Government Liability Update

Challenge to One-Time Benefit Program Is Moot after Money Spent

In Cerletti v. Newsom, published November 17, 2021, the Second District Court of Appeal, Division 5 dismissed an appeal from denial of a temporary restraining order against government spending in connection with a one-time benefit program as moot.  In April 2020, Governor Newsom established a $75 million Disaster Relief Fund to support undocumented Californians impacted by COVID-19.  The plaintiffs, as taxpayers, sued to challenge the project as an unlawful expenditure of funds.  In May 2020, they applied ex parte for a temporary restraining order and order to show cause re a preliminary injunction, seeking to halt distribution of benefits under the project.  The court denied the application on grounds including that prejudgment injunctive relief is not ordinarily available to remedy an alleged harm based on taxpayer standing.  The plaintiffs petitioned the appellate court for writ relief.  The appellate court denied the petition on grounds including the availability of an appeal.  The plaintiffs appealed the denial of the TRO.  They petitioned for a writ of supersedeas staying the order denying the TRO and the project itself.  The appellate court denied the petition, citing the rule that taxpayer harm is ordinarily insufficient to establish irreparable harm warranting preliminary injunctive relief.  While the appeal was briefed, the project money was all spent.

The appellate court ruled that because the money was spent, the appeal was moot.  While the court could resolve the case anyway if it raised an important issue likely to recur, but that evades timely appellate review, the court ruled that this was not such a case.  This was an emergency project to provide one-time payments during an extraordinary pandemic, which caused a state of emergency and a temporary pause in the operation of the Legislature.  There was nothing suggesting it was likely to recur.  

Bidder That Submits Nonresponsive Response to Request for Proposals Cannot Seek Writ Attacking Successful Bid, Because Bidder Has No Beneficial Interest

In SJJC Aviation Services v. City of San Jose, ordered published June 20, 2017, the 6th District Court of Appeal affirmed the dismissal on demurrer of a trial court writ petition challenging the award of a lease for airport facilities.  The defendant city issued a Request for Proposal that described the elements required for proposals.  The plaintiff submitted an RFP response that omitted nine required elements.  The city denied the proposal as nonresponsive, and awarded the lease to another bidder.  Before the lease was approved, the city changed one of the requirements for the lease, over the plaintiff's protest.  The city council approved the lease.  The plaintiff brought a writ petition alleging that the city violated its duties in changing the bid requirements and then awarding the lease.  It also sought injunctive and declaratory relief.

The appellate court ruled that the plaintiff could not state a cause of action for writ relief, because it lacked the beneficial interest in the outcome required by Code of Civil Procedure section 1086.  Because the plaintiff submitted a nonresponsive proposal, the requirement change it protested took place after the plaintiff's proposal was rejected, and the changed requirement had nothing to do with the reasons for the plaintiff's proposal's rejection, the changed requirement did not injure any interest plaintiff had.  None of the requirements for citizen standing, as a substitute for beneficial interest, were present.  The plaintiff also could not establish any grounds for injunctive or declaratory relief.  Because the plaintiff failed to show how it could cure the petition by amendment, the trial court properly sustained the city's demurrer without leave to amend.

Taxpayer Action Standing Requires That Plaintiff Pay Tax Assessed by the Defendant Public Entity

In Weatherford v. City of San Rafael, published June 5, 2017, the California Supreme Court reversed and remanded a stipulated dismissal of a taxpayer's action under Code of Civil Procedure section 526a.  The plaintiff sued a city and county for declaratory and injunctive relief, challenging the manner in which the defendants impounded autos.  The lower courts ruled that section 526a requires the plaintiff to have paid property taxes to the defendant public entity to have standing to bring the suit.  The Supreme Court reversed.  It ruled that section 526a was intended to restrict the common-law rules of taxpayer standing, by limiting the types of taxes that may be paid to give standing.  But limiting the types of taxes to property taxes is too narrow a reading.  The plaintiff must pay a tax assessed by the defendant locality, but the tax need not be property tax.

Municipality That Confesses Error in Response to Petition for Writ of Mandate May Be Deemed "Opposing Party" under Private Attorney General Statute

In Animal Protection League v. City of San Diego, published May 27, 2015, the Fourth District Court of Appeal, Division 1, affirmed (with modifications)  a trial court decision awarding petitioners for a writ of mandate attorney fees under Code of Civil Procedure section 1021.5, the Private Attorney General Statute, against the city appellant.  The petitioners petitioned the trial court for a writ of mandate challenging a city planning commission decision denying a permit.  The city filed an answer in which it confessed error and conceded that the planning commission erred in denying the permit.  The answer stated that it did not oppose lawful writ relief.  When the petitioners moved for entry of judgment, the city filed a nonopposition to the motion.  

Section 1021.5 provides that a court may award attorneys fees to a successful against "one or more opposing parties" in an action that has resulted in the enforcement of an important right affecting the public interest.  Interpreting the statute de novo, the appellate court concluded that a municipality that does not contest liability may nevertheless be an "opposing party," defining "opposing party" as the party against whom the suit is brought.  Since, under the catalyst theory, private attorney general fees may be awarded even when litigation does not result in a judicial resolution if the defendant changes its behavior because of the litigation, fees should be awarded when an entity confesses error in response to litigation.

Plaintiff May Not Use Taxpayer Suit to Collaterally Attack Foreclosure by Suing Sheriff or Clerk for Carrying Out Their Mandatory Duties

In Lyons v. Santa Barbara County Sheriff's Department, published December 3, 2014, the Second District Court of Appeal, Division 6, affirmed dismissal via demurrer of a taxpayer's lawsuit under Code of Civil Procedure section 526a against the sheriff's department, the county clerk recorder's office, and employees of the recorder's office for participation in a nonjudicial foreclosure and eviction proceeding.  The plaintiff alleged that fraudulent mortgage documents were recorded to foreclose on the plaintiff's property.  The court held that because the recorder has a mandatory duty to accept the paperwork that is filed with it, and the sheriff has a mandatory duty to serve a writ of execution, their actions cannot be attacked via a taxpayer's lawsuit.  A taxpayer's action may not be maintained where the challenged conduct is legal.