City of Brentwood v. Department of Finance

Filed 8/11/20; Certified for Publication 9/9/20 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
CITY OF BRENTWOOD et al., C086344
Plaintiffs and Appellants, (Super. Ct. No. 34-2016-
80002498-CU-WM-GDS)
v.
DEPARTMENT OF FINANCE et al.,
Defendants and Respondents.
This case involves another effort by the City of Brentwood (Brentwood) to obtain
reimbursement for construction costs incurred in five redevelopment projects. In City of
Brentwood v. Campbell (2015) 237 Cal.App.4th 488 (Brentwood I), we rejected
Brentwood’s contention that a statutory exception to the redevelopment dissolution
statutes allowed the city to retain funds previously reimbursed under five public
improvement agreements (PIA’s) between Brentwood and its former redevelopment
agency (RDA). (Id. at pp. 500-505.) In this case, Brentwood seeks payment for expenses
as yet unreimbursed, contending that the PIA’s are “enforceable obligations” under
1
Health & Safety Code section 34191.4, subdivision (b)(1),1 a 2015 amendment to the
dissolution statutes. Under section 34171, subdivision (d)(2), a reimbursement
agreement between a city and a former RDA would not be an enforceable obligation.
The amendment created an exception for a “loan agreement” (§ 34191.4, subd. (b)(2)),
defined to include an agreement “under” which the city “contracted with a third party on
behalf of the former redevelopment agency for the development of infrastructure” and
“the former redevelopment agency was obligated to reimburse the city . . . for the
payments made by the city . . . to the third party.” (§ 34191.4, subd. (b)(2)(C)(i).)2
Brentwood contends that third party construction contracts for the five projects—
all but a small fraction of which preceded execution of the PIA’s—were “under” the
PIA’s within the meaning of section 34191.4, subdivision (b)(2)(C)(i). The trial court
1 All undesignated statutory references are to the Health & Safety Code.
2 Section 34191.4 provides in relevant part:
“The following provisions shall apply to any successor agency that has been
issued a finding of completion by the department: [¶] . . . [¶]
“(b)(1) Notwithstanding subdivision (d) of Section 34171, upon application by the
successor agency and approval by the oversight board, loan agreements entered into
between the redevelopment agency and the city, county, or city and county that created
the redevelopment agency shall be deemed to be enforceable obligations provided that
the oversight board makes a finding that the loan was for legitimate redevelopment
purposes.
“(2) For purposes of this section, ‘loan agreement’ means any of the following:
[¶] . . . [¶]
“(C)(i) An agreement between the former redevelopment agency and the city,
county, or city and county that created the former redevelopment agency under which the
city, county, or city and county that created the former redevelopment agency contracted
with a third party on behalf of the former redevelopment agency for the development of
infrastructure in connection with a redevelopment project as identified in a
redevelopment project plan and the former redevelopment agency was obligated to
reimburse the city, county, or city and county that created the former redevelopment
agency for payments made by the city, county, or city and county to the third party.”
2
ruled that “[i]n order for the contracts to have been ‘under’ the PIAs and on behalf of the
RDA, the PIAs needed to already exist.” We agree. In this context, “under” means
“pursuant to” or “by reason of the authority of,” which calls for the construction contracts
to follow the reimbursement agreement. The 2015 amendment provides an exception to
the general rule that agreements between a city and its former RDA are not “enforceable
obligations” where a city has executed third party construction contracts for
redevelopment projects in reliance on a prior agreement with its former RDA to
reimburse construction costs. That scenario did not occur here. Brentwood adopted
resolutions to fund construction of the five projects, entered into construction contracts,
and then sought to create reimbursement agreements after the fact in the form of the
PIA’s.
Brentwood also relies on the principle stated in Civil Code section 1642 that
“[s]everal contracts relating to the same matters, between the same parties, and made as
parts of substantially one transaction, are to be taken together.” Brentwood argues that
(1) the initial cooperation agreement between the former RDA and the city executed in
1981, (2) the findings resolutions mandated by the redevelopment law that the city and
RDA adopted for the five projects from 2007 through 2011, (3) the amended and restated
cooperation agreement executed in February 2011, and (4) the PIA’s executed in
February and March 2011, are one agreement that initially arose before the PIA’s were
executed. In short, Brentwood argues that dozens of documents executed over 30 years
constitute one agreement. We disagree. To begin with, Civil Code section 1642 states a
contract principle which does not apply to statutory interpretation. Assuming it did,
whether multiple documents constitute a single transaction is a question of fact for
resolution by the trial court, which we review for substantial evidence. Where the order
is silent on the matter, as here, we presume that the trial court made sufficient findings to
support the order. Suffice it to say that Brentwood has not carried its burden to overcome
that presumption.
3
In a similar vein, Brentwood contends that the PIA’s ratified and incorporated the
prior cooperation agreement and findings resolutions that predated third party
construction contracts. Ratification is an agency doctrine in which an agent’s
unauthorized act becomes authorized by adoption by the principal, a scenario that also
did not occur here. In any event, ratification cannot change the terms of a contract, which
is what Brentwood seeks to do. No agreement or resolution prior to the PIA’s committed
the RDA to reimburse Brentwood for the construction costs of the five redevelopment
projects. Ratification cannot import the terms of the PIA’s into the cooperation
agreement and findings resolutions.
We will affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
We will not again recount the process of dissolution of RDA’s in California and
the statutes involved, covered in our prior decisions. (City of Grass Valley v. Cohen
(2017) 17 Cal.App.5th 567, 573-574 (Grass Valley); Brentwood I, supra,
237 Cal.App.4th at pp. 494-495; County of San Bernardino v. Cohen (2015)
242 Cal.App.4th 803, 807-809 (San Bernardino); City of Tracy v. Cohen (2016)
3 Cal.App.5th 852, 855-856 (Tracy).) As we observed in Grass Valley, “[g]iven the
many RDA cases this court has decided, due to the designation of Sacramento County as
the venue for such disputes [citations], its basic implementing mechanisms are well
understood by the parties.” (Grass Valley, supra, 17 Cal.App.5th at p. 573, fn. omitted.)
This appeal concerns the interpretation and application of the 2015 amendment to
the dissolution statutes, which included section 34191.4, subdivision (b)(2)(C)(i). We
will confine our discussion to matters relevant to that statute, which prompted
Brentwood’s petition for writ of mandate and this appeal.
4
On August 20, 1981, Brentwood created an RDA and designated the city council
as the governing board.3 (Brentwood I, supra, 237 Cal.App.4th at p. 493.)
On September 22, 1981, Brentwood executed a cooperation agreement with its
RDA. The cooperation agreement provided that the city “may, but is not required to,
advance necessary funds to the [RDA] or to expend funds on behalf of the [RDA] for the
preparation and implementation of a redevelopment plan, including, but not limited to,
the costs of surveys, planning, studies and environmental assessments for the adoption of
a redevelopment plan, the costs of acquisition of property within the project area,
demolition and clearance of properties acquired, building and site preparation, public
improvements and relocation assistance to displaced residential and nonresidential
occupants as required by law.”
Brentwood agreed to provide services to the RDA and submit an annual statement
of costs incurred by the city in rendering such services. The RDA agreed “to reimburse
the City for all costs incurred by the City pursuant to this Agreement . . . .” The
agreement also provided that the “obligations of the [RDA] under this Agreement shall
constitute an indebtedness of the [RDA]” within the meaning of the redevelopment law.
The cooperation agreement did not refer to any existing or future redevelopment
project or any cost incurred or projected in connection with a redevelopment project. In
Grass Valley, we noted that the trial court aptly called such an agreement, in which “no
specific loans or services were identified,” an “ ‘umbrella’ ” agreement. (Grass Valley,
supra, 17 Cal.App.5th at p. 575.)
3 Brentwood cites to what it calls an “Administrative Record in Support of Petition for
Writ of Mandate” which, as we observed in Brentwood I, supra, 237 Cal.App.4th at page
493, footnote 7, regarding similar citations, actually consists of various documents
Brentwood submitted as exhibits to the trial court.
5
From 2008 through 2011, Brentwood and the RDA adopted the findings
resolutions for a capital improvement program to include five projects: a parking
structure, community center, downtown infrastructure, downtown streetscape, and a city
park. Brentwood explains that the resolutions were adopted to make “the required
section 33445 findings to allow the RDA to reimburse the City for its costs incurred to
construct each of the Projects.”4 (Italics added.) All told Brentwood adopted over a
dozen resolutions. None of Brentwood’s resolutions referred to the cooperation
agreement. In the same period, the RDA also adopted multiple resolutions to budget for
and fund the capital improvement projects. None of the RDA’s resolutions referred to
the cooperation agreement.
From January 29, 2007, through November 29, 2011, Brentwood adopted
resolutions approving third party construction contracts and executed contracts for the
five projects. None of these resolutions referred to the cooperation agreement.
In January 2011 the Governor announced his intention to dissolve the RDA’s,
leading to the so-called “fire sale” period in which the agencies and their sponsoring
cities sought to transfer or encumber assets before the dissolution law went into effect in
June 2011. (Grass Valley, supra, 17 Cal.App.5th at p. 574 & fn. 2; Brentwood I, supra,
237 Cal.App.4th at pp. 499, 502.)
On February 7, 2011, Brentwood and the RDA entered in an amended and restated
cooperation agreement (amended cooperation agreement). The amended cooperation
agreement provided that “[t]he City agrees to design and cause the construction and
installation of and carry out” the redevelopment projects described in an exhibit attached
4 Section 33445 provides that a former RDA with the consent of the city that created it
may pay the cost of public improvements if certain determinations are made, including
“[t]hat no other reasonable means of financing . . . are available to the community.”
(§ 33445, subd. (a)(2).)
6
to the agreement, which included estimated costs for the five redevelopment projects.
The amended cooperation agreement further provided that the RDA “agrees to reimburse
the City the amounts set forth” in the exhibit and that “[t]his Agreement constitutes an
indebtedness of the [RDA] incurred in carrying out the project . . . .”
The amended cooperation agreement stated that it “amends and restates the
Cooperation Agreement in its entirety. The Cooperation Agreement is of no further force
and effect.”
Subsequently, in February and March 2011, Brentwood and the RDA adopted
resolutions approving a PIA for each of the five projects and executed the PIA’s.5 As we
noted in Brentwood I, the two PIA’s “executed in March 2011, identified the January
2011 gubernatorial announcement of an intent to eliminate redevelopment agencies
[citation] as an impetus for the execution of the PIA’s.” (Brentwood I, supra,
237 Cal.App.4th at p. 493.) All of the PIA’s, with the exception of the agreement
executed in March 2011 for the civic center parking facility, refer to the amended
cooperation agreement, and none refer to the original cooperation agreement.
Each PIA stated an amount that the RDA agreed to pay Brentwood on each project
for all “costs of planning, development, permitting, project administration, construction
and construction management . . . .” Under the PIA’s, Brentwood agreed “to cause the
construction and installation of and carry out” each project. The PIA’s provided that
“payments made by [the RDA] under this Agreement constitutes an indebtedness of the
[RDA] incurred in carrying out” the projects.
On January 10, 2012, Brentwood adopted a resolution designating the city as the
successor agency to the RDA.
On May 29, 2015, this court issued its decision in Brentwood I.
5 Brentwood and the RDA also executed amendments to certain of the February PIA’s to
adjust payment obligations.
7
On December 10, 2015, the Department of Finance (Department) issued a “finding
of completion” letter to Brentwood. “After the Department of Finance issues a ‘finding
of completion,’ meaning the successor agency has complied with the statutes concerning
disbursement of the assets of the former redevelopment agency, the loan may be repaid if
an oversight board finds it was for legitimate redevelopment purposes.” (San
Bernardino, supra, 242 Cal.App.4th at p. 809; accord City of Azusa v. Cohen (2015)
238 Cal.App.4th 619, 625.) On January 20, 2016, the oversight board adopted a
resolution finding that the PIA’s “were made for legitimate redevelopment purposes and
approving reinstatement of [these agreements] as enforceable obligations pursuant to”
section 34191.4. The resolution stated that the total principal balance on the PIA’s
eligible for repayment amounted to $15,476,371. (§ 34191.4, subd. (b)(2)(C)(ii) [capping
the repayment amount per loan agreement at $5 million].)
On January 22, 2016, the Department initiated review of the oversight board’s
actions pursuant to section 34179, subdivision (h).
On March 2, 2016, the Department disapproved the oversight board’s resolution,
finding that “the documentation provided by the Agency does not demonstrate that the
City contracted with third parties on behalf of the former RDA. Additionally, the PIAs
do not provide that the City would contract with a third party on behalf of the RDA.
Finally, it is our understanding the contracts for construction of the various projects were
entered into by the City before the PIAs were created.”
Brentwood filed a petition for writ of mandate alleging that the Department abused
its discretion in disapproving the oversight board’s resolution reinstating the PIA’s as
enforceable obligations. Brentwood sought a writ of mandate ordering the Department to
approve the oversight board’s resolution and to place the five PIA’s on the recognized
8
option payment schedule pursuant to section 34191.4, subdivision (b).6 The Department
responded with a general denial and various defenses.
Following briefing by the parties, the trial court issued a tentative ruling and
conducted a hearing. The court thereafter received and reviewed additional briefing
submitted by the parties and affirmed the tentative ruling.
In its ruling, the trial court rejected the Department’s contention that the PIA’s did
not indicate that Brentwood would contract with a third party on behalf of the RDA as
required by section 34191.4, subdivision (b)(1)(C)(i). The court relied on language in the
PIA’s that the city “will ‘cause the construction and installation of and carry out’ ” the
projects as suggesting the city would not itself construct the facilities but hire third
parties. (Italics added.)
The court, however, agreed with the Department that construction contracts with
third parties could not have been made “under” the PIA’s if the contracts pre-dated the
PIA’s. The court ruled that “[t]o the extent [Brentwood] seek[s] to establish enforceable
obligations for construction contracts entered into prior to the execution of the subject
PIA, such contracts do not fall within the ambit of subdivision (b)(2)(C)(i).” The court
reasoned that “[i]n order for the contracts to have been ‘under’ the PIAs and on behalf of
the RDA, the PIAs needed to already exist.”
Brentwood argued that certain third party construction contracts post-dated the
PIA’s. The trial court noted evidence Brentwood submitted on the issue but declined to
make a finding as to the specific amount owed or what specific contracts were executed
6 To pay an enforceable obligation, a successor agency must apply to the Department for
approval by including enforceable obligations on a recognized obligation payment
schedule (ROPS), which the successor agency submits to the Department. (San
Bernardino, supra, 242 Cal.App.4th at p. 808; §§ 34177, subd. (l)(2), 34180, subd. (g).)
The Department may eliminate any obligation listed on the ROPS. (San Bernardino,
supra, 242 Cal.App.4th at p. 808; § 34177, subd. (m), 34179, subd. (h), 34180, subd. (g).)
9
after the PIA’s that may be enforceable obligations. The court remanded the matter to the
Department “for consideration of the subject contract evidence.”7
DISCUSSION
Standard of Review
“ ‘[W]here the issue is one of statutory construction or contract interpretation, and
the evidence is not in dispute, the de novo standard of review applies [citation].’ ” (City
of Petaluma v. Cohen (2015) 238 Cal.App.4th 1430, 1438-1439; People v. International
Fidelity Ins. Co. (2010) 185 Cal.App.4th 1391, 1395.) Writ of mandate ordinarily
reviews administrative actions for abuse of discretion, but here the question is whether
the Department correctly interpreted the statute and the relevant agreements, which is
subject to de novo review without according deference to the Department. (Tracy, supra,
3 Cal.App.5th at p. 860; but see Brentwood I, supra, 237 Cal.App.4th at p. 500
[interpretation is ultimately de novo but “weak deference” is accorded to agency’s
interpretation of its governing statutes where its expertise gives it superior qualifications
to do so].)
Our objective in interpreting statutes is to ascertain and effectuate legislative
intent. (California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 269; San
Bernardino, supra, 242 Cal.App.4th at pp. 816-817; City of Cerritos v. State of
California (2015) 239 Cal.App.4th 1020, 1034; Cuenca v. Cohen (2017) 8 Cal.App.5th
200, 220.) To do so, we first look to the language itself. (Cerritos, supra,
239 Cal.App.4th at pp. 1034-1035; Cuenca, supra, 8 Cal.App.5th at p. 220.) If the
language is clear and unambiguous, there is no need to resort to other indicia of
legislative intent. (Cuenca, at p. 220.) But the “plain meaning” rule does not preclude a
7 Neither Brentwood nor the Department contends on appeal that the trial court erred in
remanding this issue to the Department. (Grass Valley, supra, 17 Cal.App.5th at pp. 576-
578.)
10
court from determining if the literal meaning comports with the statutory purpose. (Ibid.)
Where a commonly used word has more than one meaning, we adopt the one that best
serves the statutory purpose, even if the ordinary meaning is enlarged or restricted.
(Ibid.) If the statutory language is ambiguous or reasonably susceptible to more than one
interpretation, we may refer to other indicia of the Legislature’s intent, including
legislative history. (Cuenca, supra, 8 Cal.App.4th at p. 220; Cerritos, supra,
239 Cal.App.4th at p. 1035.) “ ‘Relevant material includes: legislative committee
reports [citation]; Legislative Analyst’s reports [citation]; and testimony or argument to
either a house of the Legislature or one of its committees,’ but ‘[m]aterial showing the
motive or understanding of an individual legislator, including the bill’s author, his or her
staff, or other interested persons, is generally not considered.’ [Citation.]” (Mt. Hawley
Ins. Co. v. Lopez (2013) 215 Cal.App.4th 1385, 1401.)8
Whether Civil Code section 1642 applies is a question of fact for resolution by the
trial court, which we review under the substantial evidence standard. (Brookwood v.
Bank of America (1996) 45 Cal.App.4th 1667, 1675; Versaci v. Superior Court (2005)
127 Cal.App.4th 805, 815 (Versaci); Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 534
(Pellegrini).) Ratification is also a question of fact reviewed for substantial evidence.
(Siva v. General Tire & Rubber Co. (1983) 146 Cal.App.3d 152, 159; Hale v. Farmers
Ins. Exchange (1974) 42 Cal.App.3d 681, 691, disapproved on another ground in Egan v.
Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 822, fn. 5.; StreetScenes v. ITC
Entertainment Group, Inc. (2002) 103 Cal.App.4th 233, 242; Danning v. Bank of
America (1984) 151 Cal.App.3d 961, 974.) Where the record is silent on the trial court’s
8 We granted Brentwood’s request for judicial notice of legislative history of Senate Bill
No. 107, which added section 34191.4, subd. (b)(2)(C)(i), to the dissolution statutes
(Stats. 2015, ch. 325, § 21), including legislative committee reports and transcripts of
legislative committee hearings.
11
findings on these issues, as here, we presume the court found all facts necessary to
support the order. (Pellegrini, supra, 165 Cal.App.4th at p. 534; Hochstein v. Romero
(1990) 219 Cal.App.3d 447, 451, fn. 4.)
Section 34191.49
Under section 34191.4, subdivision (b)(1), “loan agreements” between an RDA
and city “shall be deemed to be enforceable obligations provided that the oversight board
makes a finding that the loan was for legitimate redevelopment purposes.” There is no
dispute that Brentwood’s oversight board made such a finding.
However, “loan agreement” is defined by this section to include “[a]n agreement
between the former redevelopment agency and the city . . . under which the city . . .
contracted with a third party on behalf of the former redevelopment agency for the
development of infrastructure in connection with a redevelopment project as identified in
a redevelopment project plan and the former redevelopment agency was obligated to
reimburse the city . . . for the payments made by the city . . . to the third party.”
(§ 34191.4, subd. (b)(2)(C)(i), italics added.)
Brentwood argues that “an action is taken ‘under’ an agreement if it is made in the
context of an agreement, authorized by an agreement, or done in accordance with an
agreement.” (See Merriam-Webster’s Collegiate Dictionary (11th ed. 2003) p. 1363
[“under” defined as “subject to the authority, control, guidance, or instruction of”].)
Thus, Brentwood urges that construction contracts did not need to be entered into after
the PIA’s to be “under” the PIA’s.
The Department also offers various synonyms for “under,” including some of the
same ones as Brentwood, but basically interprets “under” to mean “pursuant to.” The
9 As in Grass Valley, we discuss the issues in a different order than presented by the
appellant. (Grass Valley, supra, 17 Cal.App.5th at p. 576.)
12
Department echoes the trial court’s view that for “Brentwood’s third-party construction
contracts to have been entered into ‘under’ the PIAs, ‘the PIAs needed to already exist.’ ”
The Department contends its interpretation is not a “ ‘temporal requirement’ ” but
rather a matter of “sequencing inherent in any contract—to give rise to any obligation,
there must first be an underlying agreement.” Brentwood reasonably rejoins that whether
the Department’s “interpretation is referred to as a temporal requirement or a sequencing
requirement, [the Department] is clearly asserting that the words ‘under’ and ‘on behalf
of’ should be construed to mandate a specific timeline of events.”
We agree the question is whether the words “under”—and to a lesser extent, “on
behalf of”—used in the statute import a timing requirement. We conclude that they do,
to the extent, as the trial court held, that construction contracts cannot be “under” a
reimbursement agreement (i.e., the PIA’s) that has yet to be executed.
“The word ‘under’ has many dictionary definitions and must draw its meaning
from its context.” (Ardestani v. Immigration and Naturalization Service (1991) 502 U.S.
129, 135 [112 S.Ct. 515, 519].) The statutory context here indicates that the word
“under” is most naturally read to mean that third party contracts to build an infrastructure
project must be entered into “pursuant to” or “by reason of the authority of” an agreement
by the RDA to reimburse the city. (See National Assn. of Mfrs. v. Department of Defense
(2018) 583 U.S. __, __ [138 S.Ct. 617, 630] [“ ‘ “under” means “subject [or pursuant] to”
or “by reason of the authority of” ’ ”]; see also Black’s Law Dictionary (10th ed. 2014)
p. 1431 [“pursuant to” defined to be mean “[a]s authorized by; under”]; Garner, Dict. of
Modern Legal Usage (2d ed. 1995) p. 896 [“under is preferable to pursuant to when the
noun that follows refers to a rule, statute, contractual provision, or the like”].)
The statute contemplates a circumstance where a redevelopment plan identifies
infrastructure projects and an RDA agrees to reimburse the city for the construction costs
of the projects. In reliance on that agreement, i.e., “pursuant to” or “by reason of the
authority of” that agreement, the city “contract[s] with a third party on behalf of the
13
former redevelopment agency” to build the project. (§ 34191.4, subd. (b)(2)(C)(i).) Had
the RDA not agreed in advance to pay for the projects, the city would not have bound
itself to construction contracts to build them.10
Brentwood acknowledges this reading of “under” in section 34191.4, subdivision
(b)(2)(C)(i), by arguing that the cooperation agreement in 1981 established such reliance.
“The City would have never undertaken these five redevelopment projects if it had not
been authorized to do so and guaranteed reimbursement by the Cooperation Agreement.”
Brentwood thus designates the cooperation agreement as the “loan agreement” “under
which” the city “contracted with a third party.” (§ 34191.4, subd. (b)(2)(C)(i).)
However, this court has already rejected the proposition that an “umbrella”
agreement like the cooperation agreement constituted a “loan agreement” for purposes of
the dissolution statutes. In Grass Valley, the city argued that a 1986 agreement with its
former RDA provided a basis for 2011 agreements to be enforceable obligations, under
an exception in section 34171, subdivision (d)(2), for loan agreements entered within two
years of the creation of an RDA. (Grass Valley, supra, 17 Cal.App.5th at pp. 582-583.)
Grass Valley’s umbrella agreement, similar to the cooperation agreement here,
“permitted the City to ‘advance or expend’ funds to the RDA or on its behalf, required
periodic statements to the RDA of costs incurred by the City, and required the RDA to
use available funds to reimburse the City for all costs incurred. But the 1986 agreement
did not reference any specific extant or anticipated projects, nor any ‘loan agreements’
between the RDA and the City, as contemplated by section 34171, subdivision (d)(2).”
(Grass Valley, supra, 17 Cal.App.5th at p. 583.) We held that the 1986 agreement was a
10 By contrast, a city that enters into third party construction contracts without a
reimbursement agreement with its RDA—on the presumption that the agency will agree
to do so because it is controlled by the city—facilitates the abuse that led to the
dissolution of RDA’s. (Grass Valley, supra, 17 Cal.App.5th at p. 573.)
14
“ ‘so-called agreement[] to agree . . . not [an] enforceable contract[].’ ” (Ibid.; Daniels v.
Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1174.) The “1986
agreement created a structure for how to treat future agreements, but was not a loan under
any definition.” (Grass Valley, supra, 17 Cal.App.5th at p. 583.)
Our analysis in Grass Valley applies here. Brentwood cannot argue that the
cooperation agreement created an enforceable reimbursement obligation because
Brentwood committed no money to the RDA. It was only later in the PIA’s that
Brentwood and the RDA identified the projects and the amounts that the RDA was to pay
for them.
Moreover, as the Department points out, Brentwood’s oversight board never
passed a resolution that the cooperation agreement was an enforceable obligation under
section 34191.4, subdivision (b)(2)(C)(i). The oversight board identified only the PIA’s
as agreements that Brentwood submitted to the Department for approval as enforceable
obligations under the statute.
Brentwood also argues that the legislative history of Senate Bill No. 107 shows
that the Legislature’s intent was to reimburse a city or county for any third party contract
to develop infrastructure for a former RDA, regardless of timing. We are not persuaded.
To begin with, the language of the statute considered in context is not ambiguous and
does not require consideration of legislative history. (Brentwood I, supra,237 Cal.App.4th at pp. 501-502.)
Further, the materials upon which Brentwood relies include identical sentences in
two committee reports that “loan agreements” are defined as “[a]n arrangement whereby
a third-party developed infrastructure for the former RDA under contract by the
sponsoring local government, with a loan amount not to exceed $5.0 million.” (Sen.
Com. on Budget & Fiscal Review, Report on Sen. Bill No. 107 (2015-2016 Reg. Sess.),
amended Sept. 11, 2015, p. 5; Sen. Rules Com., Off. of Sen. Floor Analyses, Analysis of
Sen. Bill No. 107 (2015-2016 Reg. Sess.), Sept. 11, 2015, p. 6.) Brentwood argues that
15
(1) the word “arrangement” indicates an expansive definition of “loan agreements,” and
(2) past tense in the term “developed infrastructure” indicates that a certain sequence is
not mandated.11 However, as the Department observes, the word “arrangement” never
appears in the statutory language. And the words “developed infrastructure” became
“development of infrastructure” in the statute, which, if anything, refutes Brentwood’s
argument that there was no legislative intent for the reimbursement agreement between
the city and the former RDA to precede any third party construction contracts.
Brentwood also submits the statement of a representative of the Department at a
hearing of the Committee on Budget and Fiscal Review regarding Senate Bill No. 107.
He described the proposed expansion of enforceable obligations to include “loans or
repayment of costs incurred by Cities for infrastructure-related projects, Public Works
type of projects at the local level.” Brentwood focuses on his statement that, “if the City
could then identify, in their RDA plan, the project that was worked upon and they can
show us the agreement and that they entered into a third-party contract with a vendor to
perform those services, they would get repaid.” The most that Brentwood can draw from
this statement is that the Department’s representative “never once mentioned an implicit,
but unstated, temporal requirement.” Brentwood does not explain how “an implicit, but
unstated, temporal requirement” would be mentioned. Moreover, there is in fact a
sequence in this statement, which refers to an order beginning with identification of a
project in the redevelopment plan, followed by a reimbursement agreement, and then
third party contracts to build the project. This statement could be interpreted to presage
11 Brentwood makes a similar argument about the use of past tense in the concluding
phrase of section 34191.4, subdivision (b)(2)(C)(i), i.e., reimbursement for “the payments
made by the city, county, or city and county to the third party.” (Italics added.)
Brentwood argues that “payments made” could include payment of construction contracts
entered into before a reimbursement agreement. But the term “payments made” could
just as well refer to construction contracts entered into after a reimbursement agreement.
This language sheds no light on whether “under” involves a temporal sequence or not.
16
the sequence that the trial court and this court reads in section 31191.4, subdivision
(b)(2)(C)(i).
Considering the language of section 34191.4, subdivision (b)(2)(C)(i), in context,
the trial court correctly held that a third party construction contract must follow an
existing reimbursement agreement for the former to be “under” the latter. To the extent
Brentwood entered into third party construction contracts prior to executing the PIA’s, in
which its former RDA agreed to reimburse construction costs for the five projects, the
PIA’s are not “enforceable obligations” under the statute.
Civil Code Section 1642
Brentwood contends that the “Loan Agreements” are “a series of documents that
should be construed as one contract . . . .” By “Loan Agreements,” Brentwood means
“the Cooperation Agreement, its amendment, the Findings Resolutions, and the PIAs
because they were executed by the same parties, relate to the same matters, and were part
of the same transactions, and the PIAs expressly incorporated the earlier commitments by
reference.”12 Brentwood maintains that “[s]ince the Loan Agreements include funding
commitments made by the RDA long before the Construction Contracts were entered,
they clearly satisfy [the Department’s] temporal requirement.”
Civil Code section 1642 provides that “[s]everal contracts relating to the same
matters, between the same parties, and made as parts of substantially one transaction, are
to be taken together.” We observe as an initial matter that contract law does not control
12 To the extent Brentwood suggests that the city’s and the RDA’s findings resolutions
preceded the third party construction contracts that Brentwood executed, the record is to
the contrary. These resolutions were adopted to fund the third party contracts. Indeed,
the first city resolution regarding funding for the parking, streetscape, and infrastructure
projects was adopted on June 12, 2007. By that point, Brentwood had executed three
contracts with third parties for the infrastructure, city park, community center and parking
projects.
17
questions of statutory interpretation. (San Bernardino, supra, 242 Cal.App.4th at
pp. 815-818.)
Assuming for argument’s sake that Civil Code section 1642 does apply, in R.W.L
Enterprises v. Oldcastle, Inc. (2017) 17 Cal.App.5th 1019 (R.W.L. Enterprises), the court
summarized the applicable standards: “Although [Civil Code section 1642] refers
expressly to several ‘contracts,’ the language has been broadened by case law to apply to
instruments or writings that are not on their own contracts. [Citations.] Civil Code
section 1642 ‘ “is most frequently applied to writings executed contemporaneously, but it
is likewise applicable to agreements executed by the parties at different times if the later
document is in fact a part of the same transaction.” ’ [Citation.]
“ ‘Whether a document is incorporated into the contract depends on the parties’
intent as it existed at the time of contracting.’ [Citation.] ‘ “ ‘For the terms of another
document to be incorporated into the document executed by the parties the reference
must be clear and unequivocal . . . . .’ ” ’ [Citation.] ‘The contract need not recite that it
“incorporates” another document, so long as it “guide[s] the reader to the incorporated
document.” ’ [Citation.] To be construed together, the separate instruments must be ‘so
interrelated as to be considered one contract.’ [Citation.]” (R.W.L. Enterprises, supra,
17 Cal.App.5th. at pp. 1027-1028.)
Because the record is silent with regard to the application of Civil Code section
1642, we presume the trial court made sufficient findings to support the order, i.e., that
Civil Code section 1642 did not apply. (Pellegrini, supra, 165 Cal.App.4th at p. 534.) It
is Brentwood’s burden to show that substantial evidence does not support the order.
(Versaci, supra, 127 Cal.App.4th at p. 815.)
Brentwood manifestly cannot carry that burden. As discussed above, the
cooperation agreement entered into in 1981—the only agreement between Brentwood
and the RDA executed before any third party construction contract—is not a “loan
agreement,” i.e., a reimbursement agreement, under the dissolution statutes. Even
18
assuming the cooperation agreement could qualify as a reimbursement agreement if
linked to the five projects, the findings resolutions that Brentwood and the RDA adopted
more than 25 years later do not mention the cooperation agreement. Brentwood does not
contend that the resolutions were an agreement for the RDA to reimburse the city. As a
general matter, resolutions are not agreements. (San Diego City Firefighters, Local 145
v. Board of Administration etc. (2012) 206 Cal.App.4th 594, 607 [“ ‘ “A resolution is
usually a mere declaration with respect to future purpose or proceedings . . .” ’ ”].)
After the Governor announced his intention to dissolve the RDA’s, Brentwood and
the RDA entered into the amended cooperation agreement in February 2011 in an
apparent attempt to create a reimbursement obligation with respect to the five ongoing
construction projects. The amended cooperation agreement does constitute a “loan
agreement” under section 34191.4, subdivision (b)(2), i.e., an agreement by the former
RDA to pay the city for the construction costs of identified redevelopment projects.
However, the amended cooperation agreement was executed after Brentwood had entered
into all but eight of the dozens of third party construction contracts. Thus, the amended
cooperation agreement cannot serve as a reimbursement agreement “under which”
Brentwood entered into third party construction contracts on behalf of the RDA.
In addition, the amended cooperation agreement states that it “amends and restates
the Cooperation Agreement in its entirety” and “[t]he Cooperation Agreement is of no
further force or effect.” The PIA’s executed shortly after the amended cooperation
agreement were under that agreement, not the cooperation agreement. The PIA’s
themselves refer in their recitals to the amended cooperation agreement and make no
mention of the cooperation agreement.
Thus, the cooperation agreement, the resolutions by Brentwood and the RDA
funding the five projects, the amended cooperation agreement, and the PIA’s do not show
a “clear and unequivocal” intention to incorporate each other. (R.W.L. Enterprises,
supra, 17 Cal.App.5th at p. 1028.) To the contrary, the cooperation agreement makes no
19
reference to any redevelopment projects, which were decades in the future. The
resolutions to fund the five projects gave no indication that the cooperation agreement
existed. The amended cooperation agreement refers to the long ago cooperation
agreement but declares it of no force and effect. Finally, the PIA’s refer only to the
amended cooperation agreement. If anything, the facts indicate an intention to separate
the cooperation agreement in 1981, with its agreement-to-agree provisions, from the
amended cooperation agreement and the PIA’s in 2011, which set forth the RDA’s
commitment to reimburse specific projects and costs. These circumstances combined
with the sheer passage of time—nearly 30 years from September 1981 when the
cooperation agreement was executed to February and March 2011 when the amended
cooperation agreement and PIA’s were executed—weighs heavily against a finding that
the parties intended these documents to be one transaction. (Id. at p. 1031.)
Brentwood argues that Holguin v. Dish Network LLC (2014) 229 Cal.App.4th
1310, supports its position that these documents constitute one agreement. In Holguin,
the court found that five written agreements between homeowners and satellite dish
programming and installation companies “were part of a single transaction.” (Id. at
p. 1321.) The plaintiffs initiated an order for a bundle of telecommunications services
with an order form indicating that service and installation were offered by different but
related companies. (Id. at pp. 1314-1315, 1320-1321.) The remaining service, residential
customer and promotion agreements provided to the plaintiffs during installation some
weeks later expressly referenced or incorporated each other. (Ibid.) All five agreements
concerned a single order for telecommunications services and were executed within
weeks of each other. (Ibid.) Holguin in no way stands as authority for construing the
cooperation agreement in 1981, dozens of resolutions from 2007 to 2011, the amended
cooperation agreement in 2011, and the PIA’s in 2011 as one agreement regarding a
single transaction.
20
Even assuming that Civil Code section 1642 applies to an issue of statutory
interpretation, Brentwood has failed to show that rejecting the application of that statute
was not supported by substantial evidence.
Ratification
Alternatively, Brentwood contends “that the PIAs should be construed to include
the parties’ prior commitments, made under the cooperation agreement and the findings
resolutions, because the PIAs expressly ratified those commitments by incorporating
them by reference.”
Ratification is an agency doctrine. “Ratification is the voluntary election by a
person to adopt in some manner as his own an act which was purportedly done on his
behalf by another person, the effect of which, as to some or all persons, is to treat the act
as if originally authorized by him. [Citations.]” (Rakestraw v. Rodrigues (1972) 8 Cal.3d
67, 73 (Rakestraw); Civ. Code, § 2307 [“An agency may be created, and an authority
may be conferred, by a precedent authorization or a subsequent ratification”]; 3 Witkin,
Summary of California Law (11th ed. 2017) Agency and Employment, § 149, pp. 203-
204 [“An agent, at the time he or she does an act, may be without authority, actual or
ostensible; but the act may be rendered valid and binding on the principal, as of the time
the unauthorized act was done, if the principal ratifies and thus gives effect to it”].)
While Brentwood has cited no cases outside of the agency context, older cases
have acknowledged that a board of supervisors “ ‘may cure informalities or irregularities
in procedure by a subsequent ratification.’ ” (Power v. May (1896) 114 Cal. 207, 208;
Sittig v. Raney (1921) 53 Cal.App. 709, 721; Smeltzer v. Miller (1899) 125 Cal. 41, 43-
44.) Brentwood, however, cites no irregularities in form or procedure pertaining to the
cooperation agreement, the findings resolutions, or the PIA’s.
Moreover, Brentwood stumbles out of the gate because the PIA’s do not
incorporate the cooperation agreement by reference, as the city contends. Rather, the
21
PIA’s incorporate the amended cooperation agreement only, which post-dated the
funding resolutions and third party construction contracts, and declared the cooperation
agreement of no force or effect.
The evident purpose of Brentwood’s contention that the PIA’s ratified the
cooperation agreement and the findings resolutions is to relate the PIA’s back in time to
when the cooperation agreement and the findings resolutions were executed. (Rakestraw,
supra, 8 Cal.3d at p. 73 [“Generally, the effect of ratification is that the authority which is
given to the purported agent relates back to the time when he performed the act”].)
Assuming that the PIA’s ratified these documents, even though there was no lack of
authority or irregularity involved that required ratification on the part of Brentwood and
the RDA, the effect of ratification is limited to the terms of the documents ratified.
Ratification does not alter the terms of a contract or make a contract with different terms.
(McClintock v. Robinson (1937) 18 Cal.App.2d 577, 582 (McClintock) [where principal
authorized agent to purchase a cabin and agent leased the cabin, principal could ratify the
lease but not change the contract to a purchase]; see also Friddle v. Epstein (1993)
16 Cal.App.4th 1649, 1656 (Friddle); 2A C.J.S. (2019 update) Agency, § 84 & fn. 1
[“Ratification by a principal of an unauthorized act of his or her agent neither changes a
contract which has been entered by the agent nor makes a new contract with different
terms”], citing McClintock, supra, 18 Cal.App.2d at p. 582.)
Thus, the cooperation agreement, if ratified by the PIA’s, continues to be an
agreement-to-agree that does not identify any existing or projected redevelopment
projects or any amounts that the former RDA commits to reimburse. The finding
resolutions, if ratified, continue to be mere declarations to allow the RDA to fund
construction. Ratification does not change the terms of the cooperation agreement or the
resolutions. Ratification or not, Brentwood has no “loan agreement” with its former
RDA to reimburse the costs of the five projects “under which” Brentwood entered into
third party construction contracts.
22
Brentwood cites Stickel v. Harris (1987) 196 Cal.App.3d 575, in which the court
concluded “that a joint venture could ratify the acts of one of its members even though
those actions were taken before the joint venture was even formed.” The court
analogized the situation to “preincorporation contracts by corporate promoters. If the
subsequently formed corporation ratifies such a contract by knowingly accepting its
benefits, the promoters’ contract becomes an obligation of the corporation and
enforceable against it. [Citations.]” (Id. at p. 586.) “There is no reason in law or logic
why this reasoning should not extend to partnerships and joint ventures.” (Ibid.)
Stickel involved a common application of the doctrine of ratification. (See 02
Development, LLC v. 607 South Park, LLC (2008) 159 Cal.App.4th 609, 610 [“It is
hornbook law that a corporation can enforce preincorporation contracts made in its
behalf, as long as the corporation ‘has adopted the contract or otherwise succeeded to it.’
[Citation]”].) Stickel does not stand for the proposition that ratification can alter the
terms of the contract ratified. The rule is that an act of ratification adopts the contract as
made at the time. (McClintock, supra, 18 Cal.App.2d at p. 582; Friddle, supra,
16 Cal.App.4th at p. 1656.)
Brentwood’s resort to the doctrine of ratification, even if it were applicable, does
not transfer the terms of the PIA’s to the earlier dates when the cooperation agreement
was executed and the resolutions adopted. At best, ratification merely confirms the terms
of these documents as written, which does not assist Brentwood in its claim for payment
of third party construction contracts.
23
DISPOSITION
The judgment is affirmed. The Department shall recover its costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(1) & (2).)
/s/
RAYE, P. J.
We concur:
/s/
ROBIE, J.
/s/
MAURO, J.
24
Filed 9/9/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
CITY OF BRENTWOOD et al., C086344
Plaintiffs and Appellants, (Super. Ct. No. 34-2016-
80002498-CU-WM-GDS)
v.
DEPARTMENT OF FINANCE et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Sacramento County, Michael
P. Kenny, Judge. Affirmed.
Burke, Williams & Sorensen, J. Leah Castella, Megan A. Burke; and Damien
Brower, City Attorney, for Plaintiffs and Appellants.
Xavier Becerra, Attorney General, Thomas S. Patterson, Assistant Attorney
General, Tamar Pachter and Anna Ferrari, Deputy Attorneys General, for Defendants and
Respondents.
1
THE COURT:
The opinion in the above-entitled matter filed August 11, 2020, was not certified
for publication in the Official Reports. For good cause it appears now that the opinion
should be published in the Official Reports and it is so ordered.
BY THE COURT:
/s/
RAYE, P. J.
/s/
ROBIE, J.
/s/
MAURO, J.
2