Fair Oaks Cemetery Dist. v.
Filed 3/2/12 Fair
Oaks Cemetery Dist. v. County
of Sacramento CA3
NOT
TO BE PUBLISHED
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE
DISTRICT
(Sacramento)
FAIR OAKS CEMETERY DISTRICT et
al.,
Plaintiffs and Appellants,
v.
COUNTY OF SACRAMENTO et al.,
Defendants and Respondents.
C066643
(Super.
Ct. No. 34-2010-00068616-CU-MC-GDS)
Although not
characterized as such, this is an in rem reverse validation action by
plaintiffs Fair Oaks and Sylvan Cemetery Districts (Fair Oaks and Sylvan,
respectively) challenging the validity of the 1981 annexations of additional
territory to the districts. The
plaintiffs seek a share of the property tax revenue received by the defendant
County of Sacramento
(County) from the annexed territories, which they claim should have been
apportioned to them for services rendered to residents in the territories from
1981 to date.
The action comes
30 years too late. The applicable
statute of limitations for the filing of the validation actions was 60 days
from the date of execution of the certificates of completion of the
annexations. (Gov. Code, § 56103, Code
Civ. Proc., § 863.) That occurred on March 18, 1981, when the Local Agency
Formation Commission (LAFCO) recorded certificates of completion of the
annexations for the two cemetery districts.
The trial court
sustained the defendants’ demurrers without leave to amend. The trial court agreed with defendants that
the complaint was barred by the statute of
limitations and the plaintiffs appeal.
Plaintiffs’ primary argument on appeal is that the time for bringing a
validation or reverse validation action never commenced because the annexation
of territory was invalid. They claim
that the validation actions were invalid because of the failure of the parties
to enter into tax-sharing agreements.
Because the point
of bringing a validation action is to determine the validity of a public
agency’s acts, the period for bringing suit begins to run when the act of the
agency is deemed complete. For purposes
of the annexation of territory, the annexation was deemed complete when LAFCO
executed certificates of completion of the annexations. Where, as here, no reverse validation action
was filed within 60 days, the annexations became valid whether or not the proceedings
leading up to the annexations were in fact legally valid.
We shall affirm
the judgment of the trial court.
FACTUAL AND
PROCEDURAL BACKGROUND
Fair
Oaks and Sylvan are public cemetery districts located in Sacramento
County. In October 1980, the two districts met with
LAFCO to discuss annexation of new territory to the districts.
In November 1980, Fair
Oaks adopted Resolution No. 22 to initiate the application
proceedings before LAFCO to annex new territory to the district. The resolution recited that the proceeding
was pursuant to the District Reorganization Act of 1965, commencing at section
56000 of the Government Code.
On January 7, 1981, LAFCO adopted
Resolution No. 756 approving Fair Oaks’s application for
annexation. The LAFCO resolution
directed Fair Oaks to “initiate further proceedings in
compliance with this resolution and applicable law[,]” and “initiate annexation
proceedings with notice and hearing, as specified under Government Code Section
56430, et. seq.” The following month,
Fair Oaks initiated the annexation proceeding by resolution.
However, Fair Oaks
never passed a resolution for the exchange of revenues relative to the
annexation. An unsigned resolution
recited that Revenue and Taxation Code section 99, subdivision (b) required the
County to establish a formula for the exchange of property tax revenues with
respect to all properties subject to the jurisdictional change. The unsigned resolution further stated that
LAFCO adopted the resolution approving the annexation with the understanding
that no property tax base or growth increment was to be exchanged as a result
of the annexation. A handwritten note at
the bottom of the unsigned resolution stated that the Board of Trustees of Fair
Oaks refused to sign the resolution.
Despite Fair
Oaks’s refusal to agree that the annexation would not involve a property tax
exchange, LAFCO sent a Statement of Boundary Change for Fair Oaks to the
Sacramento County Assessor and Recorder.
The complaint alleges that despite an assertion to the contrary in the
Statement of Boundary Change, no copy of Fair Oaks’s resolution approving the
annexation was ever attached to the Statement.
The complaint alleges that Fair Oaks never adopted any such resolution.
Most importantly
for purposes of this action, on March 18, 1981, LAFCO recorded a certificate of
completion for the Fair Oaks annexation that set forth the legal description of
the territory annexed.
On July 7, 1981,
the County Board of Supervisors adopted a resolution that no property tax base
or growth increment would be exchanged between Fair Oaks and the affected
taxing entities within the tax rate areas included in Fair Oaks’s
district.
On July 22, 1981,
LAFCO wrote a letter to Fair Oaks stating that “your annexation of territory
cannot be considered legal or complete” until Fair Oaks signed an AB8 property
tax exchange agreement.
name="_ftnref2" title="">[2] The letter stated: “Until your AB8 agreement is complete, your
annexation is not final and, according to the law, you should not accept
customers from the annexed territory.”
Similarly, Sylvan
adopted a resolution in November 1980 making application for annexation. On January 7, 1981, LAFCO adopted a
resolution approving Sylvan’s application and directing it to initiate
annexation proceedings. Sylvan initiated
the annexation process in February 1981, and one month later it adopted a
resolution annexing the additional territory.
On March 18, 1981,
LAFCO recorded a certificate of completion with the County Recorder for the
annexation of territory to Sylvan. Three
months later, on June 24, 1981, LAFCO sent Sylvan a letter stating that LAFCO
and Sylvan’s Board approved the annexation “with the understanding that the
District would not receive a share of the property tax from the previously unserved
territory.” The letter asked Sylvan to
adopt a resolution stating that no tax exchange would take place. On July 7, 1981, Sylvan passed a resolution
stating: “no property tax base or growth
increment [will] be exchanged between the Sylvan Cemetery District and the
affected taxing entities within the tax rate areas included in the Sylvan
Cemetery District.” At the bottom of
this resolution was the following statement:
“With one exception, The Sylvan Cemetery District will reserve the right
to renegotiate, at Budget time each Fiscal Year. Motion carried unanimously.”
Plaintiffs
initiated this action in January 2010.
After defendants demurred to the original complaint, the trial court
sustained the demurrer with leave to amend.
The first amended complaint (complaint) contains 11 causes of
action. Fair Oaks is the complainant in
causes of action one through three, five and six, and eight through ten. Sylvan is the complainant in causes of action
four, seven and eleven.
The first cause of
action (by Fair Oaks) seeks damages against LAFCO for failure to comply with
the requirements of former Government Code section 35351, which required that a
certificate of completion provide the date the resolution was adopted ordering
the annexation. (Stats. 1977, ch. 1253,
§ 35351, p. 4728.)
The second and
fourth causes of action (by Fair Oaks and Sylvan) seek damages against LAFCO
and County for failure to comply with former Revenue and Taxation Code section
99, subdivision (b), which directed that agencies affected by the change of
organization meet to determine the amount of tax revenues to be exchanged.
The third cause of
action (by Fair Oaks) seeks damages against County, again for violation of
former Revenue and Taxation Code section 99, subdivision (b), and alleges that
the county auditor was not authorized to allocate or pay any property tax
revenue until it received notice that a property tax exchange agreement had
been reached.
The fifth cause of
action (by Fair Oaks) seeks damages for violating former Revenue and Taxation
Code section 99.1. That section provided
that if a special district involved in the negotiation for the exchange of
property tax revenue among local agencies failed to adopt a resolution
providing for the exchange of property tax revenue, the county would determine
the exchange of property tax revenue, unless the special district was one which
would provide services to the area where such services had not been previously
provided. (Stats. 1980, ch. 801, § 11.5,
p. 2517.)
The sixth and
seventh causes of action seek damages from County for violating former
Government Code section 56482, which provided that any territory annexed to a
district would be subject to the levying of taxes to provide payment of
principal, interest and other amounts on any bonds or other contracts or
obligations of the district. (Stats.
1965, ch. 2043, § 56482, p. 4729.)
The eighth cause
of action is a declaratory relief
action by Fair Oaks, alleging that LAFCO filed a certificate of completion for
the Fair Oaks annexation in violation of the requirements of then Government
Code section 35350. That section
provided that LAFCO could prepare and execute a certificate of completion only
if Fair Oaks’s resolution ordering the change of organization was in compliance
with the boundaries, modifications, and conditions specified by LAFCO in its
resolution making determinations.
(Stats. 1977, ch. 1253, § 35350,
p. 4727.)
The ninth cause of
action (by Fair Oaks) is against County for conversion of property tax revenue
since 1981.
The tenth and
eleventh causes of action are for declaratory relief, seeking a declaration
that the Fair Oaks and Sylvan annexations were valid and that the districts are
entitled to receive property tax revenue from the annexed areas.
The trial court
found that the first through eighth causes of action were barred by the
limitation periods in Government Code section 56103 and Code of Civil Procedure
section 863, providing that any challenge to the annexations had to be brought
within 60 days of the filing of the certificates of completion in March
1981. The court rejected plaintiffs’
“contention that the limitation period never commenced because the ‘annexation
proceedings’ were ‘never completed’ because ‘the process was ‘fatally
flawed.’” The trial court stated: “Plaintiffs cannot circumvent the fact that the
certificates were recorded in March 1981.
Indeed, they allege so. . . . Plaintiffs had 60 days to challenge the
annexations. They failed to do so. Plaintiffs present no authority that they may
do so now, almost thirty years later.”
The trial court further found that because
plaintiffs did not respond to defendants’ claim that the second through eighth
causes of action were also barred by Code of Civil Procedure section 349.1,
plaintiffs had conceded the application of that statute. Code of Civil Procedure section 349.1 states
that an action to contest the validity of any action or proceeding to change
the boundaries of a special district or other public entity must be brought
within six months from the date of completion of the action or proceeding. The trial court likewise found plaintiffs had
conceded that the ninth cause of action for conversion was barred by
plaintiffs’ failure to allege compliance with the Tort Claims Act, Government
Code sections 900, et seq. Finally, the
trial court found that the causes of action for declaratory relief were barred
because they were based upon the complaint’s earlier allegations.
DISCUSSION
I
Action Barred by 60
Day Limitations Period
The applicable
former Government Code sections 56008 and 56009 and Code of Civil Procedure
sections 860 and 863. Former section
56008 provided that an action “to determine the validity of a change of
organization or a reorganization may be brought pursuant to Chapter 9
(commencing at Section 860) of Title 10, Part 2 of the Code of Civil
Procedure.” (Stats. 1965, ch. 2043, §
56008, p. 4673.) The action at issue
here, the annexation of territory to a district, is considered a change of
organization, pursuant to former Government Code section 56028, which provided
in pertinent part that a change of organization includes an annexation of
territory to a district. (Stats. 1965,
ch. 2043, § 56028, p. 4678.)
Former Government
Code section 56009 provided that for the purpose of contesting the validity of
a change of organization, “such change of organization . . . shall be deemed to
be completed and in existence upon the date of execution of the certificate of
completion.” (Stats. 1978, ch. 76, § 8,
p. 211.)
Code of Civil
Procedure section 860, which has remained unchanged since it was enacted in
1961, states that a public agency may test the legal validity of “the existence
of any matter which under any other law is authorized to be determined pursuant
to this chapter” by filing an in rem action within 60 days. Such actions are referred to as validation
actions. (Robings v. Santa Monica Mountains Conservancy (2010) 188
Cal.App.4th 952, 960 (Robings).) Since former Government Code sections 56008
and 56009 authorized a validation action pursuant to Code of Civil Procedure
section 860 to determine the validity of the annexation of territory to a
district, and specified that the annexation would be deemed completed and in
existence when the certificate of completion was executed, it follows that the
60 day period provided in Code of Civil Procedure section 860 commenced upon
the execution of the certificate of completion.
Pursuant to Code
of Civil Procedure section 863, an interested party may file a “reverse
validation action” to test the validity of the public agency’s acts. Such a proceeding must be brought within the
same 60 day period. (
960.) If the public agency’s actions go
unchallenged during the 60 day period, they are thereafter immune from
challenge, whether legally valid or not.
(Ibid; California Commerce Casino,
Inc. v. Schwarzenegger (2007) 146 Cal.App.4th 1406, 1420.)
The statutes of
limitations for validation and reverse validation actions serve the important
public policy of promptly settling all questions about the validity of the
public agency’s actions. (
Transportation Financing Corp. (2009) 178 Cal.App.4th 924, 932.)
A. Trial Court Did
Not Weigh Conflicting Facts
As stated, the
trial court ruled that the first through eighth causes of action were barred by
the 60 day statute of limitations for validation actions, stating that it
rejected plaintiffs’ contention that the statute of limitations never commenced
because the annexation proceedings were never completed.
Plaintiffs argue
that the trial court necessarily gave credence to the recorded certificates of
completion, but not to the allegation that LAFCO wrote the districts informing
them that the annexations were not complete, and that no tax sharing agreement
existed. Plaintiffs argue the trial
court accepted that the certificates of completion were valid, but ignored the
fact that LAFCO informed the districts the annexation was not legal and that
the steps necessary for the completion of the annexation were never taken.
“In reviewing the
sufficiency of a complaint against a general demurrer, we are guided by
long-settled rules. ‘We treat the
demurrer as admitting all material facts properly pleaded, but not contentions,
deductions or conclusions of fact or law. [Citation.] We also consider matters which may be
judicially noticed.’ [Citation.]” (
318.) In making its ruling on this
issue, the trial court considered the only material
fact pleaded in the complaint, i.e., the date the certificate of completion was
executed.
A material fact is
a fact of consequence to the determination of the action. Whether a fact is material is “‘determined
mainly by the pleadings, the rules in pleading and the substantive law relating
to the particular kind of case.’” (
29, overruled on another ground in People
v. Nesler (1997) 16 Cal.4th 561, 582, citations omitted.) On the issue of when a reverse validation
action must be brought, and therefore when the statute of limitations is
commenced, the only fact of consequence to the determination was when the
executed.
The fact that
LAFCO wrote a letter stating that the annexations were not legal or complete,
as well as the fact that no tax sharing agreement was signed or that any other
step required toward annexation was not taken was not material to the issue of
whether 60 days had run from the date the annexation was completed. That date was determined solely by the
execution of the certificate of completion, at which time the change of
organization was “deemed to be completed . . . .” (Former Gov. Code, § 56009; Stats. 1978, ch.
76, § 8, p. 211.) After 60 days had passed,
no action could be brought to challenge the annexation because it was deemed
valid, whether or not it was in fact legally valid. (California
Commerce Casino, Inc. v. Schwarzenegger, supra, 146 Cal.App.4th at p.
1420.)
Because the
execution of the certificates of completion was the only fact material to the
issue of when the statute of limitations commenced for bringing a validation
action, the trial court did not improperly “engage in a weighing of the
evidence[,]” but properly sustained the defendants’ demurrer.
Appellants’
argument is similar to one tendered in Smith
v. Mt. Diablo Unified School Dist. (1976) 56 Cal.App.3d 412 (
That case involved Code of Civil Procedure section 864, which applies
section 860 to certain contracts of a public agency. The appellants argued that because the
contract at issue had not been validly authorized, the 60 day period had not
commenced. (Id. at p. 415.) Although the
court eventually held that Code of Civil Procedure section 864 did not apply,
it held that for the purpose of the validating statutes, the contract was
formed when the school board approved the contract and authorized its
execution. (Id. at pp. 416-417.)
The court
stated: “The validity of the matters encompassed by Code of Civil Procedure
sections 860—870 is the precise question to be answered thereunder; hence,
cognizance under those sections is not based upon the validity of the substance or procedures attacked, but upon the
specific definitions provided in Code of Civil Procedure section 864 . . .
.” (Smith,
supra, 56 Cal.App.3d. at p. 416.) In
this case, the validity of the annexation is the precise matter determined by
the validation statutes. The only
material question is whether the annexation was in existence for purposes of
Code of Civil Procedure section 860, not whether the substance of the
procedures taken to accomplish the annexation was valid.
B. The Action was Necessarily Barred
Plaintiffs argue
the action was not necessarily barred because some causes of action allege
statutory violations, and statutory violations are not subject to validation
actions. This argument fails because the
statutory violations alleged are inextricably bound to the annexation of
territory to the districts, which is the gravamen of plaintiffs’ complaint.
At the time of the
annexation, Revenue and Taxation Code section 99 (alleged by plaintiffs to have
been violated in the second, third, and fourth causes of action) applied
“[u]pon the filing of an application or a resolution pursuant to . . . the
District Reorganization Act of 1965 (Part 1 (commencing with Section 56000) of
Division 1 of Title 6 of the Government Code)[.]” (Stats. 1980, ch. 801, § 11, p. 2513.) Former Revenue and Taxation Code section 99.1
(alleged to have been violated in the fifth cause of action) specifically
applied “for the purposes of Section 99[.]”
(Stats. 1980, ch. 1220, § 4, p.
4136.) Former Government Code section
56482 (alleged to have been violated in the sixth and seventh causes of
action), applied to “territory annexed to a district” and provided that such
territory would be subject to the levying of taxes and assessments to provide
for the payment of bonds. (Stats. 1965,
ch. 2043, § 56482, p. 4729.)
Even though these
causes of action are pleaded in the language of statutory violations, rather
than as challenges to the validity of the annexations, the appropriate statute
of limitations is determined by the “‘gravamen of a complaint and the nature of
the right sued upon, rather than the form of the action or relief
demanded[.]’” (McLeod v. Vista Unified School Dist. (2008) 158 Cal.App.4th 1156,
1165.) “[I]t is the nature of the
governmental action being challenged rather than the basis for the challenge
that determines the procedure to be utilized.” (Hills
for Everyone v. Local Agency Formation Com. (1980) 105 Cal.App.3d 461,
468.)
Here, the gravamen
of the plaintiffs’ complaint is that the annexation of territory to their
districts was accomplished without any corresponding increase in revenue in the
form of a larger tax base. They claim
the annexation was invalid principally because there was no corresponding tax
sharing agreement that would have increased their tax base. The tax sharing agreement required by Revenue
and Taxation Code section 99 was required because
of the annexations, and would not have been required had there been no
annexations. The underlying issue is the
alleged invalid annexation, which is properly the subject of a validation
action.
II
1983 Validation Act
The trial court
took judicial notice of the 1983
Validation Act. The act provided in
pertinent part: “The boundaries of every
public body as heretofore established, defined or recorded . . . are hereby
confirmed, validated, and declared legally established.” (Stats. 1983, ch. 638, § 3, p. 2550.) It also provided: “Any action or proceeding contesting the validity
of any action or proceeding heretofore taken under any law, or under color of
any law, for the formation . . . of any public body, or for any annexation
thereto, . . . must be commenced within six months of the effective date of
this act[.]” (Stats. 1983, ch. 638, § 7,
p. 2552.)
The 1983
Validation Act sets forth another limitation to an action contesting the validity
of the annexation. Plaintiffs argue that
there is a factual issue as to what the boundaries of the districts were in
1983. However, the only factual question
relevant to the limitations issue posed by the 1983 Validation Act is whether
the territory at issue from the 1981 annexation had been recorded as being
within the boundaries of the districts.
The certificates of completion, attached as exhibits to the complaint,
indicated that the annexed territory had been recorded as territory included within
the boundaries of the respective districts as early as 1981.
Plaintiffs argue
again that even if the boundaries of the districts including the annexed
territory were validated by the 1983 Validation Act, this did nothing to
resolve the property tax issue. As
previously indicated, the property tax issue was inextricably bound to the
annexation of territory to the districts, and is subject to the same
taxes as a result of the annexations or whether the annexations were valid
because of the failure enter into a tax-sharing agreement are matters that
could have been resolved in an action to validate the annexations. Matters which could have been adjudicated in
a validation action must be raised within the 60 day limitations period, or
they are waived. (McLeod v. Vista Unified School Dist., supra, 158 Cal.App.4th at p.
1165.)
Plaintiffs have
not raised any argument as to the remainder of the trial court’s ruling. The trial court found that by failing to
raise any argument in opposition, plaintiffs had conceded the applicability of
the six-month statute of limitations in Code of Civil Procedure section 349.1
to causes of action two through eight, and the bar of the Tort Claims Act to
the ninth cause of action. We treat
these issues as waived or abandoned. (
Cal.App.4th 1086, 1096.)
DISPOSITION
The judgment is
affirmed.
BLEASE , Acting P. J.
We concur:
ROBIE , J.
HOCH , J.
name="_ftn1" title="">[1] This is a curious argument. Without a tax-sharing agreement with the
County the plaintiffs were not entitled to a share of tax revenues. As the trial court noted in its ruling
sustaining plaintiffs’ demurrer to the original complaint with leave to amend,
“if Plaintiffs’ argument were accepted, it would mean they have nothing to
challenge at this point. That is, if the
annexations were never complete, then there would be no basis for them to seek
tax revenue which they allege they should have received as a result of the 1981
annexations. If the annexations were
never completed, Plaintiffs might be able to seek some type of relief requiring
completion of the annexations, but not monetary relief. Any claim for monetary relief is necessarily
based on the proposition that the annexations were complete.”
name="_ftn2" title="">[2] AB8 is Assembly Bill No. 8. It was a fiscal relief bill designed to
lessen the impact of Proposition 13 on local governments. (American
River Fire Protection Dist. v. Board of Supervisors (1989) 211 Cal.App.3d
1076, 1079.)
