Luke v. Sonoma County

Filed 12/12/19
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
GEORGE W. LUKE,
Plaintiff and Appellant,
A155286
v.
SONOMA COUNTY et al., (Sonoma County
Super. Ct. No. SCV261187)
Defendants and Respondents.
Plaintiff George W. Luke, a Sonoma County resident and taxpayer, appeals from
the trial court’s orders sustaining the demurrers of Sonoma County (the County) and
certain County officials, the Sonoma County Employees’ Retirement Association, and the
Sonoma County Law Enforcement Association (collectively, Respondents). Plaintiff
argues the trial court erred in finding his claims challenging the payment of increased
public employee pension benefits barred by the statute of limitations. We affirm.
BACKGROUND1
In 2002 or 2003, the County authorized increased pension benefits for County
employees, pursuant to a settlement of employee lawsuits alleging past miscalculation of
retirement benefits. In doing so, the County failed to comply with state laws requiring
local legislative bodies to obtain an actuarial statement of the future annual costs of
*
Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is
certified for publication with the exception of part II.
1
“On appeal from the sustaining of a demurrer, we accept as true the well-pleaded facts
in the operative complaint . . . .” (Aryeh v. Canon Business Solutions, Inc. (2013) 55
Cal. 4th 1185, 1189, fn. 1 (Aryeh).)
1
proposed pension increases, and to make the future annual costs public at a public
meeting, before authorizing the pension increases. (See Gov. Code, §§ 7507, 23026,
31515.5, 31516.)2 In 2017, Plaintiff filed the underlying petition for writ of mandate,
alleging these violations and seeking a writ enjoining payment of the increased pension
benefits.
The trial court sustained Respondents’ demurrers to Plaintiff’s original and first
amended petitions, finding the claim barred by the statute of limitations. In sustaining the
demurrers to the first amended petition, the trial court denied leave to amend. Judgment
issued in favor of Respondents.
DISCUSSION3
“This appeal follows the sustaining of a demurrer. The application of the statute
of limitations on undisputed facts is a purely legal question [citation]; accordingly, we
review the lower courts’ rulings de novo. We must take the allegations of the operative
complaint as true and consider whether the facts alleged establish [Plaintiff’s] claim is
barred as a matter of law.” (Aryeh, supra, 55 Cal.4th at p. 1191.)
“An affirmative defense, the statute of limitations exists to promote the diligent
assertion of claims, ensure defendants the opportunity to collect evidence while still
fresh, and provide repose and protection from dilatory suits once excess time has passed.
[Citations.] The duration of the limitations period marks the legislatively selected point
at which, for a given claim, these considerations surmount the otherwise compelling
interest in adjudicating on their merits valid claims. [Citations.] [¶] The limitations
period, the period in which a plaintiff must bring suit or be barred, runs from the moment
a claim accrues. [Citations.] Traditionally at common law, a ‘cause of action accrues
“when [it] is complete with all of its elements”—those elements being wrongdoing, harm,
and causation.’ [Citation.] This is the ‘last element’ accrual rule: ordinarily, the statute
2
All undesignated section references are to the Government Code.
3
The Sonoma County Employees’ Retirement Association and the Sonoma County Law
Enforcement Association join in the arguments submitted on behalf of the County and its
officials.
2
of limitations runs from ‘the occurrence of the last element essential to the cause of
action.’ ” (Aryeh, supra, 55 Cal.4th at p. 1191.)
“To align the actual application of the limitations defense more closely with the
policy goals animating it, the courts and the Legislature have over time developed a
handful of equitable exceptions to and modifications of the usual rules governing
limitations periods. These doctrines may alter the rules governing either the initial
accrual of a claim, the subsequent running of the limitations period, or both.” (Aryeh,
supra, 55 Cal.4th at p. 1192.) “[The defendant] bears the initial burden of proving [the
plaintiff’s] claims are barred by [the applicable] limitations period. [Citation.]
Thereafter, the burden shifts to [the plaintiff] to demonstrate his claims survive based on
one or more nonstatutory exceptions to the basic limitations period. [Citation.] That
burden may be imposed even at the pleading stage.” (Id. at p. 1197.)
All parties agree the applicable statute of limitations is set forth in Code of Civil
Procedure section 338, subdivision (a), which provides a three-year limitations period for
“[a]n action upon a liability created by statute, other than a penalty or forfeiture.”
Because Plaintiff’s lawsuit was filed well over three years after the County approved the
challenged pension increases, Respondents have met their burden to prove Plaintiff’s
claims are barred by this limitations period. The parties dispute whether Plaintiff has met
his burden to demonstrate that his claim survives based on an exception to the limitations
period.
I. Continuous Accrual
“[U]nder the theory of continuous accrual, a series of wrongs or injuries may be
viewed as each triggering its own limitations period, such that a suit for relief may be
partially time-barred as to older events but timely as to those within the applicable
limitations period.” (Aryeh, supra, 55 Cal.4th at p. 1192.) “The theory is a response to
the inequities that would arise if the expiration of the limitations period following a first
breach of duty or instance of misconduct were treated as sufficient to bar suit for any
subsequent breach or misconduct; parties engaged in long-standing misfeasance would
thereby obtain immunity in perpetuity from suit even for recent and ongoing misfeasance.
3
In addition, where misfeasance is ongoing, a defendant’s claim to repose, the principal
justification underlying the limitations defense, is vitiated.” (Id. at p. 1198.) “Generally
speaking, continuous accrual applies whenever there is a continuing or recurring
obligation: ‘When an obligation or liability arises on a recurring basis, a cause of action
accrues each time a wrongful act occurs, triggering a new limitations period.’ ” (Id. at
p. 1199.) “[T]he theory of continuous accrual supports recovery only for damages arising
from those breaches falling within the limitations period.” (Ibid.)
The obligation allegedly violated is the one imposed by former section 7507, as
effective in 2002 and 2003: “The Legislature and local legislative bodies shall secure the
services of an enrolled actuary to provide a statement of the actuarial impact upon future
annual costs before authorizing increases in public retirement plan benefits. An ‘enrolled
actuary’ means an actuary enrolled under subtitle C of Title III of the federal Employee
Retirement Income Security Act of 1974 and ‘future annual costs’ shall include, but not
be limited to, annual dollar increases or the total dollar increases involved when
available. [¶] The future annual costs as determined by the actuary shall be made public
at a public meeting at least two weeks prior to the adoption of any increases in public
retirement plan benefits.” (Former § 7507, added by Stats. 1977, ch. 941, § 1; amended
by Stats. 1980, ch. 481, § 3, fn. omitted.)4 As Respondents argue, the statute on its face
does not impose a continuing or recurring obligation. Instead, the obligation is imposed
before pension increases are authorized.
Plaintiff argues the County’s failure to comply with former section 7507 renders
the authorized pension increases void and therefore each pension payment made pursuant
to this void authority is a new wrong triggering its own limitations period. Plaintiff relies
on Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal. 4th 809 (Howard
Jarvis), which involved “an action against a city for allegedly imposing and collecting a
general tax on its residents without the voter approval mandated by Proposition 62 (Gov.
4
The other statutes cited in Plaintiff’s petition effectively restate these requirements
(§§ 23026, 31515.5, 31516) or set forth a statement of legislative intent (§ 31515).
4
Code, §§ 53720–53730) . . . .” (Howard Jarvis, at p. 812.) “Government Code section
53723 provides: ‘No local government . . . may impose any general tax unless and until
such general tax is submitted to the electorate of the local government . . . and approved
by a majority vote of the voters voting in an election on the issue.’ ” (Howard Jarvis, at
p. 814.) As here, it was “undisputed . . . that this action is one ‘upon a liability created by
statute,’ to which a three-year limitation period applies. (Code Civ. Proc., § 338, subd.
(a).)” (Id. at p. 815.) The city argued the cause of action accrued when the tax ordinance
was enacted without the requisite electorate vote and, because that enactment took place
more than three years before the plaintiffs’ action, the claim was time-barred. (Id. at
p. 819.) In response, the plaintiffs argued “they are seeking redress for two types of
injury: the violation of their right to vote on new taxes, and the City’s continued
collection of the tax without valid legal authority.” (Ibid.) As to the latter, the plaintiffs
alleged: “ ‘By continuing to impose the general tax at issue in this case,’ . . . ‘defendant
City is failing to perform the legal duties required of it by Proposition 62.’ ” (Ibid.)
The Supreme Court agreed with the plaintiffs and held each collection of the tax
triggered a new limitations period, pursuant to the continuous accrual theory. (Howard
Jarvis, supra, 25 Cal.4th at p. 812.) In its analysis, the court relied on the statutory
language enacted by Proposition 62 to conclude that the statute imposed an ongoing
obligation. “Proposition 62 prohibited the imposition of a general tax ‘unless and until
such general tax is submitted to the electorate.’ (Gov. Code, § 53723.) That command is
allegedly violated each time the City collects its utility tax through the service providers.”
(Howard Jarvis, at p. 823.) The court expressly rejected the city’s contention that
Proposition 62’s prohibition of the “imposition” of a tax without voter approval is limited
to the time of enactment: “Government Code section 53727, subdivision (b), which
governs taxes imposed prior to the measure’s passage, provides that no such tax ‘shall
continue to be imposed’ without a vote within two years of the measure’s effective date,
and that a taxing jurisdiction that fails to obtain a majority vote ‘shall cease to impose
such tax on and after November 15, 1988.’ Clearly, in this provision, ‘imposition’ is not
limited to the time of initial enactment, and nothing in Proposition 62 suggests that it was
5
used in a more restricted sense in Government Code section 53723, the prohibitory
provision at issue here. Government Code section 53728, moreover, provides a remedy
against a city’s continued collection of a tax that has not been approved by the voters,
requiring the responsible county official to withhold property tax transfers in a dollar
amount equal to the illegal collections. Clearly the intent of Proposition 62’s enactors
was not merely to preclude enactment of a tax ordinance without voter approval, but to
preclude continued imposition or collection of such a tax as well.” (Howard Jarvis, at
pp. 823–824.)
Howard Jarvis also noted that a tax refund action would have been timely as to the
collection of any tax within the relevant limitations period for such an action. (Howard
Jarvis, supra, 25 Cal.4th at p. 820 & fn. 3.) In a tax refund action, the plaintiff “is not
limited to seeking a refund, but may challenge the validity of the taxing agency’s policy
or continuing conduct by a claim for declaratory relief.” (Id. at p. 822.) The court
reasoned, “Plaintiffs’ causes of action for a declaration of the currently collected tax’s
invalidity and for a writ of mandate to prevent future collection of the tax are no more
barred by the statute of limitations than would be an action for refund of taxes paid.” (Id.
at p. 821.)
We find Howard Jarvis distinguishable. In Howard Jarvis, the allegedly violated
statute imposed an obligation at the time of a tax ordinance’s enactment, but it also
imposed a separate and ongoing obligation not to collect a tax enacted without voter
approval. The court discerned the legislative intent to impose this ongoing obligation
from the statutory language—in particular, the language in section 53727 providing that
no tax imposed prior to Proposition 62’s enactment “ ‘shall continue to be imposed’ ”
without voter approval—construing section 53723’s prohibition on the “impos[ition]” of
a tax without voter approval to mean both the tax’s initial enactment and its subsequent
collection. (Howard Jarvis, supra, 25 Cal.4th at pp. 823–824; see also Aryeh, supra, 55
Cal.4th at p. 1200 [“To determine whether the continuous accrual doctrine applies here,
we look . . . to the nature of the obligation allegedly breached.”].) In contrast, the plain
language of former section 7507 imposes only a one-time obligation: to obtain and make
6
public a statement of the future costs of proposed pension increases “before authorizing”
them.
Plaintiff does not appear to argue that former section 7507 itself imposes a
continuing obligation, but instead suggests Howard Jarvis stands for the proposition that,
if an authority is void for failing to comply with a state law, a new limitations period to
challenge the original failure is triggered every time money is collected or disbursed
pursuant to that authority. Plaintiff construes the case too broadly. As discussed above,
significant portions of the court’s analysis rely on statutory language imposing a
continuing obligation, not present here. We acknowledge that the opinion includes
broader language suggesting the limitations period for a challenge to the validity of a tax
measure based on a violation of any statute can be brought within three years after any
collection of the tax. (Howard Jarvis, supra, 25 Cal.4th at p. 825 [“Cities and counties
must eventually obey the state laws governing their taxing authority and cannot continue
indefinitely to collect unauthorized taxes.”]; ibid. [“[W]here the three-year limitations
period for actions on a liability created by statute (Code Civ. Proc., § 338, subd. (a))
applies, and no other statute or constitutional rule provides differently, the validity of a
tax measure may be challenged within the statutory period after any collection of the tax,
regardless of whether more than three years have passed since the tax measure was
adopted.”].) But the actual analysis hinges on the nature of the obligation imposed by
Proposition 62 itself. (See In re Ricardo P. (2019) 7 Cal.5th 1113, 1126 [“It is true that
our opinion in [a prior case] contains some expansive language . . . . But our reasoning
reflected the specific circumstances presented by the [facts of the case].”].) Moreover,
even this broader language is limited to challenges to tax measures. The court’s
reasoning relied in part on factors unique to such measures, to wit, the availability of a
refund action within a certain limitations period after the collection of a tax, and the
ability to challenge the validity of the underlying tax measure in such an action. (Howard
Jarvis, at pp. 820–822.) Plaintiff cites no comparable statute authorizing actions to
challenge pension payments (or other county expenditures) and setting forth separate
limitations periods for such actions.
7
The pension cases relied on by Plaintiff do not alter this analysis. The cases
discussed by Plaintiff finding certain pension benefits invalid do not involve statute of
limitations defenses and are therefore inapposite. (E.g., San Diego City Firefighters,
Local 145 v. Board of Administration, etc. (2012) 206 Cal. App. 4th 594; Medina v. Board
of Retirement (2003) 112 Cal. App. 4th 864.) Cases involving actions brought by
pensioners rely on the proposition that “ ‘[t]he right to receive periodic payments under a
pension is a continuing one [citation], and any time limitation upon the right to sue for
each instalment necessarily commences to run from the time when that instalment
actually falls due.’ ” (Abbott v. City of Los Angeles (1958) 50 Cal. 2d 438, 462; see also
Dryden v. Board of Pension Commrs. (1936) 6 Cal. 2d 575, 580–581.) That a pensioner
has a continuing right to a pension does not mean that Section 7507 imposes a continuing
obligation on the County.
In Baxter v. State Teachers’ Retirement System (2017) 18 Cal.App.5th 340
(Baxter), the California State Teachers’ Retirement System (CalSTRS) discovered a
years-long error in the monthly benefit calculation of certain retired teachers resulting in
overpayments. (Id. at p. 347.) The teachers argued the applicable statute of limitations
barred CalSTRS from bringing an action to recoup past overpayments and reduce future
benefits. (Ibid.) The Court of Appeal held that, although CalSTRS’ action was untimely,
the continuous accrual doctrine applied. (Id. at p. 382.) The court relied on the
continuing nature of the underlying obligation: “The right of each of the Teachers to
receive monthly payments, and the obligation of CalSTRS to disburse them, are
continuing ones that accrue when such payments become due.” (Id. at p. 380; accord,
Blaser v. State Teachers’ Retirement System (2019) 37 Cal.App.5th 349, 367–368.)
Contrary to Plaintiff’s suggestion, the court’s reasoning does not apply equally here. The
continuing obligation of CalSTRS was to pay correctly calculated benefits—an obligation
that recurred with every pension payment made. In contrast, the County’s obligation at
issue here was to procure and make public an actuarial statement before authorizing
pension increases. Although Plaintiff argues the alleged violation of this obligation
8
rendered the pension increases void, the underlying obligation itself does not recur each
time pension benefits are paid.5
In sum, former section 7507 imposes a duty on government entities to secure and
make public an actuarial statement before approving pension increases. This duty is
imposed at the time of approval and is not “a continuing one, susceptible to recurring
breaches . . . .” (Aryeh, supra, 55 Cal.4th at p. 1200; see also Howard Jarvis, supra, 25
Cal.4th at pp. 823–824.) Unlike the statutory language at issue in Howard Jarvis, there is
no basis to construe former section 7507 as imposing an additional and separate duty to
not pay increased pension benefits pursuant to a pension increase authorized without
compliance with its requirements regarding actuarial statements. To find such a
requirement outside of former section 7507—by finding every allegedly void government
action subject to ongoing challenge pursuant to the continuous accrual theory—would
ignore the direction that, “[t]o determine whether the continuous accrual doctrine applies
here, we look . . . to the nature of the obligation allegedly breached.” (Aryeh, at p. 1200.)
Accordingly, we find the continuous accrual doctrine does not trigger a new limitations
period every time retirement benefits are paid pursuant to the increased pension benefits
approved in 2002 and 2003.
II. Delayed Discovery/Estoppel
Plaintiff alternatively argues that his action is timely under the delayed discovery
and estoppel doctrines. “[T]he discovery rule, where applicable, ‘postpones accrual of a
cause of action until the plaintiff discovers, or has reason to discover, the cause of
action.’ ” (Aryeh, supra, 55 Cal.4th at p. 1192.) “A plaintiff relying on the discovery
5
Plaintiff’s reliance on a constitutional provision prohibiting gifts of public funds (Cal.
Const., art. XVI, § 6) and on a statute barring county payments on a void contract
(§ 23006), is unavailing. Plaintiff contends that because these provisions impose ongoing
obligations, it was unnecessary for the Legislature to impose an ongoing obligation in
former section 7507. We decline to construe these provisions as effectively extending the
continuous accrual doctrine to any alleged violation of a one-time statutory obligation
that results in an expenditure of public funds. To do so would contravene the direction in
Howard Jarvis and Aryeh that the continuous accrual doctrine looks to the underlying
obligation allegedly violated—here, the obligation imposed by former section 7507.
9
rule must plead ‘ “(1) the time and manner of discovery and (2) the inability to have
made earlier discovery despite reasonable diligence.” ’ [Citation.] Plaintiffs have an
obligation to plead facts demonstrating reasonable diligence.” (WA Southwest 2, LLC v.
First American Title Ins. Co. (2015) 240 Cal. App. 4th 148, 157.) “A party may be
equitably estopped to assert the statute of limitations when his or her conduct induced
another not to file a lawsuit within the applicable limitations period.” (Walker v. City of
San Clemente (2015) 239 Cal. App. 4th 1350, 1370.)
All of the statutes allegedly violated required the County to provide specified
notice at a public meeting of the board of supervisors. (Former section 7507 [“[L]ocal
legislative bodies shall secure the services of an enrolled actuary to provide a statement
of the actuarial impact upon future annual costs before authorizing increases in public
retirement plan benefits. . . . [¶] The future annual costs as determined by the actuary
shall be made public at a public meeting at least two weeks prior to the adoption of any
increases in public retirement plan benefits.” (italics added)]; see also §§ 23026 [“[T]he
board of supervisors shall make public, at a regularly scheduled meeting of the board, all
salary and benefit increases that affect either or both represented employees and
nonrepresented employees. . . . Notice shall occur prior to the adoption of the salary or
benefit increase, and shall include an explanation of the financial impact that the
proposed benefit change or salary increase will have on the funding status of the county
employees’ retirement system.” (italics added)], 31515.5 [same], 31516 [“The board of
supervisors, in compliance with Section 7507, shall secure the services of an enrolled
actuary to provide a statement of the actuarial impact upon future annual costs before
authorizing increases in benefits. . . . [¶] The future annual costs as determined by the
actuary shall be made public at a public meeting at least two weeks prior to the adoption
of any increases in benefits.” (italics added)].) Any violation would therefore be apparent
from the public records of the County Board of Supervisors’ meetings from 2002 and
2003. (See International Longshoremen’s and Warehousemen's Union v. Los Angeles
Export Terminal, Inc. (1999) 69 Cal. App. 4th 287, 293 [“The Brown Act (§ 54950 et
seq.), adopted in 1953, is intended to ensure the public’s right to attend the meetings of
10
public agencies. [Citation.] To achieve this aim, the Act requires, inter alia, that an
agenda be posted at least 72 hours before a regular meeting and forbids action on any
item not on that agenda.”].)
Plaintiff fails to allege (or argue) facts demonstrating why, under such
circumstances, he was unable to discover the alleged violation within the limitations
period. He has thus failed to meet his burden under the discovery rule. Moreover, “a
discovery rule is not appropriate, where as here, a public agency’s violation of a statute is
a matter of public record and the violation is being asserted by a plaintiff which has no
direct beneficial interest in the outcome of the litigation.” (Hogar Dulce Hogar v.
Community Development Commission (2003) 110 Cal. App. 4th 1288, 1297.)
Plaintiff argues the public records “were superseded by the subsequent
misrepresentations of Respondents,” but the only cited misrepresentations were made in
response to a 2012 grand jury report on the issue. This conduct took place well outside of
the limitations period and therefore does not estop Respondents from invoking the statute
of limitations. (Walker v. City of San Clemente, supra, 239 Cal.App.4th at p. 1370
[defendant’s conduct “several years after the limitations period already had expired” was
insufficient to warrant estoppel].)
Accordingly, we conclude that neither delayed discovery nor estoppel applies to
toll the statute of limitations.6
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs.
6
Because of our conclusion, we need not resolve several issues raised by the parties:
whether the 2012 grand jury report was sufficient to put Plaintiff on inquiry notice of the
alleged violation; whether any County officials were fiduciaries and/or had a conflict of
interest with respect to the County’s response to the grand jury report; whether Plaintiff
failed to preserve certain claims; and whether the dismissal in favor of the Sonoma
County Law Enforcement Association can be affirmed on alternative grounds. In
addition, because our resolution of the issue relies solely on undisputed facts, we need not
address the parties’ dispute about judicial notice or Plaintiff’s contention that the trial
court relied on its own personal knowledge in resolving the issue.
11
SIMONS, J.
We concur.
JONES, P.J.
BURNS, J.
(A155286)
12
Superior Court of Sonoma County, No. SCV261187, Hon. Rene Chouteau, Judge.
Robinson & Robinson, Jeffrey A. Robinson and Charles R. Patterson for Plaintiff and
Appellant.
Colantuono, Highsmith & Whatley, Michael G. Colantuono, Jon R. di Cristina and Conor
W. Harkins for Defendants and Respondents County of Sonoma, Sonoma County Board
of Supervisors, Erick Roeser, Christina Cramer, Bruce Goldstein, and Sheryl Bratton.
Nossaman, Ashley K. Dunning and Jennifer L. Meeker for Defendant and Respondent
Sonoma County Employees’ Retirement Association and Julie Wyne.
Mastagni Holstedt, David P. Mastagni and Kenneth E. Bacon for Defendant and
Respondent Sonoma County Law Enforcement Association.
13