Webb v. City of Riverside
232 Cal. Rptr. 3d 761
| Cal. Ct. App. 5th | 2018Background
- Riverside Public Utilities (RPU), a municipal electric utility, may transfer up to 11.5% of its gross operating revenues to the city general fund under the city charter; “gross operating revenues” was not defined in the charter.
- Riverside owns transmission lines whose operations were transferred to CAISO; CAISO pays Riverside a Transmission Revenue Requirement (TRR) from wholesale users.
- Before December 2013 Riverside included some TRR in its calculations; at a December 17, 2013 City Council meeting the council accepted a finance dept. recommendation to include the full TRR in gross operating revenues used to compute the annual electric general fund transfer. No separate public hearing was held.
- Petitioner Webb sued (verified petition) claiming the inclusion of full TRR in the transfer calculation unlawfully exacted funds from ratepayers and violated Propositions 26 and 218; Riverside demurred claiming the suit was time-barred by Pub. Util. Code § 10004.5 (120‑day limit) and that no tax increase occurred.
- Webb filed successive verified amended petitions removing terminology like “rate” and “charge”; the trial court sustained a demurrer without leave to amend and entered judgment for Riverside. Webb appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Pub. Util. Code § 10004.5 (120‑day limit) apply to challenge? | Webb: §10004.5 applies only to formal ratemaking via rate schedules, not to Riverside’s internal change in transfer calculation. | Riverside: §10004.5 broadly applies to any ordinance/resolution/motion fixing or changing a rate or charge for electric commodity/service. | Held: §10004.5 applies broadly to any fixing/changing of a rate or charge for electric commodities/services; Webb’s verified pleadings are time‑barred. |
| Can Webb avoid §10004.5 by omitting earlier verified allegations that alleged overcharges? | Webb: Removed “rate”/“charge” language to clarify she challenges transfers/exaction, not a rate change. | Riverside: The amended verifications are sham because they contradict the original verified petition’s factual allegations. | Held: Courts may consider omitted verified allegations; Webb’s prior verified allegations alleging overcharges contradict later omissions and statute of limitations bars her suit. |
| Did the December 2013 action amount to a tax increase triggering Prop. 26/218 voter‑approval rules? | Webb: Including full TRR changed the methodology and increased the tax/exaction on ratepayers, requiring voter approval. | Riverside: The transfer practice predated 2013 and TRR funds are wholesale revenues, not charges to current retail ratepayers; no increased payments to ratepayers. | Held: Even treating methodology change as possible, Webb alleged no increase in amounts paid by ratepayers; without increased taxpayer burden there is no tax increase under Prop. 26/218. |
| Was trial court’s refusal to grant further leave to amend an abuse of discretion? | Webb: Claimed she could cure defects by repleading. | Riverside: Webb had multiple chances and amendments were sham; defects persisted. | Held: No abuse of discretion; after three attempts the pleadings remained deficient and demurrer properly sustained without leave to amend. |
Key Cases Cited
- Stearn v. County of San Bernardino, 170 Cal.App.4th 434 (discusses de novo review for demurrer dismissals)
- Curcini v. County of Alameda, 164 Cal.App.4th 629 (pleading sufficiency reviewed under any legal theory)
- Schifando v. City of Los Angeles, 31 Cal.4th 1074 (pleading: assume truth of properly pleaded facts on demurrer)
- Shoemaker v. Myers, 52 Cal.3d 1 (material facts in verified pleadings omitted in amendments may be considered against later pleadings)
- Gonzalez v. City of Norwalk, 17 Cal.App.5th 1295 (revision to tax methodology constitutes an increase only if it raises amount paid by taxpayers)
- AB Cellular LA, LLC v. City of Los Angeles, 150 Cal.App.4th 747 (defines "methodology" and explains when methodology revisions create tax increases)