Filed 10/24/17 Leon v. Superior Court CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

MARIA LEON, et al., Plaintiffs and Appellants, v. SUPERIOR COURT OF SANTA CRUZ COUNTY Defendant and Respondent.

H043183 (Santa Cruz County Super. Ct. No. CV179934)

Appellants Maria and Rafael Leon seek review of a judgment dismissing their class action against respondent Superior Court of Santa Cruz County. Appellants seek review of orders sustaining without leave to amend respondent’s demurrer to two causes of action in their original complaint and an additional cause of action in their first amended complaint. Appellants contend that (1) they stated adequate causes of action for breach of mandatory duty and negligence in their original complaint; (2) they pleaded viable claims for breach of contract and declaratory and injunctive relief; and (3) the action was not moot. Finding parts of appellants’ original complaint sufficient to withstand demurrer, we must reverse the judgment.

Background

In January 2014 appellants submitted a claim against respondent under the Government Claims Act (Gov. Code, § 810 et seq.),^[1] alleging that on July 17, 2013 and subsequent dates, they and others similarly situated paid a court reporter fee but received no official court reporter. On February 2, 2014, respondent refunded appellants $120, the aggregate of payments for four civil hearings at which a court reporter was not provided to them.

On March 24, 2014, appellants submitted a supplemental government claim, alleging that respondent “attempted to implement a policy that unless reimbursement for unprovided court reporter services was demanded court would retain funds.” Having been charged the fee without provision of the reporting service, appellants alleged, they and others had to pay not only the fee charged by the court but also the cost of a private reporter.

Appellants then initiated this class action on September 5, 2014, alleging negligence by respondent’s employees for collecting and retaining fees without providing a court reporter (§ 815.2); breach of a mandatory duty not to allow the charging and retention of such fees without providing the reporter (§ 815.6); and breach of an implied contract to provide a court reporter upon collection of the fee (§ 814). Appellants also requested a judicial declaration that respondent had “a duty to provide reporters when fees are charged for them and that it has no authority to retain such fees when such services are not provided,” as well as an injunction prohibiting such practices. The exhibits appellants attached to the complaint included a set of respondent’s Frequently Asked Questions (FAQs) for “Court Reporting Services Under One Hour,” dated December 10, 2013, effective January 1, 2014. The FAQs explained that the reporter fee was not waivable by the litigants, and that the fee was refundable if reporting services were not provided “due to unforeseen circumstances.” The fee would be refunded “as soon as practicable, after written request is received, to the remitting party or parties.” (Italics added.)

Respondent demurred to the complaint, denoting each cause of action as meritless and moot, and disputing the timeliness of the government claim. The Honorable Marjorie L. Carter sustained the demurrer without leave to amend as to the first (negligence) and second (breach of mandatory duty) causes of action. As to the claim of breach of contract and the request for declaratory and injunctive relief, Judge Carter granted leave to amend.

In their first amended complaint, filed August 7, 2015, appellants asserted that they represented a class of all persons or entities that had paid a court reporter fee but received neither an official reporter nor “adequate compensation for the lack of provision.”^[2] In the first cause of action for breach of contract, appellants alleged that “[t]he collection of a reporter fee implies a contract with [respondent] to provide reporter services.” When reporter services were not provided, respondent breached the implied agreement and the affected litigants lost both the fee “and, in some cases,” money they paid for private reporting services. In the second cause of action appellants requested a declaration that respondent was “obligated to provide a court reporter if a fee is paid for one and that it may not retain and must return fees obtained for that purpose when no reporter is provided, with or without demand[,] and an injunction enjoining such practices in the future.”

In September 2015 respondent again demurred, asserting that (1) appellants’ claim was moot, as they had received the refunds owed to them; (2) no implied contract with a public entity was created merely by payment of a fee; (3) because there was no merit to appellants’ theory of an implied contract, no declaratory or injunctive relief was warranted; and (4) the January 2014 government claim was untimely. Respondent also sought judicial notice of its amended FAQs for “Court Reporting Services Under One Hour,” dated May 8, 2014. These FAQs, which had been revised from the January 2014 version, included the following entries: “Q: Is the fee refundable? A: The fee may be refunded if no court reporting services were provided due to unforeseen circumstances. . . . [¶] Q: When will the fee be refunded if I’m eligible for a refund? A: The fee shall be refunded as soon as practicable, to the remitting party or parties.” The “as soon as practicable” language reflected the refund provision of section 68086, which governs the collection of court reporter fees in superior court civil proceedings. The entry no longer specified that the party must submit a written request for the refund.

After a hearing on October 23, 2015, Judge Carter granted the request for judicial notice, sustained the entire demurrer without leave to amend, and ordered the action dismissed with prejudice.^[3] This timely appeal followed.

Discussion

1. Principles of Review

A demurrer is properly sustained when “[t]he pleading does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) “On appeal from a dismissal entered after an order sustaining a demurrer, we review the order de novo, exercising our independent judgment about whether the petition states a cause of action as a matter of law. [Citations.] We give the petition a reasonable interpretation, reading it as a whole and viewing its parts in context. [Citations.] We deem to be true all material facts that were properly [pleaded]. [Citation.] We must also accept as true those facts that may be . . . inferred from those expressly alleged. [Citation.] We may also consider matters that may be judicially noticed, but do not accept contentions, deductions or conclusions of fact or law.” (City of Morgan Hill v. Bay Area Air Quality Management Dist. (2004) 118 Cal.App.4th 861, 869-70; Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512.)

The judgment of dismissal “must be affirmed ‘if any one of the several grounds of demurrer is well taken. [Citations.]’ [Citation.] However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. [Citation.] And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility [that] any defect identified by the defendant can be cured by amendment.” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967 (Aubry).)

2. Public Entity Liability

Before a litigant may maintain a suit for damages against a public entity, he or she must file a claim under the Government Claims Act. (See § 810, 945.4, 910; Munoz v. State of California (1995) 33 Cal.App.4th 1767, 1776.) Appellants complied with this requirement, and its subsequent complaint correctly identified the superior court as a public entity subject to suit under the Act. (§§ 940.3, 945.) The liability of a public entity, however, exists only where imposed by separate statute. (See § 944 [“Nothing in this part imposes liability upon a public entity unless such liability otherwise exists”]; § 815 [A public entity is not liable for an injury except as otherwise provided by statute].) “When an enactment establishes a mandatory governmental duty and is designed to protect against the particular kind of injury the plaintiff suffered, section 815.6 provides that the public entity ‘is liable’ for an injury proximately caused by its negligent failure to discharge the duty. It is section 815.6, not the predicate enactment, that creates the private right of action. If the predicate enactment is of a type that supplies the elements of liability under section 815.6—if it places the public entity under an obligatory duty to act or refrain from acting, with the purpose of preventing the specific type of injury that occurred—then liability lies against the agency under section 815.6, regardless of whether private recovery liability would have been permitted, in the absence of section 815.6, under the predicate enactment alone.” (Haggis v. City of Los Angeles (2000) 22 Cal. 4th 490, 499-500 (Haggis), italics omitted.)

The predicate enactment at issue here is section 68086 (as amended in 2013), which provides, in pertinent part: “(a) In addition to any other fee required in civil actions or cases: [¶] (1) For each proceeding anticipated to last one hour or less, a fee of thirty dollars ($30) shall be charged for the reasonable cost of the court reporting services provided at the expense of the court by an official court reporter pursuant to Section 269 of the Code of Civil Procedure. [¶] (A) The fee shall be charged to the party, or parties if filing jointly, that filed the paper that resulted in the proceeding being scheduled . . . . [¶] . . . [¶] (E) The fee shall be refunded as soon as practicable to the remitting party or parties if no court reporting services were provided. . . . [¶] . . . [¶] (d) The Judicial Council shall adopt rules to ensure all of the following: [¶] (1) That parties are given adequate and timely notice of the availability of an official court reporter. [¶] (2) That if an official court reporter is not available, a party may arrange for the presence of a certified shorthand reporter to serve as an official pro tempore reporter, the costs therefor recoverable as provided in subdivision (c). [¶] (3) That if the services of an official pro tempore reporter are utilized pursuant to paragraph (2), no other charge shall be made to the parties. [¶] (e) The fees collected pursuant to this section shall be used only to pay the cost for services of an official court reporter in civil proceedings.” (Italics added.)

3. Breach of Mandatory Duty

In alleging breach of mandatory duty in their original complaint, appellants relied on sections 68086 and 815.6. Section 815.6 provides: “Where a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty.”

Thus, under section 815.6, “the government may be liable when (1) a mandatory duty is imposed by enactment, (2) the duty was designed to protect against the kind of injury allegedly suffered, and (3) breach of the duty proximately caused injury.” (State Dept. of State Hospitals v. Superior Court (2015) 61 Cal.4th 339, 348.) In Haggis, supra, 22 Cal.4th at p. 498, our Supreme Court explained these three elements in detail. “First and foremost, application of section 815.6 requires that the enactment at issue be obligatory, rather than merely discretionary or permissive, in its directions to the public entity; it must require, rather than merely authorize or permit, that a particular action be taken or not taken.” This criterion involves statutory construction and therefore is a question of law. (Id. at p. 499.) “Second, but equally important, section 815.6 requires [that] the mandatory duty be ‘designed’ to protect against the particular kind of injury the plaintiff suffered.” (Ibid.) “If these two prongs are met, the next question is whether the breach of the duty was a proximate cause of the plaintiff’s injury.” (Guzman v. County of Monterey (2009) 46 Cal.4th 887, 898 (Guzman).)

In Guzman, the Supreme Court expanded its explanation of the first two elements of the analysis. With regard to the first element—an obligatory, not discretionary or permissive—enactment, “[c]ourts have construed this first prong rather strictly, finding a mandatory duty only if the enactment ‘affirmatively imposes the duty and provides implementing guidelines.’ [Citation.]” (Guzman, supra, 46 Cal.4th at p. 898.) Typically, an enactment imposing a mandatory duty includes specific rules and guidelines for implementation. Second, in determining whether the duty imposed is designed to protect against the particular kind of injury the plaintiff suffered, the court added, “[w]e examine the ‘language, function and apparent purpose’ of each cited enactment ‘to determine if any or each creates a mandatory duty designed to protect against’ the injury allegedly suffered by [the] plaintiff.” (Ibid., quoting Haggis, supra, 22 Cal.4th at p. 499.) The requirement is not satisfied if the enactment merely confers some incidental benefit upon the class to which the plaintiff belongs. (Guzman, supra, at p. 898.)

The first element merits particular attention, in light of appellants’ insistence that respondent’s mandatory duty was to provide a court reporter. Appellants argue that we must interpret section 68086 to mean that the court shall provide a court reporter whenever the fee is paid. But the statute says no such thing; it states that the $30 fee “shall be charged for the reasonable cost of the court reporting services.” (§ 68086, subd. (a)(1), italics added.) The statute clearly anticipates and accommodates the contingency that a court reporter may be unavailable: It requires the Judicial Council to adopt rules ensuring that parties have the opportunity to arrange for a pro tempore reporter when the court does not provide one. Nowhere in the extensive language of section 68086 is there a mandate that the court provide a court reporter. Likewise, California Rules of Court, rule 2.956, which was adopted to give effect to section 68086, contemplates the situation in which “the services of an official court reporter are not available for a hearing or trial in a civil case.” (Cal. Rules of Court, rule 2.956(c).) In such a case, the rule permits a party to arrange for a pro tempore court reporter. Notably, the rule makes that party, not the court, responsible for the cost of the reporter, though “the expense may be recoverable as part of the costs, as provided by law.” (Ibid.)

Section 68086 does, however, require that the court refund the fee “as soon as practicable” if the party does not receive the official court reporter. Appellants correctly note that the Legislature used the term “shall” in the refund clause, section 68086, subdivision (a)(1)(E): “The fee shall be refunded as soon as practicable to the remitting party or parties if no court reporting services were provided.” Respondent does not directly address this provision, confining its argument primarily to the allegation of a duty to provide a reporter. At best respondent asserts, in discussing negligence, that “[t]he Legislature did not impose a time limitation or method related to the refund, and did not create a specific cause of action for failure to refund the fee.” That there was no specific time limit is irrelevant.

In addressing the nonexistent duty to provide an official reporter, respondent invokes the requirement in section 815.6 that the mandatory duty created by an enactment (here, section 68086) must be designed to protect against the kind of injury allegedly suffered. It is difficult to conceive how the kind of injury contemplated by the refund provision is anything other than what was alleged in the complaint—that appellants and the class did not receive their refunds. Citing Aubry, supra, 2 Cal.4th 962, respondent asserts that appellants “have not suffered the type of injury that imposes liability for breach of a mandatory duty” because it is “not one that would be actionable between private parties.” In Aubry, a Supreme Court majority held that section 815.6 did not provide a cause of action against a public entity, a hospital district, that did not comply with the prevailing wage law in awarding a public works contract. Calling attention to the Law Revision Commission comment to section 810.8,^[4] the court reasoned that the district’s alleged failure to perform its mandatory duty caused injury to the workers (i.e., pay lower than the prevailing wage) that “by its very nature could not exist in an action between private persons; if the defendant awarding body were not a public entity, there would be no injury.” (Aubry, supra, at p. 968.)^[5]

Aubry does not compel the same result in these very different circumstances. Indeed, respondent does not explain how failing to refund a payment for a service that was not provided could not be actionable between private parties; respondent offers only circular reasoning by pointing out that “the injury alleged by Appellants . . . exists [only] because the Superior Court is a public entity.” If an individual paid for a service from a private person who then failed to provide that service, the loss suffered by the paying individual clearly would be actionable. That a public entity had a mandatory duty to refund money for a service it did not provide does not mean that the injury—the litigant’s loss of money—is not the type of “injury” (as defined by section 810.8) protected by section 815.6.

Respondent further argues, however, that all the issues before the court are moot, because it “has issued refunds to all parties who were entitled to a refund.”^[6] For the same reason, it disputes appellants’ capacity to represent the alleged class. In so arguing, however, respondent relies on a factual assertion that was not appropriate for consideration by demurrer. Indeed, at the time the court sustained the demurrer to this cause of action, there was no evidence of refunds beyond a response to interrogatories indicating reimbursement to appellants themselves for four hearings. It was only after that disposition, without leave to amend, that respondent supplemented its response by listing numerous other litigants who were issued refunds for their payment of the $30 fee. None of this evidence was properly before the court in the demurrer proceedings. The sustaining of a demurrer is proper when the facts stated in the complaint itself do not state a viable cause of action as a matter of law; it should not be based on facts that were not properly pleaded or judicially noticed. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP (2010) 183 Cal.App.4th 238, 244.) If there is dispositive evidence vitiating the causes of action for failing to return the litigants’ money, respondent should be presenting that evidence in a motion for summary judgment.

3. Negligence

Appellants’ negligence claim was based on respondent’s “charging [court reporter] fees without providing court reporters,” and on the retaining of the fees when a court reporter was not provided.^[7] In their opening brief, their focus is on respondent’s failure to provide a court reporter; in their reply brief they incorporate the charge that respondent failed to timely return the fee. As we have already explained, the court had no mandatory duty under section 815.6 to provide official court reporters, but it did have a duty to refund the fee if the party who paid it was not provided with the service. To the extent that appellants were asserting negligence for the failure to return the fee “as soon as practicable,” they stated a sufficient cause of action.^[8] (§ 68086, subd. (a)(1)(E).)

4. Breach of Implied Contract

Appellants’ first amended complaint contained the amended contract claim, which stated, “Per Government Code section 814, liability may be imposed on a public entity for breach of contract. The collection of a reporter fee implies a contract with [the superior court] to provide reporter services. Such services were not provided in breach of the implied agreement. and money was lost due to the failure to provide such services, both in the loss of the fee and, in some cases, the need to obtain private reporting services.” This allegation finds no legal support under section 814^[9] because no contract could have been inferred from the mere collection of a court reporter fee. As discussed earlier, section 68086 clearly requires the court to charge the fee and to return the fee if no court reporter is provided, but it does not require the court to provide the reporter. The Legislature obviously recognized that the availability of official court reporters cannot be guaranteed, and it took that fact into account when providing for a refund. Under section 815.6, a public entity has no liability absent a mandatory duty imposed by separate enactment. Because section 68086 imposes no mandatory duty on the court to provide a court reporter, no contractual rights were created by the payment of the fee.

5. Declaratory Relief

In both the original and amended complaints, appellants alleged that they paid the $30 fee because their attorney was told that this was a filing fee that was required “regardless of whether a reporter was actually provided.” Appellants added that the court had an improper policy to retain the fee unless a demand was made for its return, contrary to section 68086. They sought an order “declaring [that] defendants are obligated to provide a court reporter if a fee is paid for one and that it may not retain and must return fees obtained for that purpose when no reporter is provided, with or without demand and an injunction enjoining such practices in the future.” We have already explained that respondent had no duty to provide a court reporter upon payment of the fee, but section 68086 did require it to return the fee “as soon as practicable to the remitting party or parties if no court reporting services were provided.” Because a judiciable controversy was stated in appellants’ pleading, the demurrer to the declaratory relief claim as well as those for negligence and breach of mandatory duty should have been overruled.

This case should have been resolved long ago, either by settlement or summary judgment. We cannot provide that resolution, however, because the principles of review applicable to demurrer rulings require this court to accept as true not only the facts that were alleged but also those that can be inferred from those expressly alleged. As the claims pertaining to the failure to refund the fee survived respondent’s demurrers, dismissal of the action was unjustified.

Disposition

The judgment of dismissal is reversed. On remand, the court is directed to vacate its August 2015 order sustaining respondent’s demurrer to the September 5, 2014 complaint without leave to amend as to the first and second causes of action, and to enter a new order overruling the demurrer to the first, second, and fourth causes of action in that complaint. Appellants are entitled to their costs on appeal.

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