v. City of Los Angeles (1998) 65 Cal.App.4th 650, 660, 76 Cal.Rptr.2d 626; South Bay Senior Housing Corp. v. City of Hawthorne (1997) 56 Cal.App.4th 1231, 1235-1236, 66 Cal.Rptr.2d 99.) The powers of a general law city include "`only those powers expressly conferred upon it by the Legislature, together with such powers as are "necessarily incident to those expressly granted or essential to the declared object and purposes of the municipal corporation." The powers of such a city are strictly construed, so that "any fair, reasonable doubt concerning the exercise of a power is resolved against the corporation." [Citation.]' [Citations.]" (Martin v. Superior Court (1991) 234 Cal. App.3d 1765, 1768, 286 Cal.Rptr. 513.) American Canyon is a general law city and, as such, it must comply with state statutes that specify requirements for entering into contracts. (See § 34000 et seq.; South Bay Senior Housing Corp. v City of Hawthorne, supra, 56 Cal.App.4th at pp. 1235-1236, 66 Cal.Rptr.2d 99.) "A contract entered into by a local government without legal authority is `wholly void,' ultra vires, and unenforceable." (Midway Orchards v. County of Butte (1990) 220 Cal.App.3d 765, 783, 269 Cal. Rptr. 796, quoting Dynamic Ind. Co. v. City of Long Beach (1958) 159 Cal.App.2d 294, 299-300, 323 P.2d 768.)

The parties cite one Government Code section and two of the City's Municipal Code provisions as relevant to the question of what type of contracts the City has the power to enter into. First, section 40602 provides in relevant part: "The mayor shall sign: [¶] ... [¶] (b) All written contracts and conveyances made or entered into by the city. [¶] ... [¶] The legislative body may provide by ordinance that the instruments described ... be signed by an officer other than the mayor." Municipal Code section 2.08.060, which sets forth the powers and duties of the city manager, provides in relevant part that the city manager "shall be expected to, and shall have the power to: [¶] ... [¶] M. Have the same authority as the mayor (as conveniences to the parties may dictate) to sign documents specified in Section 40602 ... whenever such documents have been approved by the council for execution by resolution, motion, minute order or other appropriate action...." Finally, section 2.20.030 of the Municipal Code provides in relevant part: "The functions of the office of the city attorney shall be to: [¶] ... [¶] C. Prepare and/or approve all ordinances, resolutions, agreements, contracts, and other legal instruments as shall be required for the proper conduct of the business of the city and approve the form of all contracts and agreements and bonds given to the city...."

A. Oral Contract

Mezzetta contends the trial court erred in finding that Mezzetta failed to state a cause of action for breach of an oral contract. According to Mezzetta, nothing in the three relevant Government and Municipal Code sections...