60 Cal.App.5th 923
Cal. Ct. App.2021Background:
- San Juan Capistrano used tiered water rates from Feb 1, 2010 through June 30, 2014; a prior suit (Capistrano Taxpayers) held the tiers violated Prop. 218.
- City created a Refund Program (approved June 16, 2015) offering refunds/credits for overbilling between Aug 28, 2013 and June 30, 2014 in exchange for a signed release waiving all claims for disputed rates before July 1, 2014.
- More than 6,530 ratepayers (including Bottjer) accepted refunds and signed releases; others (Daneshmand, Montgomery) did not.
- Plaintiffs served notices of claim in Sept and Dec 2015 and sued in Jan 2016 seeking refunds for the entire period the tiered rates were in effect; the City denied the notices as untimely under Gov. Code § 911.2.
- Trial court: granted summary adjudication that the releases were valid and barred claims of those who accepted refunds; granted judgment on the pleadings dismissing breach of contract and implied covenant claims against the City; after a bench trial on stipulated facts, held remaining class claims untimely and not waived. Appeal followed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability of the refund release (fraudulent concealment; unconscionability; consideration; public policy) | Release invalid: City fraudulently concealed material facts (amounts/determinants of overcharge); release unconscionable, lacking consideration, and violates public policy | Release is unambiguous, supported (or not needing) consideration, not unconscionable, not against public policy; no proof of concealment or damages from concealment | Release valid and enforceable; plaintiffs failed to show fraudulent concealment, unconscionability, or public‑policy bar; written release bars claims of participating ratepayers |
| Breach of contract and breach of implied covenant claims against City (judgment on the pleadings) | Monthly bills or conduct created an implied contract or implied term that rates would comply with Prop. 218; breach and covenant claims therefore viable | Public entities cannot be sued on implied contracts; allegations do not plausibly plead an express contract term promising legality of rates | Court properly dismissed these causes: implied contracts against a municipality are unenforceable and complaint did not show a contractual term implying constitutional legality |
| Timeliness under Gov. Code § 911.2 (accrual date; one‑year presentment rule) | Claims did not accrue (or accrual was tolled) such that the Sept/Dec 2015 notices were timely; alternatively accrual delayed by City communications | Last tiered bill due Aug 19, 2014 → one‑year presentment deadline Aug 19, 2015; plaintiffs’ notices in Sept/Dec 2015 were untimely | Claims accrued when last tiered bill was due; one‑year presentment expired Aug 19, 2015; plaintiffs’ notices were untimely |
| Equitable tolling / waiver / reopening of claims period by Refund Program | Equitable tolling applies; Refund Program or City conduct waived or reopened the one‑year claims period (e.g., accepting late individual claims, program deadline Oct 1, 2015) | Plaintiffs forfeited tolling argument below; Refund Program did not waive or reopen the statutory notice period; City’s limited acceptance of some late individual claims did not evince intent to relinquish statutory right | Equitable tolling forfeited on appeal for not being raised below; substantial evidence supports no waiver or reopening—the Refund Program did not extend or waive § 911.2 deadline |
Key Cases Cited
- Moore v. Rogers, 157 Cal.App.2d 192 (Cal. Ct. App. 1958) (deception in obtaining a release can invalidate it)
- Donovan v. RRL Corp., 26 Cal.4th 261 (Cal. 2001) (elements of procedural and substantive unconscionability)
- Morris v. Redwood Empire Bancorp, 128 Cal.App.4th 1305 (Cal. Ct. App. 2005) (adhesion contract and expectations analysis for unconscionability)
- Utility Audit Co., Inc. v. City of Los Angeles, 112 Cal.App.4th 950 (Cal. Ct. App. 2003) (waiver of governmental limitations period requires clear showing)
- City of Stockton v. Superior Court, 42 Cal.4th 730 (Cal. 2007) (Gov. Claims Act bars suit without timely presentment)
- Green Valley Landowners Assn. v. City of Vallejo, 241 Cal.App.4th 425 (Cal. Ct. App. 2015) (public entity may not be sued on an implied contract)
- Foley v. Interactive Data Corp., 47 Cal.3d 654 (Cal. 1988) (breach of implied covenant requires an underlying contract)