Poverty Resistance Center v. Hart

• Decision Date: 18 August 1989
• Docket Number: No. C000432,C000432
• Court: California Court of Appeals Court of Appeals
• Parties: POVERTY RESISTANCE CENTER et al., Plaintiffs and Appellants, v. Dennis B. HART, as Director, etc. et al., Defendants and Respondents.

Page 545

261 Cal.Rptr. 545

POVERTY RESISTANCE CENTER et al., Plaintiffs and Appellants, v. Dennis B. HART, as Director, etc. et al., Defendants and Respondents.

No. C000432.

Court of Appeal, Third District, California.

Aug. 18, 1989.

Review Granted Nov. 16, 1989.

Puglia, P.J., filed a dissenting opinion.

Daniel L. Siegel, Eugene T. Moriguchi, Roberta Ranstrom, and Jeffery Ogata, Sacramento, for plaintiffs and appellants.

L.B. Elam, County Counsel, and Michele Bach, Deputy County Counsel, Sacramento, for defendants and respondents.

BLEASE, Associate Justice.

This action challenges a resolution of the Sacramento County Board of Supervisors (Board), setting the levels of aid for county recipients of general assistance. General assistance is a state-mandated program for the support of all poor or incapacitated county residents who lack other means of support. Plaintiffs are the Poverty Resistance Center and individual recipients of general assistance. Defendants are the county, the Board, the County Department of Social Welfare and its director, Dennis B. Hart (Director).

Plaintiffs appeal from the judgment entered following the sustaining of defendants' demurrer to the complaint for failure to state a cause of action. The complaint charges that the Board breached the statutory duties imposed upon it by Welfare and Institutions Code sections 17000 and 17001 ¹ in that the standard of aid is not supported by "adequate studies of the actual cost of maintaining a minimum standard of living in Sacramento County." We will conclude that the Board has not complied with the statutory mandate by failing to adequately consider the relevant factors of subsistence and by predicating the levels of aid on documentary evidence and studies without a rational connection to the relevant factors. We will reverse the judgment.

Facts and Procedural Background

The facts material to our review are contained in the complaint, the documents incorporated by it, and the documents considered on the motions of the parties for judicial notice.

On September 17, 1985, the Board, after noticed public hearings at which oral presentations were made and documentary materials were received, adopted Resolution No. 85-1424. The resolution establishes monthly cash grant levels to meet shelter, food and personal and incidental needs for families, e.g., two persons $320 (including a $30 transportation allowance), persons living alone $206, and persons living in shared housing $159. It also provides a transportation allowance, $15 for employable persons and $10 for unemployable persons.

The resolution contains various recitals and findings explaining and justifying the grant levels. Among the findings is the following assertion. "Strict application of the cost-of-living survey results is not appropriate. Cost-of-living surveys, including that [sic] considered by this Board, represent hypothetical rather than real data pertaining to actual costs incurred by General Assistance recipients. As such, cost-of-living surveys constitute only one factor of many which must be considered in determining the adequacy of General Assistance grant levels."

Among the recitals in the resolution is a list of documents that the Board considered and reviewed in conjunction with the hearings. Chief among these documents is a memorandum from the Director recommending the maximum grant levels that were adopted by the resolution and explaining the justification for the recommendation. The Director's memorandum asserts that "The General Assistance grant is intended to meet the basic needs of shelter, food, personal needs and transportation for indigents who are residents of Sacramento County." It indicates that the amount of the proposed grant level attributable to meeting these respective needs are as follows, food $60, personal needs $9, transportation $15 for employable recipients and $10 for unemployable recipients, and the remainder for shelter costs. The grant level recommendation is asserted to be supported by cost-of-living survey results contained in several appendices.

In the appendices there is a "market basket survey" pricing costs of food, toiletries, aspirin, and cleaning supplies. The cost of food to meet the dietary standard prescribed is $60.45. The cost of the other items in the market basket survey is $7.56. There also is a breakout of public transit services that can be purchased with the recommended allocation of money for transportation. Lastly there is a survey of housing costs. The housing cost survey indicates that the average cost of shelter when the rent includes utilities is $152.67 for general assistance recipients living alone and $97.48 if sharing housing. It indicates that the average cost of shelter when the rent does not include utilities is $146.49 for general assistance recipients living alone and $110.90 if sharing housing.

Plaintiffs' counsel submitted a memorandum to the Board replying to the memorandum of the Director. It recommends higher maximum monthly grant levels and contains arguments criticizing the methodology of the Director's cost-of-living surveys and the Director's reasoning from that data to the recommended grant levels. Appended to this memorandum is a recommendation and justification for the higher grant levels prepared by a retained consultant which includes an alternative market basket survey for food items.

The Director submitted a memorandum in which he responded to the arguments and criticism in plaintiffs' counsel's memorandum and "evidence and testimony ... presented by various community and legal organizations" at the first hearing on the topic before the Board. The Director's reply memorandum explains, inter alia, that his methodology for the market basket survey was that developed by a consultant that had been retained by the Board in 1979. That earlier survey and explanation of methodology is included in the documents before the Board.

Plaintiffs filed a complaint for declaratory, injunctive, and monetary relief alleging in pertinent part that the grant levels set by the Board in the resolution are not supported by "adequate studies of the actual cost of maintaining a minimum standard of living in Sacramento County." The complaint sets forth specific respects in which it is claimed that the methodology used by the Board to survey costs and to calculate the aggregate cost of subsistence living is deficient. Defendants demurred on the ground these allegations failed to state a cause of action.

The trial court sustained the demurrer on the ground that the argument and evidence "as a matter of law, fails to provide any ground for judicial intervention by this Court." The trial court reasoned that plaintiffs "have not shown a failure by the Board of Supervisors to review evidence of the minimum subsistence needs of the indigent residents within Sacramento County. The Court will not inquire into the relative validity of the various studies conducted to determine these minimum subsistence needs."

This appeal followed the ensuing judgment dismissing the action with prejudice.

Discussion

I The Scope of Judicial Review

The parties advance antithetical standards of judicial review of the Board's action. We will conclude that neither is proper for reasons derived by case law from the statutes which govern the provision of general assistance.

This appeal arises on demurrer. Ordinarily, the validity of the demurrer is measured by the complaint. ² However, in this case the factual allegations of the complaint are supplemented by documents appended to the complaint and by the documents that were judicially noticed. These documents were considered by the Board in establishing the grant levels. The materiality of this factual grist depends upon the underlying substantive law, namely, the nature of the standards of aid and care mandated by sections 17000 and 17001. (See Perry v. Robertson (1988) 201 Cal.App.3d 333, 339, 247 Cal.Rptr. 74.) The standard of judicial review of the action of the Board is in turn dependent upon these substantive statutory requirements. We first turn to the views of the parties on the requisite standard.

Plaintiffs suggest that they are entitled to an independent adjudication of the cost of subsistence in Sacramento County based on evidence they would adduce in the judicial forum. Defendants suggest that judicial review is strictly limited to that ordinarily applicable to a legislative appropriation, that the only issue is whether the Board acted arbitrarily and capriciously in adopting the standards of aid. They reason that the adoption of standards of aid and care by the Board under section 17001 is a part of the budgetary process; that adoption of the budget is a legislative function; that we must broadly defer to the expertise of the Board in performing its legislative function. Neither plaintiffs' nor defendants' view is correct. Plaintiffs have too broad a view of the scope of judicial review; defendants' view is too narrow.

Plaintiffs mistake the essential posture of the adjudication. The issuable facts in the judicial proceeding are not the costs of a subsistence living in Sacramento County. Rather, as we later show, they are the facts considered by the Board in setting the grant levels. That is so because it is the lawfulness of the Board's action in setting the standard of aid which is under review. "A court will uphold the agency action unless the action is arbitrary, capricious, or lacking in evidentiary support. [However, 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 and Motel Assn. v. Industrial Welfare Com. (1979) 25 Cal.3d 200, 212, 157 Cal.Rptr. 840, 599 P.2d 31; fn. omitted; see also California Assn. of Nursing Homes etc., Inc. v. Williams (1970) 4 Cal.App.3d 800, 815-816, 84...