San Mateo Union High School District v. County of San Mateo
152 Cal. Rptr. 3d 530
Cal. Ct. App.2013Background
- Plaintiffs are school districts that invested in the San Mateo Pool managed by San Mateo County and former County Treasurer Buffington.
- Lehman Brothers notes in the Pool collapsed after Lehman’s bankruptcy in 2008, causing roughly $155 million in losses (plaintiffs’ share ~ $20 million).
- Plaintiffs filed tort/contract claims after settlement talks failed and after government tort claim notice was rejected.
- The first amended complaint asserted claims for breach of contract, prudent investor standards violations, maturity-limit violations, and investment-policy violations.
- The trial court sustained a demurrer without leave to amend, ruling plaintiffs failed to plead breach of contract and that defendants were immune from the noncontractual claims; judgment for defendants followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the County and Buffington are immune for prudent investor standard violations. | Pltfs argue §27000.3/§53600.3 impose a mandatory duty; immunity does not apply. | Defendants contend the acts involve discretionary investments; immunity applies. | Public entities immune under 815.6/820.2 for prudent investor claims. |
| Whether Buffington and the County can be vicariously liable under §815.2 despite 815.6 immunity. | Buffington’s acts could trigger vicarious liability for the County. | Discretionary acts and immunities shield both from liability. | Immunity under 820.2 applies; vicarious liability barred. |
| Whether the third and fourth causes of action escape immunity due to mandatory duties. | 53601/maturity limits and Investment Policy create enforceable mandatory duties. | Discretionary investment decisions do not create actionable mandatory duties; immunized. | Third/mandatory-duty theory rejected for maturity limits; fourth action dismissed as discretionary; immunity applied. |
| Whether the first (breach of contract) claim is viable given immunity. | Implied contract to manage Pool per statutory duties could be breached. | No contract distinct from statutory duties; immunity bars noncontractual claims. | First cause of action for breach of contract properly dismissed; no viable contract claim. |
| Whether leave to amend was properly denied. | No reasonable possibility to cure; denial of leave to amend affirmed. |
Key Cases Cited
- Ellerbee v. County of Los Angeles, 187 Cal.App.4th 1206 (2010) (rigid 815.6 standards for mandatory duties and immunity)
- de Villers v. County of San Diego, 156 Cal.App.4th 238 (2007) (mandatory duties require discrete, non-discretionary acts; discretionary in other contexts)
- Guzman v. County of Monterey, 46 Cal.4th 887 (2009) (mandatory duty analysis; discretion in complex tasks)
- Lockhart v. County of Los Angeles, 155 Cal.App.4th 289 (2007) (distinguishes discretionary/plenary duties; mandatory duty tests)
- Creason v. Department of Health Services, 18 Cal.4th 623 (1998) (discretion in implementing standards negates 815.6 liability)
- Roe v. State of California, 94 Cal.App.4th 64 (2001) (immunity implications in state actions)