Filed 6/14/16 Lucia Mar Unified School D ist. v. Cohen CA2/6 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

LUCIA MAR UNIFIED SCHOOL DISTRICT,
Plaintiff and Ap pellant,

v.
MICHAEL COHEN, as Director
, etc.,
Defendant and Respondent. 2d Civil No. B260624 (Super. Ct. No. CV 130573) (San Luis Obispo County)

This is an action to enforce a pass

- t hrough agreement with the Redevelopment Agency of the City of Pismo Beach (RDA). Lucia Mar Unified School District (Lucia Mar) appeals an order (1) transferring venue to the Superior Court of Sacramento County and (2) vacating a default judgment against the RDA’s successor

agency , Designat ed Local Authority ( DLA)

. (Health & Saf. Code, §§ 3 4177, subd. (m), 34168, 34189.1

- 34189.3.) 1 We affirm.
BACKGROUND
The RDA was formed to improve streets and access to Hig hway 101, among other things. The RDA was authorized to borrow money, acquire land, and improve infrastructu re under the Community Redevelopment Law . ( § 33000 et seq.) Once the redevelopment plan was adopted, a ll increases in property tax revenue in the

1 All statutory references are to the Health and Safety Code unless otherwise stated.2

.

area were allocated to the RDA to repay its indebtedness , the "tax increment revenues

. " (Cal. Const.
, a rt

. XVI, § 16 ; § 33670, sub ds. (a) & (b)

. ) The share for local taxing entities
such as Lucia Mar was frozen. ( I bi d. ) To alleviate the resulting financial burden on Lucia Mar, the RDA agreed to

pas s through the tax increment revenues to Lucia Mar as follows: from 1988 to 2008, the
RDA would receive all tax increment revenues ; but from 2008 to 2033
, Lucia Mar would
receive all tax increment revenues (the A greement )

. The RDA began making pass

through payments to Lucia Mar in 2008 as agreed

.

In 2011, the Le gislature dissolved RDAs. ( § 34170 et seq., “ the dissolution
law. ” ) The Governor is charged with creating a DLA when a city such as Pismo elects not to act as successor to a redevelopment agency it created. ( § 34173, subd. (d)(3).)
Under the dissolutio n law, the former RDA ' s tax increment allocations are deposited into
a trust fund while the DLA, as successor , " wind s down " RDA affairs. (§§ 34172, subd. (d)
, 34182 , subd. (c)(1)
, 34177.) The DLA dispose s of assets and pay s “enforceable obligations,” as directed by an oversight board subject to review and approval by the
S tate Director of the Department of Finance (the Director) . ( §§ 34171, subd. (d)(1), 34177, subd s

. (a), (e) & (m).)

Meanwhile, the county auditor

- controller distributes the trust fund s according to a statutory priority: first, to make pass

- through payments; second, to the DLA to pay enforceable obligations; third, for administrative costs; and
, finally, to local taxing entities according to their ordinary property tax shares. (§§ 341 83, subd. (a), 34188.) Pass

- though payments stop when all the RDA’s enforceable obligations are paid
or retired

. (§ 34187, subd. (h).) After that, property tax revenue is distributed to local taxing entities according to their ordinary shares, essential ly as it was before redevelopment. ( Ibid. )

T he auditor

- controller for the County of San Luis Obispo took over Lucia Mar’s pass

- through payments in 2011

. These payments were to continue until the RDA's

en forceable obligations are paid.3

. In 2013, t he DL A listed the A greement as an “ enforceable obligation. ” The Director, however, di s approve d this determination

. ( § 34177, subd. (m) (1) .) The
Director reasoned that (1) pass

- through payments a re paid directly by the auditor

controller from incoming tax inc rement revenues before any funds are used to pay enforceable obligations ( § 34183, subd. (a)(1))
, and (2) the A greement does not meet the statutory definition of an enforceable obligation because it does not specify the total debt or any loan terms ( § 3417 1, subd. (d)(1)(B) )

. Neither the DLA nor Lucia Mar c hallenged the Director’s determination.

Instead, Lucia Mar filed an action for breach of contract and declaratory
relief in the Superior Court of San Luis Obispo County against the DLA. T he DLA did

n ot answer

. Lucia Mar did not serve the Director. Lucia Mar obtained a default judgment against the DLA. The court found the DLA is obligated to pay a ll tax increment revenues to Lucia Mar through 2033

. In its request for entry of default, Lucia Mar arg ued the A greement is an "enforceable obligation."

The DLA emailed a copy of the default judgment to the Director, who timely moved to vacate t he judgment and to tran sfer the action to the Sacramento Superior Court

. The trial court granted the Director’ s motion. Lucia Mar appeals. We granted leave to the California School Boards Association’s Education Legal Alliance to file an amicus brief in support of Lucia Mar’s appeal.
DISCUSSION
Venue The superior court must transfer an action not commenced in the proper court. ( Code Civ. Proc., § 396 b, subd. (a).)

Venue is proper only in the County of Sacramento because this action

contest s acts taken by the DLA and the Director pursuant to the dissolution law. ( §§ 34189.1

- 34189.3.) The Sacramento Superi or Court is the proper venue for an “action contesting any act taken or determinations or decisions made pursuant to” the dissolution
law. ( § 34189.3

. ) Lucia Mar’s complaint contests an act taken by the successor agency because it alleges that DLA , as su ccessor agency, “failed and refused” to pay and “has4

.

repudiated the ob ligation to re pay” under the A greement. The DLA’s acts were taken “pursuant to” the dissolution law because the DLA is a creature of the dissolution law and has power to act only under its provisions. ( §§ 34173, subd. (d)(3) (A) , 34177

. )

The Sacramento Superior Court is also the proper venue because t h is action challenges the Director’s determination
, pursuant to the dissolution law
, that the
A greement is not an enforceable obligation. ( § 34189.3

. ) The gravamen of the complaint is a challenge to the validity of the Director’s decision that the A greement is not an enforceable obligation. Lucia Mar a sserted in the trial court that “[t] he Agreement is an Enforceable Obligation” because, “while there is not a fixed repayment schedule, the Agreement comprises mandat ory loan terms.” The Director’s contrary determination was made “pursuant to the dissolution law,” triggering Sacramento as the proper venue to
decide this case . ( §§ 34189.3, 3 4177, subd. (m) (1) .)

Moreover, Sacramento is the proper venue to the extent this is a validation action challenging the DLA’s exercise of its powers. The dissolution law designates Sacramento as the proper venue for any validation action “with respect t o any action of

. . . a successor agency” after 2011 ( § 34189.1 ) and for any validation action “involving any enforceable obligation .

. . that bel onged to a redevelopment agency” (§ 34189.2 )

. A “validation act ion” includes “[a]n action .

. . to determine

. . . the legality and validity of all pro ceedings .

. . in any way connected with the establishment of [a redevelopment] agency, its authority to transact business and exercise its powers.” ( § 33501 , subd. (a) .) The complaint challenges the DLA's post

- 2011 repudiation o f an "enforceable obligation." Default

An aggrieved party may move to set aside a void judgment. (Code Civ. Proc., §§ 663, 473, subd. (d).) The default judgment is void. I t was not fil e d in the
Sacramento Superior Court and Lucia Mar did not give notice to the Director. Notice to the Director is required for any validation action involving an RDA’s enforceable obligation and for any validation action involving the acts of a successor agency after 2011. ( §§ 34189.1, 34189.2

. )5

. Lucia Mar characterizes this as a “ garden

- variety ” contract action

. We disagree. Lucia Mar's mischaracterization of its lawsuit as a prosaic contract action ignores the Director's determination and circumvents the dissolution law's notice requirements. (§§ 34 189.1, 34189.2.) These include the statutory directive that pas s

through payments stop when a redev elopment agency's enfor ceable obligations are paid
or retired (§ 34187, subd. (h)) and the prohibition on mandamus relief agai nst a public entity by defau lt (Code Civ. Proc., § 1088 )

.

Lucia Mar contends the dissolution law unconstitutionally impairs contractual rights and violates the doctrine of separation of powers to the extent it permits the Director to adjudicate contractual obligations. (Cal. Const. , art. I, § 9; id.
, art. VI , § 1.) But this contest must be decided in the Sacramento Superior Court. ( § 34168

. )

Amicus argue s that this case raises issues of first impression critical to the continued funding of school districts across the state. Thes e issues should be given a full airing in a contested judicial proceeding and not by way of a "prove up" in a default hearing

. DISPOSITION

The order is affirme d. Respondent shall recover costs on appeal.
NOT TO BE PUBLISHED.

GILBERT, P. J. We c oncur:

YEGAN, J.

PERREN, J.6

. Barry T. LaBarbe ra, Judge
Superior Court County of San Luis Obispo

______________________________

Atkinson, Andelson, Loya, Ruud & Romo, David A. Soldani, W. Bryce Chastain, Jennifer D. Cantrell for Plaintiff and Appellant.

Fagen Friedman & Fulfrost, LLP, Peter K. Fagen, Kelley A. Owens, Lori Y. Chiu; California School Boards Association's Education Legal Alliance, Keith J. Bray,
Joshua R. Daniels for Amicus Curiae California School Boards Association's Education Legal Alliance on behalf of A ppellant

.

Kamala D. Harris, Attorney General, Douglas J. Woods , Senior Assistant Attorney General, Marc A. LeForestier, Supervis ing Deputy Attorney General,
S. Michele Inan, Deputy Attorney General, for Defendant and Responde nt Michael Cohen, Director of State of California Department of Finance.