Yoffie v. Marin Hospital Dist.

• Decision Date: 15 July 1987
• Citation: 238 Cal.Rptr. 502,193 Cal.App.3d 743
• Court: California Court of Appeals Court of Appeals
• Parties: Norwin YOFFIE et al., Plaintiffs and Appellants, v. MARIN HOSPITAL DISTRICT et al., Defendants and Respondents. A034544.

Page 502

238 Cal.Rptr. 502

193 Cal.App.3d 743

Norwin YOFFIE et al., Plaintiffs and Appellants, v. MARIN HOSPITAL DISTRICT et al., Defendants and Respondents.

A034544.

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

July 15, 1987.

Review Denied Oct. 1, 1987.

Judith R. Epstein, George A. Markell, Crosby, Heafey, Roach and May, Oakland, James R. Wheaton, Center for Public Interest Law, Northern California Office, San Francisco, for plaintiffs and appellants.

Joseph T. Francke, California Newspaper Publishers Ass'n, Sacramento, for amici curiae on Behalf of plaintiffs and appellants.

Carr, McClellan, Ingersoll, Thompson & Horn, David C. Carr, Quentin L. Cook, Mark D. Hudak, Burlingame, Hanson, Bridgett Marcus, Vlahos & Rudy, John J. Vlahos, Duane B. Garrett, David W. Baer, San Francisco, for defendants and respondents.

SCOTT, Associate Justice.

This is an appeal from a judgment denying a petition for writ of mandate. The sole question is whether a private nonprofit public benefit corporation which operates Marin General Hospital pursuant to the terms of a 30-year lease from the Marin Hospital District is subject to the open meeting requirements of the Ralph M. Brown Act (the Brown Act or the Act). (Gov.Code, § 54950 et seq.) ¹ For reasons which we will explain, we conclude that it is not, and affirm the judgment.

The Facts

The Marin Hospital District (the District) was organized in 1946 under the provisions of the Local Hospital District Law (Health & Saf.Code, § 32000 et seq.). The District established, owned, and, until recently, operated Marin General Hospital (the hospital) in San Rafael.

The elected board of directors of a hospital district is charged with operating all district-owned hospitals. (Health & Saf. Code, § 32125.) The board may provide for that operation through tenants, and may enter into a lease for the operation of an entire hospital for up to 30 years. (Health & Saf.Code, § 32126.) In addition, a district may transfer, with or without consideration, all of its assets to a nonprofit corporation "to operate and maintain the assets for the benefit of the communities served by the district." (Health & Saf. Code, § 32121, subd. (p)(1).)

The Legislature's stated reason for allowing such transfers is to permit local hospital districts "to remain competitive in the ever changing health care environment...." (Stats.1985, ch. 382, § 5, No. 3 Deering's Adv. Legis. Service, p. 953.) The Legislature's statement of purpose does not explain how the transfer of assets improves the competitive posture of hospital districts, but declarations which appear in the record in this case provide some insight into the plight of district hospitals as of the date of the transfer involved here. According to those declarations, recent years have brought changes in how government agencies and insurance companies reimburse hospitals for services, fewer government restrictions on hospital construction and expansion, and technological advances. These factors have all combined to increase competition among hospitals. In this atmosphere, district hospitals were at a disadvantage for two reasons. Because of open meeting and public disclosure requirements, their private competitors were able to become informed about their economic strategies and plans. ² In addition, constitutional prohibitions on stock ownership and lending of credit by the state and its subdivisions (Cal. Const., art. XVI, § 6) inhibited districts from participating in partnerships with private investor groups to purchase equipment or facilities or in other joint ventures.

Faced with these pressures, in November 1985, after several months of discussion and public meetings, the District's board agreed to lease the hospital for 30 years to a nonprofit public benefit corporation named Marin General Hospital (MGH), for the purpose of operating and maintaining the facility as a nonprofit community hospital for the benefit of the communities served by the District. The District also transferred certain of its assets to MGH, which assumed the debts and liabilities of the District related to the operation of the hospital.

MGH is managed by a 12-person board of directors. The District has no power to appoint any of those board members. Nevertheless, the lease was contingent on the District's approval of MGH's initial board of directors, which did include 2 members of the District's then current board.

Thereafter, appellants Norwin and Sandra Yoffie, taxpayers and residents of the District, filed a complaint for declaratory relief and a petition for writ of mandate against the District, MGH, and their respective boards, among others. Appellants sought an order commanding the MGH board and the other defendants to comply with the open meeting requirements of the Brown Act. After a hearing, the trial court issued a statement of tentative decision and denied the petition, and this appeal followed. With this court's permission, an amicus brief has been filed on behalf of appellants by the California Newspaper Publishers Association and an association of professional journalists.

Discussion

a. Introduction

Initially, we emphasize that neither the legality nor the wisdom of the District's lease of its hospital is at issue in this case. As the trial court noted in its statement of tentative decision, the Legislature has specifically approved the transfer of a hospital district's assets to a nonprofit corporation for operation and management for periods of up to 30 years. Appellants have not challenged the legality of the agreement between the District and MGH. The only question in this case is whether MGH is subject to the open meeting requirements of the Brown Act. ³

The answer to that question requires the application of settled principles of statutory construction. The first such principle is that this court must determine the Legislature's intent so as to effectuate the law's purpose. (Regents of University of California v. Public Employment Relations Bd. (1986) 41 Cal.3d 601, 607, 224 Cal.Rptr. 631, 715 P.2d 590.) If the statutory language is clear and unambiguous, a court will look no further to determine its meaning. (Building Industry Assn. v. City of Camarillo (1986) 41 Cal.3d 810, 819, 226 Cal.Rptr. 81, 718 P.2d 68.) But we cannot read words or sections of statutes in isolation. Every statute must be construed with reference to the whole system of law of which it is a part, so that each part may be harmonized and have effect. (Bozung v. Local Agency Formation Com. (1975) 13 Cal.3d 263, 274, fn. 7, 118 Cal.Rptr. 249, 529 P.2d 1017.) The various parts of a statute must be harmonized by considering each section in the context of the statutory framework as a whole. (Palos Verdes Faculty Assn. v. Palos Verdes Peninsula Unified Sch. Dist. (1978) 21 Cal.3d 650, 659, 147 Cal.Rptr. 359, 580 P.2d 1155.) This rule applies even if the statutes to be harmonized appear in different codes. (Bozung v. Local Agency Formation Com., supra, 13 Cal.3d at p. 274, fn. 7, 118 Cal.Rptr. 249, 529 P.2d 1017.) Significance should be given to every part of an act, if possible, and construction making words surplusage should be avoided. (Palos Verdes Faculty Assn., supra, 21 Cal.3d at p. 659, 147 Cal.Rptr. 359, 580 P.2d 1155.) Where a general statute standing alone would include the same matter and conflict with a special statute, the special act will be considered as an exception to the general, whether it was passed before or after the general enactment. (People v. Watson (1981) 30 Cal.3d 290, 295, 179 Cal.Rptr. 43, 637 P.2d 279.)

In addition, we must assume that the Legislature has in mind existing law when it passes a statute. (Bailey v. Superior Court (1977) 19 Cal.3d 970, 977-978, fn. 10, 140 Cal.Rptr. 669, 568 P.2d 394.) The fact that a prior act was amended demonstrates legislative intent to change preexisting law, and we must presume that material changes in the language of an act were intended to change the law. (Clements v. T.R. Bechtel Co. (1954) 43 Cal.2d 227, 231, 273 P.2d 5.)

The Legislature's aim in enacting the Brown Act is stated in section 54950: "... the public commissions, boards and councils and the other public agencies in this State exist to aid in the conduct of the people's business. It is the intent of the law that their actions be taken openly and that their deliberations be conducted openly...." To further that goal, section 54953 mandates that "[a]ll meetings of the legislative body of a local agency shall be open and public ... except as otherwise permitted by this chapter." (Emphasis added.)

Both "local agency" and "legislative body" are defined in the Brown Act. The basic definition of a "local agency" appears in section 54951: "... a county, city, whether general law or chartered, city and county, town, school district, municipal corporation, district, political subdivision, or any board, commission or agency thereof, or other local public agency." The Act also makes certain private entities "local agencies" within its scope. For example, the term "local agency" includes "any nonprofit corporation, created by one or more local agencies, any one of the members of whose board of directors is appointed by such local agencies and which is formed to acquire, construct, reconstruct, maintain, or operate any public works project." (§ 54951.7; see also § 54951.1 [local agency includes private nonprofit corporations which receive certain federal funds].)

The basic definition of "legislative body" appears in section 54952, which provides in pertinent part that the term means "the governing board [or] directors ... of a local agency ... and shall include any board ... on which officers of a local agency serve in their official capacity as members and which is supported in whole or in part by funds provided by such agency, whether such board ... is organized and operated by such local agency or by a private corporation." (Emphasis...