35 Cal.App.5th 721
Cal. Ct. App.2019Background
- Plaintiff Tobias Kahan bought residential property at a foreclosure sale; eight days before the sale the City of Richmond recorded a lien (a "garbage lien") for delinquent solid waste collection charges under a city ordinance.
- When Kahan later sold the property he paid the City to obtain a release of the garbage lien and then sued on behalf of a putative class seeking refunds, injunctions, removal of liens, and damages for inverse condemnation and negligence.
- The City demurred, arguing statutes (Gov. Code §§ 25831, 38790.1 and Pub. Resources Code § 40059) authorize converting unpaid garbage fees into special assessment liens collected like property taxes, and that refund claims are governed by Revenue & Taxation Code procedures (requiring exhaustion and naming the county). The City also asserted immunity for certain tort claims.
- The trial court sustained the demurrers with leave to amend (noting the County might be a necessary party and Revenue & Taxation Code procedures may apply); Kahan did not amend and the case was dismissed with prejudice.
- The Court of Appeal affirmed, holding the statutes expressly authorize counties and cities to treat delinquent garbage fees as special assessments collectible like property taxes, that Kahan failed to plead facts showing the bona fide encumbrancer exception applied, and that his causes of action therefore failed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to convert delinquent garbage fees into assessment liens | Kahan: garbage fees are user fees under the Constitution and cannot be unilaterally recharacterized as assessments; Gov. Code § 25831/§ 38790.1 do not authorize this conversion | City: Gov. Code §§ 25831 and 38790.1 and Pub. Resources Code § 40059 expressly authorize counties/cities to collect delinquent garbage fees as special assessments and liens, collected like property taxes | Court: Statutes unambiguously authorize the City to record and collect delinquent garbage fees as special assessments; demurrer sustained on this ground |
| Applicability of Revenue & Taxation Code refund procedures | Kahan: If fees are user fees, tax/assessment refund procedures (Rev. & Tax. Code) should not apply | City: Fees converted to assessments are collected like taxes per statute, so tax/assessment refund procedures apply and plaintiff failed to allege exhaustion | Held: Because statutes make the assessments collectible like taxes, Revenue & Taxation Code procedures apply; Kahan failed to plead compliance |
| Statewide lien-priority preemption | Kahan: City ordinance conflicts with state lien priority rules (preempted) and cannot elevate garbage liens above other encumbrances | City: Statutory scheme grants the authorized assessment lien its priority; ordinance is consistent with state law | Held: Isaac (distinguished) does not control here; express statutory authorization means no conflict or preemption |
| Bona fide encumbrancer exception (preventing lien attachment) | Kahan: A prior mortgage/encumbrance on the property precludes the garbage lien attaching | City: Exception protects only subsequent bona fide purchasers/encumbrancers who took without notice of an existing lien; Kahan bought with constructive notice of recorded lien | Held: Exception applies only where a bona fide encumbrancer/purchaser obtained an interest without notice of the lien; Kahan’s pleadings did not allege facts showing such a subsequent, protected encumbrancer, so the exception did not bar the lien |
Key Cases Cited
- Isaac v. County of Los Angeles, 66 Cal.App.4th 586 (Cal. Ct. App. 1998) (utility charges were user fees and a municipal ordinance lacked statutory basis to create a lien; lien-priority/preemption analysis)
- Casteel v. County of San Joaquin, 134 Cal.App.4th 918 (Cal. Ct. App. 2005) (statutes authorizing imposition of liens for unpaid solid waste fees support county collection by lien)
- MacIsaac v. Waste Management Collection & Recycling, Inc., 134 Cal.App.4th 1076 (Cal. Ct. App. 2005) (statutory interpretation principles; legislative intent analysis)
- Rossberg v. Bank of America, N.A., 219 Cal.App.4th 1481 (Cal. Ct. App. 2013) (standards for affirming demurrer if any ground supports it)