Filed 10/16 /15 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

GREEN VALLEY LANDOWNERS ASSOCIATION, Plaintiff and Appellant,

v. CITY OF VALLEJO, Defendant and Respondent. A14280 8 (Solano County Super. Ct. No. FCS042938)

I n this class action comprised of nonresident water customers , plaintiff Green Valley Landowners Association filed a complaint seeking to preserve its alleged right to continue receiving water at reaso nable rates from an historic al water delivery system owned and operated by defendant City of Vallejo (City) . The trial court sustained the City’s demurrer as to all 12 causes of action contained in the complaint without l eave to amend. Plaintiff contends the court’s ruling s are legally erroneous. We affirm.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. Factual Background 1 The Lakes Water System (LWS) was created in the late 1800’s through the early 1900’s to provide the City with potable water. T he Cit y first constructed a diversion dam coupled with a 14

- inch transmission pipeline, which brought water from Solano County’s Green Valley to the City (the Green Line ). After completing the dam, the City created

1 We ta ke the facts from the allegations in the complaint.2

two reservoirs, Lake Frey ( completed in 1894) and Lake Madigan ( completed in 1908).
T he LWS was one of the first municipal water projects in California. Lake Frey and Lake Madigan were soon insufficient to meet the demands of the City’s rapidly growing population. The City then applied fo r a permi t to store 37,000

acre

- feet of water in the hills above Napa County’s Gordon Valley. Subsequently , the City constructed a dam and reservoir in Napa County known as Lake Curry ( completed in 1925) , along with a 24

- inch transmission line to transport water f rom Lake Curry to the City (the Gordon Line ). Upon completion , the LWS consisted of three large reservoirs, two dams, thousands of acres of land and watershed , and dozens of miles of municipal

sized pipes , which conveyed needed water to the City

. I n or der to transport the water from the three reservoirs, the City acquired
easements from some of the property owners along the Green Line, the Gordon Line, and
elsewhere within the LWS service area. In exchange for these easements, the City agreed
in writin g to provide a certain quantity of “free water” to the owners of the servient

estates. 2 In addition, the City agreed in writing to provide certain quantities of “free
water” to other nonresident customers in exchange for riparian water rights. Over the
d ecades, the City agreed to provide potable water to other nonresident customers. These
connection s were made without a master plan. From 1893 through the 1950’s, the City’s municipal water needs were met exclusively by the LWS. In the 1950’s, the City obtained water rights fr om the
Sacramento River Delta and contracted for water from the Solano Project.
In 1992, water quality from Lake Curry ceased to meet water treatment standards adopted by the California Department of Health Services. The City e lected to stop using Lake Curry as a water source, closing a valve on the Gordon Line and stopping the flow

2 In other instances, the City condemned by eminent domain the property needed for the easements.3

of LWS water to the City. The City then passed an ordinance (the 1992 Ordinance) shifting 100 percent of the cost of operating the LWS to its appro ximately 809
nonresident customers. Prior to 1991, the se nonresident s had shared the cost of the LWS with approximately 30,000 metered connections with in the City. As a result of the 1992 Ordinance, water rates for the nonresident customers increased by over 230 percent. The City passed additional water rate increases by ordinances enacted in 1995 (the 1995 Ordinance) and 2009 (the 2009 Ordinance)

. In addition to increasing water consumption charges, the ordinances increased the fixed service charges to the
nonresident customers of the LWS. Plaintiff allege s in its complaint that current water rates within the LWS are among the highest in the state. 3 On June 9, 2009, plaintiff, on behalf of the purported class of nonresident LWS customers (the Clas s) , entered into a tolling agreement with the City (Tolling Agreement). The Tolling Agreement tolls “any applicable statutes of limitations regarding a potential challenge to the rate increase [which occurred in 2009].” The Tolling Agreement has been ext ended 10 times , and expired on December 31, 2013. According to p laintiff , the City has grossly mismanaged and neglected the LWS, placing the burden on the Class to fund a deteriorating, inefficient, and costly water system that is spread over an “incohe rent service area.” In addition to water treatment plant improvements made between 1997 and 2005 that cost almost $8 million, replacement cost for a 10

- mile section of the Gordon Line and a six

- mile section of the Green Line are expected to be over $12 mi llion. All of these costs have been, or will be, passed on to the LWS’s nonresident customers. Plaintiff did not become aware of these unfunded liabilities until June 2013. Previously, the City had represented that the LWS

3 According to plaintiff’s opening brief, the average bimonthly water bill for residential members of t he Class is now over $400, or approximately 400 percent more than the average City customer water bill.4

was free of liabilities and de bt, even though it performed “virtually no capital improvements to or replacements of the infrastructure” between 1894 and 1992. Plaintiff also allege s that the City had engaged in negotiations with a private
investor

- owned utility to purchase the LWS. Reportedly, t he City will only consider selling the LWS to p laintiff (or to a water district or service district created by p laintiff)
for a sum that is almost $3 million over its “already flawed appraised value of the LWS.” The extra sum reportedly repr esents a loan or subsidy that the City claims it extended to LWS customers prior to 2009. Additionally, plaintiff complains that certain fees paid by Class members have not been earmarked for LWS improvements as required by City
ordinances , but instead ha ve been improperly used by the City for other unrelated

purposes. II. Procedural History On December 3, 2013, plaintiff filed and served a claim pursuant to Government
Code section 910 on behalf of itself and the Class. 4 On January 23, 2013, plaintif f filed the operative complaint against the City. The
class action complaint states 12 causes of action, comprised of claims for breach of implied contract, breach of implied covenant of good faith and fair dealing, breach of contract (third party benefic iary), breach of duty to charge reasonable water rates, breach of fiduciary duty, specific performance, declaratory relief, and accounting, along with four separate claims for injunctive relief. On February 24, 2014, the City filed a general demurrer to the complaint.
On June 11 , 2014, the trial court issued a tentative ruling sustaining the City’s
demurrer without le a ve to amend.

4 All further statutory references are to the Government Code except as otherwise indicated.5

On August 21, 2014, plaintiff filed its notice of appeal. 5 On August 2 2 , 2014, the trial court filed its order affirm ing its tentative ruling, granting the demurrer without leave to amend. On October 1, 2014, the trial court filed its order dismissing the lawsuit and entered final judgment for the City.
DISCUSSION
I. Standard of Review “Because this case comes to us on a demurrer for failure to state a cause of action, we accept as true the well

- pleaded allegations in plaintiff’s . . . complaint. ‘ “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions
or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.” [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.’ ” ( Evans v. City of Berkeley (200 6) 38 Cal.4th 1, 6.) “While the decision to sustain or overrule a demurrer is a legal ruling subject to de novo review on appeal, the granting of leave to amend involves an exercise of the trial
court’ s discretion. [Citations.] When the trial court sustain s a demurrer without leave to amend, we must also consider whether the complaint might state a cause of action if a defect could reasonably be cured by amendment. If the defect can be cured, then the judgment of dismissal must be reversed to allow the pla intiff an opportunity to do so. The plaintiff bears the burden of demonstrating a reasonable possibility to cure any defect

5 Although plaintiff ’ s appeal was premature because it was taken from the nonappealable order sustaining the demurrer without leave to amend, we treat it as being from the subsequently entered final judgment of dismissal. (See, e.g., Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 96, fn. 1 [“We deem appellant’ s p remature appeal, filed after the nonappealable order sustaining the demurrer without leave to amend and before the judgment of dismissal was entered, to be an appeal from the subsequent judgment of dismissal. ”].)6

by amendment. [Citations.] A trial court abuses its discretion if it sustains a demurrer without leave to amend when the plaintif f shows a reasonable possibility to cure any defect by amendment. [Citations.] If the plaintiff cannot show an abuse of discretion, the trial court’s order sustaining the demurrer without leave to amend must be affirmed.” ( Trader Sports, Inc. v. City of San Leandro (2001) 93 Cal.App.4th 37, 43

– 44.) The plaintiff’s “burden of demonstrating a reasonable possibility to cure any defect” ( Trader Sports, Inc. v. City of San Leandro , supra , 93 Cal.App.4th at p. 43) is not pro forma. “ ‘To satisfy that burden on appeal, a plaintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” [Citation.] . . . The plaintiff must clearly and specifically set forth . . . factual allegations that suffi ciently state all required elements of that cause of action. [Citations.] Allegations must be factual and specific, not vague or conclusionary.’ ” ( Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1491, quoting Rakestraw v. California Phys icians ’ Service (2000) 81 Cal.App.4th 39, 43

– 44.)
II. The Demurrer Was Properly Sustained a s t o t he Implied Contract Claims
A. Causes of Action
Plaintiff represents that its implied contract claims, which it identifies as the first (breach of implied con tract) , second (breach of implied covenant of good faith and fair dealing) and 10 th (specific performance) causes of action, are based on its theory that the City is contractually obligated to share in th e cost of the LWS pursuant to what plaintiff
refers to as the “Historic [ al ] Cost Sharing Ratio.” 6 The gist of these claims is that the City made an implied promise that it woul d “indefinitely share in the co st of operating, maintaining and improving the LWS and that the costs would be shared according to t he

6 In the complaint, the “Historic[al] Cost Sharing Ratio” is identified as the percentage of LWS costs paid by City residents (at least 98 percent), as compared to nonresident LWS customers (less than 2 percent) up until 1992.7

Historic [ al ] Cost Sharing Ratio,” a promise that it allegedly breached when it passed the 1992, 1995, and 2009 Ordinances. As the City notes, plaintiff’s third cause of action is also based on an implied contract theory. 7 The City also correctly obs erves that the complaint’s 10 th claim, which is for specific performance of the alleged implied agreement , actually constitutes a remedy and is not itself a cause of action. 8

B. Implied Contracts “The terms of an express contract are stated in words. [Citation.] The existence and terms of an implied contract are manifested by conduct. [Citation.] The distinction reflects no difference in legal effect but merely in the mode of manifesting assent.” ( Retired Employees Assn. of Orange County, Inc. v. C ounty of Orange (2011) 52 Cal.4th 1171, 1178.) The essential elements of a claim of breach of contract, whether express or implied, are the contract, the plaintiff’ s performance or excuse fo r nonperformance, the defendant’ s breach, and the resulting damag es to the plaintiff. ( Reichert v. General Ins.
Co. (1968) 68 Cal.2d 822, 830; Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1332.) The prerequisite for any action for breach of the implied covenant of good fait h and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the

contract. (See Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 683

– 684, 690;

7 The third cause of action for breach of contract (third party benefi ciary) focuses on the LWS’s easements and asserts the City “breached its obligation to the Class when it divested itself of any obligation to pay for the LWS and forced the members of the Class to pay for and subsidize the provision of free water to the se rvient property owners. In essence, [the City] transferred its contractual obligation to provide and pay for the free water and has improperly shifted that obligation to the class.”

8 T here are no separate causes of action for specific performance or in junctive relief, which are instead remedies. ( See, e.g., Wong v. Jing (2010) 189 Cal.App.4th 1354, 1360, fn. 2 [specific performance and injunctive relief are equitable remedies and not causes of action for injuries]; Marlin v. Aimco Venezia, LLC (2007) 1 54 Cal.App.4th 154, 162 [injunctive relief].)8

Gruenberg v. Aetna Ins. Co . (1973) 9 Cal .3d 566, 576 [since noninsurer defendants in bad faith case were not parties to the insurance contracts, they were not subject to an implied duty of good faith and fair dealing].)
The trial court found the City could not be subjected to liab ility under an implied contract theory , first noting the City’s c harter does not contain any provisions specifically addressing contract formation . As the c harter is silent , the court concluded the City’s contracting procedures are governed by the general law provision found in section 40602.
That section applies to the manner of contract formation and provides , in part, “[t]he mayor shall sign

. . . [¶] .

. . [¶] [a]ll written contracts and conveyances made or entered into by the city.” (Italics added.)
T he trial c ourt also cited to G.L. Mez z etta, Inc. v. City of American Canyon (2000) 78 Cal.App.4th 1087 ( Me z zetta )

. In Me z zetta , the appellate court concluded that certain municipal code provisions together with section 40602 precluded the general law c ity of
Americ an Canyon from entering into an oral agreement. The agreement had allegedly obligated the city to provide the plaintiff with wastewater discharge services

. The court
reasoned: “ [I]mplicit in the relevant statutes, when read together, is the requirement that contracts with the City be in writing, approved by the city council, approved as to form by the city attorney, and signed by either the mayor or the city manager. [Citations.] ” ( Me z z e tta, at p. 1093 , italics added. ) The court held that the alleged o ral agreement was
void because it failed to comply with this requirement : “ [B]ecause the statutes in question specifically set forth the ways in which the City may enter into contracts, any other
methods of contract formation

— even though not explicitly pr ohibited by the statutes

— are invalid. [Citations.]

. . . To conclude otherwise would undermine the City ’ s clear
intent to ‘ “ ensure that expensive decisions are not hastily made .” ’ ” ( Id. at pp. 1093

– 1094 , fn. omitted .) Plaintiff does not dispute tha t t he City’s c harter is silent with respect to the manner of contracting. I t also conced es the “implied agreement to share in the cost of the LWS9

was never memorialized in writing

. ” It contends section 40602 does not apply because charter cities “are ind ependent of the general laws of the State on all matters of municipal
affairs. ” This is true , according to plaintiff, even as to matters on which the c harter is
silent. In so arguing, p laintiff co nstrues cases that favor charter city ordinances over conf licting general law provisions as standing for the proposition that general law s have no application to charter cities in the absence of ordinance s or charter provision s that expressly invok e th ose general law s

. This construction is not supported by case law

. C

. General Law and Charter Cities “ ‘The Government Code classifies cities as either “general law cities” (cities organized under the general law of California) or “chartered cities” (cities organized under a charter).’ ” ( City of Orange v. San Die go County Employees Retirement Assn. (2002) 103 Cal.App.4th 45, 52.) It is well settled that the method by which a city has power to enter into a contract may be controlled by its charter. ( Loop Lumber Co. v. Van
Loben Sels (1916) 173 Cal. 228, 232; Firs t Street Plaza Partners v. City of Los Angeles (1998) 65 Cal.App.4th 650, 661 ( First Street ) .) Further, unless the city charter authorizes such, no implied contract rights can arise. ( Reams v. Cooley (1915) 171 Cal. 150, 1 53

– 154; First Street, at p. 667. ) Section 201 of the City’s c harter states: “The City shall have the power to act pursuant to procedure established by any law of the State unless a different procedure is required by this Charter.” 9 The court below correctly noted that the manner in which a city may form a contract is a municipal affair, and that the City’s charter, which could
have validly included contract formation provisions, “does not specifically prescribe how its contracts must be executed.” The court concluded t he City could thus rely on section 40602 for guidance. Plaintiff contends charter cities are never subject to general laws,

9 The City adopted its charter in 1970.10

including section 40602, even if their charters are silent on the subject matter

. We are not persuaded. Charter cities are specifically author ized by our state Constitution to govern themselves, free of state legislative intrusion, as to those matters deemed municipal
affairs. Article XI, section 5, subdivision (a) of the California Constitution provides: “It shall be competent in any city char ter to provide that the city governed thereunder may make and enforce all ordinances and regulations in respect to municipal affairs, subject only to restrictions and limitations provided in their several charters and in respect to other matters they shall be subject to general laws. City charters adopted pursuant to this Constitution shall supersede any existing charter, and with respect to municipal affairs shall supersede all laws inconsistent therewith .” (Italics added.) As th e italicized provision s indicate , chartered cities are permitted, but not required, to make and enforce laws governing municipal affairs. I f a city’s charter is silent as to a particular matter , even one concerning a municipal affair, courts have opined that the matter will be s ubject to the general laws of this state. (See, e.g. , McLeod v. Board of Pension Commissioners (1970) 14 Cal.App.3d 23, 29

– 30 ( McLeod ) [“[a] city, such as Los Angeles, which operates under a freeholders’ charter is exempt from the operation of general law s with respect to all ‘municipal affairs’ covere d by the charter. [Citation.] .

. . However, where the charter contains no special procedure concerning a municipal subject, the general laws govern

. ”] (I talics added, fn. omitted. ) )
As noted in section 2 01 of the Vallejo Charter, the C ity is permitted to follow the laws of California regarding contract formation, i.e. , section 40602, unless “a different procedure is required by this Charter.” And s ection 200 of the Vallejo c harter expressly permits the City to “exercise any and all rights [and powers] . . . established, granted or prescribed by the general laws of the State.” Thus , as the trial court below concluded, the Vallejo Charter has effectively adopted the procedures set forth in section 40602 over any11

other municipal

- based approach to government contracts. Simply stated, the C ity has not opted to create a different contracting procedure under its Charter. 10

We concur with the holding of McLeod, supra , 14 Cal.App.3d 23

. That decision
follows established principles in addressing charter cities and the effect of state statutes on such municipalities when their charter does not provide specific guidance on a matter of municipal concern

. We disagree with plaintiff’s characterization of McLeod as an isolated decision. ( See Civic Cen ter Ass n . v. Railroad Comm. (1917) 175 Cal. 441, 445 [ “With respect to matters not municipal, or municipal affairs upon which the charter [ is ] silent, the provisions of any general law [i.e. state statute] pertaining t hereto would control the subject.” ] ; Armas v. City of Oakland (1960) 183 Cal.App.2d 137, 138

– 139 [ “Although Oakland is a charter city, plaintiffs concede that its charter and ordinances prescribe no procedure for street closing and that thus the procedural provisions of state law must be followed, even if the funct ion be municipal in character ”] ; Hyde v. W ilde (1921) 51 Cal.App. 82, 86 [ “Where no particular provisions are made covering a matter falling within the classification of a ‘municipal affair,’ the state law controls.” ] ) In arguing otherwise, p laintiff relies on Butterworth v. Boyd (1938) 12 Cal.2d 140 ( Butterworth ) for the proposition that charter cities are not bound by the general laws of this state with respect to municipal affairs, even as to matters that the charter does not
address. In Butterworth , a proposed charter amendment to the c harter of the City and

10 The Vallejo charter contains express language dealing with contracting that is compatible with section 40602. These charter provisions ensure City taxpayers are prote cted from implied obligations. Charter section 716 prohibits any City expenditures without the approval of the city council. Also, section 717 allows the city manager to make contracts only with the approval of the council and an appropriation. The Muni cipal Code of Vallejo has similar express restrictions. Section 3.20.045 allows particular officials of the City to make contracts in stated dollar amounts. Written bids and proposals in contracting are required under section 3.20.222. Additionally, sec tion 3.22.010 mandates chapter 3.22 of the Vallejo Municipal Code applies to all government contracts. These charter provisions and municipal ordinances facilitate the operation of section 40602 and its requirements for express contracts.12

County of San Francisco was approved by the electorate, and became effective by concurrent resolution of the Legislature. The amendment called for a “ ‘ health [ care ] system ’ ” for municipal employees. ( Id. at p. 143.)
In decid ing whether the establishment of a health care system qualified as a

“ ‘ municipal affair , ’ ” the Supreme C ourt observed , “ I n the early stages of municipal
home rul e in California, the charter prevailed only where it expressly covered the particular power exercised. Under the liberalizing constitutional amendment of 1914, the charter is not a grant of power but a restriction only, and the municipality is supreme in the field of municipal affairs even as to matters on which the charter is silent .” ( Butterworth , supra, 12 Cal.2d at p. 146, italics added.) As is apparent, t he language plaintiff relies on from Butterworth simply states the well

- established principle th at chartered cities may act independent of general law with respect to matters deemed “municipal affairs,” regardless of whether their charter s address the specific municipal affair that is at issue. It does not stand for the proposition that general laws never apply to chartered cities, particularly in the absence of conflicting municipal ordinances or regulations

. As the Butterworth court stated: “ The purpose of the constitutional provisions was to make municipalities self

- governing and free from legi slative interference with respect
to matters of local or internal concern. ‘ It was to enable municipalities to conduct their own business and control their own affairs, to the fullest possible extent in their own way. It was enacted upon the principle tha t the municipality itself knew better what it wanted and needed than the state at large, and to give that municipality the exclusive privilege and right to enact direct legislation which would carry out and satisfy its wants and
needs. ’ ” ( Butterworth, su pra, 12 Cal.2d at p. 147 , italics added .) Thus, Butterworth merely stands for the proposition that a chartered city has the power to enact regulations regarding contract formation that differ from those contained in section 40602 , something the City has e vidently chosen not to do

. Simply stated, in Butterworth, the court held the13

general law (state law) could not preempt a charter amendment passed by the voters of San Francisco specifically addressing the topic of city employee health insurance practices.
D

. Cities Cannot Be Sued Under An Implied Contract Theory Even if plaintiff is correct that section 40602 does not apply to this case, a s explained by the Court of Appeal in Katsura v. City of San Buenaventura (2007)
155 Cal.App.4th 104 ( Katsura ) , “ [i] t is settled that ‘a private party cannot sue a public entity on an implied

- in

- law or quasi

- contract theory, because such a theory is based on quantum meruit or restitution considerations which are outweighed by the need to protect and limit a public entit y’s contractual obligations.’ [Citations.] [¶]

. . . The reason is simple: ‘ “The law never implies an agreement against its own restrictions and prohibitions, or [expressed differently], ‘the law never implies an obligation to do that
which it for bids the party to agree to do. ’ ” ’ [Citation.] In other words, contracts that disregard applicable code provisions are beyond the power of the city to make.” ( Id. at pp. 109

– 110.) The principle set forth in Katsura , supra , 155 Cal.App.4th 104, is well e stablished ( see , e.g., Janis v. California State Lottery Com . (1998) 68 Cal.App.4th 824, 830; see
also Seymour v. State of California (1984) 156 Cal.App.3d 200, 204

– 205.) Limitations on a municipality’ s power to contract should be strictly construed becau se such restrictions are designed to protect the public, not those who contract with the municipality. (10 McQuillin, Municipal Corporations (3d ed. 2009 rev.) § 29:6 , p. 336 .) Plaintiff seeks to distinguish Katsura , supra , 155 Cal.App.4th 104, because the operative charter in that case expressly required all city contracts to be in writing. Plaintiff asserts that if the City had “ wanted the benefit of the Katsura rule, it could have adopted similar charter language. ” However, the holding in Katsura wa s that all implied contracts against public entities are barred because, by definition, they have not formally14

been approved by the entity. The court in that case did not limit its holding to cities with charters that expressly require all contracts to be in writing. In sum, we agree with the City that the demurrer as to the first, second, third and 10th causes of action was properly sustained.
III. Proposition 218 The trial court sustained the City’s demurrer to the fourth, fifth, and 11 th causes of

a ction , finding them barred under Proposition 218. “ Adopted by California voters in November 1996, Proposition 218 added articles XIII C and XIII D to the California
Constitution. Proposition 218 generally prohibits local governments from imposing taxes

w ithout voter approval. ” ( Owens v. County of Los Angeles (2013) 220 Cal.App.4th 107, 128.) “ ‘ Article XIII C concerns voter approval for local government general taxes and special taxes. Article XIII D sets forth procedures, requirements and voter approv al mechanisms for local government assessments, fees and charges. ’ ” ( City of Palmdale v.
Palmdale Water Dist. (2011) 198 Cal.App.4th 926, 931.) Plaintiff’s fourth cause of action is for “Breach of Duty to Charge a Reasonable
Water Rate.” 11 In its clai m, it asserts the City “breached its obligation to provi d e water at a reasonable rate” when it passed the 1992, 1995, and 2009 Ordinances in contravention
of the Historic al Cost Sharing Ratio , causing C lass members to pay rates almost five times higher tha n rates paid by City residents. It claims the C lass has suffered damages in excess of $11 million, equal to the difference between what the Class paid under the
2009 Ordinance and what it w ould have paid had the City “honored the contractual
Historic [ al ] Cost Sharing Ratio.” Similarly, the fifth cause of action for breach of fiduciary duty claims that the City owes the Class a duty to treat residents and
nonresident s equally with respect to the LWS

. The 11th cause of action for declaratory

11 Our research has not uncovered any reported cases in any jurisdiction in the United States identifying this claim as a cause of action.15

relief alleges that the City presently intends to sell the LWS to a private utility and claims
the July 2014 rates “will continue to violate the Historical Cost Sharing Ratio by forcing
the non

- resident customers of the LWS to pay 100% of the cost of operating, maintain ing and improving the LWS.”
The trial court found what it referred to as the “ ‘ pooled

- rate ’ structure ” proposed by plaintiff in these claims to be prohibited by a rticle XIII D, section 6, subdivision (b) of
the California C onstitution , which provides t hat “[a] fee or charge shall not be extended, imposed, or increased by any agency unless it meets all of the following requirements: [ ¶ ] (1) Revenues derived from the fee or charge shall not exceed the funds r equired to provide the property

- related servic e. [ ¶ ] (2) Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed. [ ¶ ] (3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership s hall not exceed the proportional cost of the service attributable to the parcel

. ” (Italics added.) The court cited to Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586 ( Griffith ) in support of its ruling , conclud ing that P ropos ition 218 “prohibits a rate structure as alleged in Plaintiff’s complaint that requires one group of customers to essentially subsidize another

. . . . ”
In Griffith, the objectors appealed from judgments in favor of a water management
agency challenging an ordinance enacted by the agency that increased groundwater augmentation charges for the operation of wells with in the agency’ s jurisdiction. The
C ourt of A ppeal held that the augmentation charge s were expres sly exempt from Proposition 218’ s fee/charge voting requirement. “ Given that Proposition 218 prescribes no particular method for apportioning a fee or charge other than that the amount shall not exceed the proportional cost of the service attrib utable to the parcel, defendant’ s method of grouping si milar users together for the same augmentation rate and charging the users according to usage is a reasonable way to apportion the cost of service.” ( Griffith , supra, 220 Cal.App.4th at p. 601.)16

Plaintiff asserts Proposition 218 is irrelevant to this dis pute because the complaint does not specify how the City is to satisfy its obligation to pay monetary damages equal to the difference between a “reasonable rate” and the rates the City actually charged members of the putative class. However, the “ Historic al Cost Sharing Ratio ” theory is not viable in light of Proposition 218. Manifestly , an apportionment that would place 98 percent of the burden of L WS on City residents while giving them zero services in return
is unreasonable. Plaintiff also briefly ass erts it should be granted leave to amend to allege a federal equal protection cause of action. However, t he case that it relies on

— Hansen v. City of San Buenaventura (1986) 42 Cal.3d 1172, 1189

– 1190 ( Hansen )

— does not assist plaintiff , as it was decided be fore the passage of Proposition 218

. IV. Injunctive Relief Against Sale Plaintiff’s sixth and seventh causes of action are for injunctive relief against the alleged proposed sale of the LWS. The sixth cause of action is against the sale of the system , and the seventh is against the sale of the system without land. The complaint alleges that the City inten ds to sell the LWS to a private investor

- owned utility that would thereafter “be allowed to pass the full cost of operating, maintaining and improving the LWS onto the Class.” In the seventh cause of action, plaintiff asserts the city intends to
sell the physical structure of the LWS , while retaining the excess real property for the benefit of its general municipal fund without investing any of the pro ceeds into the LWS. The trial court concluded that it could not legally prevent the execution of a public
sale , noting that both the California Constitution 12 and Public Utilities Code section

12 California Constitution article XI, section 9, subdivision (a) provides: “ A municipal corporation may establish, purchase, and o perate public works to furnish its inhabitants with light, water, power, heat, transportation, or means of communication. It may furnish those services outside its boundaries, except within another municipal corporation which furnishes the same service an d does not consent. ”17

10051 13 grant the City the power to operate and to sell its pu blic utility assets . (See Leach v. City of San Marcos (1989) 213 Cal.Ap p.3d 648, 660

– 661 [“ Under Code of Civil
Procedure section 526

. . . and Civil Code section 3423 an injunction cannot be granted to

preven t execution of a public statute . Nonetheless a n injunction may issue where the

statu t e or ordinance is invalid and a showing is made of irreparable injury to property or business.”].) Here, plaintiff offers nothing persuasive to show that Public Utilities Code
section 10051 is invalid. 14 Accordingly, the two claims for injunctive relief fail.
V. Injunctive Relief Against Surcharge Fee and Future Rate Structures Plaintiff’s e ighth cause of action asked for an injunction to stop the City from continuing a surcharge fee enacted as a part of the 1995 Ord inance after September 30, 2015, when it is set to expire. In the ninth cause of action it seeks to stop the City from imposing fut u re rate structures that do not require it to share in the cost of operating and maintaining th e LWS pursuant to the Histori c al Cost Sharing Ratio.
A s the trial court correctly found, the speculative allegation that the City may
violate the provision that discontinues the surcharge fee after September 30, 2015 , was premature. Additionally, the court noted that under Water R eplenishment Dist

. of Southern California v. City of Cerritos (2013) 220 Cal.App.4th 1450, 1469

– 1470, water assessments are subject to the “ ‘ pay first, litigate later ’ ” rule. Plaintiff challenges this ruling. Regardless, the injunction claims are based on the same implied contract theory that we have already found lacking in merit

.

13 Public Utility Code section 10051 provides: “ Any municipal corporation incorporated under the laws of this State may as provided in this article sell and dispose of any public utility that it owns. ”

14 Plaintiff claims that the sale would violate Public Utilities Code sections 10061 [prohibiting the acquiring entity from unreasonably discriminating against existing customers] and 789.1 [proceeds from sale of public utility land by a “water corporation” must be invested in “necessary o r useful” water infrastructure]. The claims are premature, as there are no allegations in the complaint that the City has approved a sale to an identified buyer on known terms.18

VI. Breach of Fiduciary Duty and Accounting Plaintiff’s fifth cause of action is for breach of fiduciary duty. The 12th cause of action is for accounting. The trial court agreed with the City that the two claims fail because there is no common law tort liability for public entities in California. Instead, liability must be based on statute per section 815, subdivision (a). We agree. “The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. [Citation.] Whether a fiduciary duty exists is generally a question of law. [Citation.]
Whether the defendant breached th at duty towards the plaintiff is a question of fact.” ( Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1599.)
It is a well

- settled rule that “[t] here is no common law governmental tort liability in California; and except as otherwise prov ided by statute, there is no liability on the part of a public entity for any act or omission of itself, a public employee, or any other

person. ” ( Cowing v. City of Torrance (1976) 60 Cal.App.3d 757, 761.) S ection 815 , subdivision (a) states: “Except as otherwise provided by statute : [¶] (a) A public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or a public employee or any other person.” The legislative committee comment to
section 815 stat es: “This section abolishes all common law or judicially declared forms of liability for public entities, except for such liability as may be required by the state or
federal constitution

. . . .” (Italics added.)
Plain t iff relies on South Pasadena v. P asadena Land Etc. Co

. (1908) 152 Ca l. 579,
5 94 ( South Pasadena ) and other cases stating that a city hold ing title to a water system
outside of its boundaries acts “as a mere trustee, bound to apply it to the use of those beneficially interested. ” These ca ses are not controlling , however . For example, i n Hansen , supra, 42 Cal.3d 1172, the Supreme Court reversed the C ourt of A ppeal and upheld the lower court ’s ruling that a 70 percent surcharge on nonresident water customers was reasonable. ( Id . at p. 1176 .) That case is distinguishable because it, like19

South Pasadena, at pp. 587

– 588, is founded on the following principle: “ A city which acquires the water system of another community incurs an obligation to deal fairly with its customers in that community a nd to provide them with service at reasonable rates. ” ( Hansen , at p. 1180 , italics added .) Here, the City did not acquire the LWS from plaintiff or plaintiff’ s predecessors. Again, Hansen is also distinguishable because it was decided prior to the passa ge of Proposition 218. Additionally, none of the cases cited by plaintiff in this regard discuss section 815, subdivision (a). Finally, t he accounting cause of action seeks an accounting of the surcharge and connection fees levied by the City upon the LW S customers based on the allegation that the fees were not placed in dedicated accounts and were not used exclusively for constructing capital improvements to the LWS , as required by City regulations. “An accounting is an equitable proceeding which is p roper where there is an unliquidated and unascertained amount owing that cannot be determined without an examination of the debits and credits on the books to determine what is due and owing. [Citations.] Equitable principles govern, and the plaintiff mu st show the legal remedy is inadequate.

. . . Generally, an underlying fiduciary relationship, such as a partnership, will support an accounting, but the acti on does not lie merely because the books and records are complex. [Citations.] Some underlying misconduct on the part of the defendant must be shown to invoke the right to this equitable remedy.” ( Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1136

– 1137.) As we have already concluded plaintiff cannot state any viable claims alleging misconduct on the part of the City, the cause of action for an accounting fails.20

VII. Trial Court Did Not Abuse I ts Discretion in Denying Leave to Amend
Plaintiff fails to set forth in sufficient detail how it would am e nd its complaint to

corre ct the multiple defects noted above. We conclude the trial court did not abuse its discretion in denying plaintiff leave to amend. 15

DISPOSITION The judgment is affirmed.

15 In light of our above conclusions, we need not address the parties’ remaini ng arguments.21 _________________________ DONDERO, J.

We concur:

____________ _____________ MARGULIES, Acting P.J.

_________________________ BANKE, J.

A14280822

Trial Court: Solano County Superior Court Trial Judge: Hon. W. Arvid S. Johnson Counsel for Appellant Law Offices of Stephen M. Flynn Stephen M . Flynn Counsel for Respondent Claudia M. Quintana, Vallejo City Attorney; Donna R. Moody, Chief Assistant Vallejo City Attorney Colantuono, Highsmith & Whatley, PC Michael G. Colantuono Amy C. Sparr ow Leonard P. Aslanian Jennifer L. Pancake