222 Cal. App. 4th 1469
Cal. Ct. App.2014Background
- Fresno County withheld a property tax administration fee (PTAF) from city distributions; cities sued asserting the county’s post-2004 PTAF calculation was unlawful.
- The Supreme Court in City of Alhambra v. County of Los Angeles rejected the counties’ method and required counties to use the cities’ methodology.
- The trial court here (anticipating Alhambra) ordered Fresno County to refund excess PTAF amounts and awarded costs, prejudgment interest, and postjudgment interest at 7% per annum.
- After briefing but before finality, the Legislature enacted chapter 424 (effective Jan 1, 2014), amending Civ. Code §3287 to set prejudgment interest equal to the weekly average 1‑year Treasury yield (capped at 7%) and postjudgment interest at that yield plus 2% (capped at 7%).
- The parties disputed only the interest awards on appeal: whether interest was authorized and, if so, which rates and whether the new statute applied to interest accruing on or after Jan 1, 2014.
- The Court of Appeal held interest was awardable under pre‑existing law and that chapter 424 applies to this pending case but affects rates only prospectively as of Jan 1, 2014 (reducing postjudgment rate to 2.39% in this matter).
Issues
| Issue | Plaintiff's Argument (Cities) | Defendant's Argument (County) | Held |
|---|---|---|---|
| Whether prejudgment interest is authorized | §3287 authorizes prejudgment interest on recoverable monetary awards | Money returned is not "damages" (Dinuba) but compliance with statutory duty, so §3287 inapplicable | Prejudgment interest authorized under §3287; Dinuba not controlling here |
| Whether postjudgment interest is authorized and at what rate | Postjudgment interest available under art. XV, §1 at 7% | Judgment is not a conventional "money judgment," so Code Civ. Proc. rates inapplicable | Postjudgment interest authorized under art. XV, §1; 7% was correct pre‑Jan 1, 2014 |
| Whether chapter 424 (Civ. Code §3287(c)) applies to this case | New statute is prospective and should not reduce interest for claims arising earlier | Chapter 424 is remedial/procedural and applies to pending cases; it defines tax/fee claims to include PTAF disputes | Chapter 424 applies to this pending case (it governs tax/fee claims like this one) |
| If chapter 424 applies, does its rate apply retroactively to pre‑effective accruals? | New rates should not retroactively reduce interest accrued before Jan 1, 2014 | New statutory rate is procedural and should govern interest after effective date | New rates govern interest accruing on and after Jan 1, 2014; prior rate governs earlier accruals (postjudgment reduced to 2.39% here as of Jan 1, 2014) |
Key Cases Cited
- City of Alhambra v. County of Los Angeles, 55 Cal.4th 707 (Cal. 2012) (Supreme Court rejected counties’ PTAF calculation and mandated the cities’ methodology)
- City of Dinuba v. County of Tulare, 41 Cal.4th 859 (Cal. 2007) (distinguishes money‑damages analysis for purposes of the Government Claims Act)
- California Fed. Sav. & Loan Assn. v. City of Los Angeles, 11 Cal.4th 342 (Cal. 1995) (postjudgment interest on judgments against local entities governed by art. XV, §1; 7% applied in absence of legislative rate)
- People v. Union Oil Co., 48 Cal.2d 476 (Cal. 1957) (statutory changes to interest rates apply prospectively to interest accruing after effective date)
- White v. Lyons, 42 Cal. 279 (Cal. 1871) (historical precedent that changes in statutory interest rates operate only prospectively)
- Ehret v. Congoleum Corp., 87 Cal.App.4th 202 (Cal. Ct. App.) (illustrative application of forward‑applying changed interest rates)