Court Opinion

ID: 2827839
Source: CourtListenerOpinion
Date Created: 2015-08-17 23:08:11.641588+00
Date Added: 2024-06-11T11:31:28.381285
License: Public Domain

Filed 8/17/15

                            CERTIFIED FOR PUBLICATION

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                           FOURTH APPELLATE DISTRICT

                                    DIVISION TWO

COLONIES PARTNERS, L.P.,

        Petitioner,                                  E058044

v.                                                   (Super.Ct.No. CIVDS1201251)

THE SUPERIOR COURT OF SAN                            OPINION
BERNARDINO COUNTY,

        Respondent;

THE INLAND OVERSIGHT
COMMITTEE et al.,

        Real Parties in Interest.

        ORIGINAL PROCEEDINGS: petition for writ of mandate. David Cohn, Judge.

Petition granted.

        Arent Fox, Stephen G. Larson and Jerrold Abeles for Petitioner.

        Leibold McClendon & Mann and John G. McClendon for Real Parties in Interest.

        Real parties in interest The Inland Oversight Committee (IOC) and Citizens for

Responsible Equitable Environmental Development (CREED and, together with IOC,

plaintiffs), are taxpayer organizations that have brought suit challenging a November

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2006 settlement agreement between petitioner Colonies Partners, L.P. (Colonies) and

defendants County of San Bernardino and San Bernardino County Flood Control District

(County and, together with Colonies, defendants), pursuant to which County paid

Colonies $102 million. Plaintiffs seek to have the settlement agreement declared void

under state law governing conflicts of interests of government officials, and to force

Colonies to disgorge any money already paid pursuant to the agreement.

       Now pending before this court are Colonies’ appeal of the denial of its special

motion to strike the complaint as a strategic lawsuit against public participation (anti-

SLAPP motion) pursuant to Code of Civil Procedure section 425.16 (the anti-SLAPP

statute) and two writ petitions, one brought by County, the other by Colonies, regarding

the denial of their respective demurrers. This opinion addresses only Colonies’ writ

petition; we rule on Colonies’ appeal and County’s writ petition in separate opinions,

issued contemporaneously herewith.

       In its petition, Colonies contends the trial court erred by overruling its demurrer,

because plaintiffs’ complaint suffers from three fatal pleading defects: (1) lack of

standing, (2) the effect of a 2007 validation judgment, and (3) the inapplicability of

Government Code, sections 1090 and 1092 to payments in satisfaction of a court

judgment. For the reasons discussed below, we agree with Colonies that the demurrer

should have been sustained without leave to amend based on plaintiffs’ lack of standing

and the effect of the validation judgment; we decline to reach the merits of the third issue.

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                   I. FACTS AND PROCEDURAL BACKGROUND1

       The November 2006 settlement agreement between County and Colonies,

pursuant to which County paid Colonies $102 million, resolved a lawsuit brought by

Colonies against County alleging that the County had taken 67 acres of Colonies’ land for

use as part of a regional flood-control facility. That settlement was incorporated into a

stipulated judgment, filed January 23, 2007.2

       The County satisfied its obligation under the settlement agreement and stipulated

judgment by issuing judgment obligation bonds, pursuant to a resolution by the San

Bernardino County Board of Supervisors. Subsequently, County brought a validation

action, and obtained a judgment, dated March 29, 2007, declaring the settlement

agreement between Colonies and the County, the inverse condemnation judgment, and

the bonds issued to satisfy the inverse condemnation judgment to be “valid, legal and

binding obligations of [County].”3

       In 2010, the San Bernardino County District Attorney’s Office filed a felony

indictment accusing William Postmus, a former county supervisor, of (among other

things) receiving bribes—disguised as contributions to political action committees

       1  The following factual and procedural summary of the case is taken verbatim
from our opinion in The Inland Oversight Committee et al. v. County of San Bernardino
et al.; Colonies Partners, L.P., No. E058020, regarding Colonies’ appeal of the denial of
its anti-SLAPP motion.

       2  Adopting the practice of the parties in their briefing, we will sometimes refer to
this stipulated judgment as the “inverse condemnation judgment.”

       3Again adopting the practice of the parties in their briefing, we will refer to the
judgment issued in the validation action as the “validation judgment.”

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(PACs)—from Colonies in exchange for his vote approving the settlement agreement. In

March 2011, Postmus pleaded guilty to various bribery-related charges.

       In February 2012, plaintiffs filed the present action, and in April 2012, they filed

the operative first amended complaint (complaint). The complaint asserts a single cause

of action for violation of Government Code section 1090. Plaintiffs seek to have the

settlement agreement between Colonies and County declared void as in violation of

Government Code section 1090 because of Postmus’s personal financial interest; to

require Colonies to disgorge any monies received under the agreement; and to enjoin any

transfer of monies Colonies received under the agreement.

       In May 2012, Colonies filed its demurrer to the complaint, and in June 2012, filed

its anti-SLAPP motion. The demurrer first came on for hearing in June 2012, but the

matter was continued pending supplemental briefing. Both Colonies’ demurrer and its

anti-SLAPP motion were set for hearing on September 19, 2012; the trial court overruled

Colonies’ demurrer, but continued the hearing of Colonies’ anti-SLAPP motion.4 On

October 15, 2012, the County filed its demurrer. Both Colonies’ anti-SLAPP motion and

County’s demurrer were heard on December 13, 2012; the trial court overruled the

demurrer and denied the anti-SLAPP motion.

                                     II. DISCUSSION

       In our opinion in San Bernardino County et al. v. The Superior Court of San

Bernardino County; The Inland Oversight Committee et al., No. E058359, ruling on

       4 On the same date, the trial court also ruled on a motion to strike certain language
from the complaint; that ruling is not at issue here.

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County’s petition for writ of mandate, we discuss the issue of plaintiffs’ standing to sue at

some length. We need not repeat that discussion again here, and only restate our

conclusion: Plaintiffs’ complaint does not allege adequate facts to demonstrate they have

standing as taxpayers to bring the claim they have asserted, whether under Code of Civil

Procedure section 526a or the common law regarding taxpayer standing, or as a suit

brought, as plaintiffs put it, “directly under [Government Code] Section 1090.” (Opinion,

case No. E058359). For all the same reasons that County’s demurrer should have been

sustained, Colonies’ demurrer should have been sustained as well.

       In addition to the issue of standing, however, Colonies also raised in its demurrer,

and raises in the petition at bar, the effect of the 2007 validation judgment obtained by

County. The issue is not moot, because it bears on whether we should direct the trial

court to consider in the first instance the question of granting or denying plaintiffs leave

to amend, or whether we should direct the trial court to enter an order sustaining

defendants’ demurrers without leave to amend. Even assuming plaintiffs could amend

their complaint to survive demurrer on the basis of standing, it would be futile to allow

them to do so if their claim is barred by the effect of the validation judgment, as Colonies

contends. (Singh v. Lipworth (2014) 227 Cal. App. 4th 813, 828 [“leave to amend may be

denied where permitting an amendment would be futile”].) For the reasons discussed

below, we find that the validation judgment does indeed bar plaintiffs’ only cause of

action, even if we were to assume they could amend to sufficiently plead standing. As

such, leave to amend is properly denied.

                                              5
       Code of Civil Procedure section 860 authorizes a public agency to bring a

validation action. It provides that “A public agency may upon the existence of any matter

which under any other law is authorized to be determined pursuant to this chapter, and for

60 days thereafter, bring an action . . . to determine the validity of such matter.” (Code

Civ. Proc., § 860.) The relevant “other law” in this case is Government Code section

53511, which states: “A local agency may bring an action to determine the validity of its

bonds, warrants, contracts, obligations or evidences of indebtedness pursuant to [section

860 et seq.].” (Gov. Code, § 53511.) The summons is directed “to ‘all persons interested

in the matter’” of the validation action (Code Civ. Proc., § 861.1), and notice is given by

publication, and any other notice ordered by the court. (Code Civ. Proc., § 861.) “Any

party interested may, not later than the date specified in the summons, appear and contest

the legality or validity of the matter sought to be determined.” (Code Civ. Proc., § 862.)

       “[A] validation action differs from traditional actions challenging a public agency

decision; its effect binds the agency and all other persons.” (Friedland v. City of Long

Beach (1998) 62 Cal. App. 4th 835, 843.) Moreover, “[t]he validation judgment is

conclusive.” (Id. at p. 844.) Pursuant to Code of Civil Procedure section 870, “[t]he

judgment, if no appeal is taken, or if taken and the judgment is affirmed, shall,

notwithstanding any other provision of law including, without limitation, [Code of Civil

Procedure] Sections 473 and 473.5, thereupon become and thereafter be forever binding

and conclusive, as to all matters therein adjudicated or which at that time could have been

adjudicated, against the agency and against all other persons, and the judgment shall

permanently enjoin the institution by any person of any action or proceeding raising any

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issue as to which the judgment is binding and conclusive.” (Code Civ. Proc., § 870,

subd. (a).) The focus of our inquiry, therefore, is whether plaintiffs are attempting to

litigate matters that were, or that could have been, adjudicated in the validation action.

       They are. Plaintiffs allege and argue that the settlement agreement “could not

have been and was not a proper subject of validation in any judicial proceeding pursuant

to [Code of Civil Procedure] Section 860 et seq.” And the gravamen of their complaint is

that the settlement agreement is void because it was made in violation of Government

Code section 1090. However, the validity of the settlement agreement and whether the

settlement agreement is a proper subject of validation are matters that could have been

litigated in the validation action. Indeed, they are matters that were litigated in the

validation action: The validation judgment states: “The Settlement Agreement is a

contract that is subject to validation under California Code of Civil Procedure Section

860 et seq.” It also declares the settlement agreement to be one of several “valid, legal

and binding obligations of [County].” Further, the judgment “binds and permanently

enjoins and restrains all persons or entities, public or private, from the institution of any

action or proceeding or maintaining any action or proceeding challenging, inter alia, the

validity of the Settlement Agreement . . . .”

       Fontana Redevelopment Agency v. Torres (2007) 153 Cal. App. 4th 902 (Fontana),

a case that plaintiffs cite repeatedly in their briefing, is instructive. In Fontana, this court

considered whether a settlement agreement between a city redevelopment agency and the

California Department of Housing and Community Development, following an audit of

the city’s affordable housing efforts by the department, was properly the subject of a

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validation action, deciding that question in the negative and reversing a trial court ruling

to the contrary. (Id. at pp. 907-911.) Fontana, however, unlike the present case,

involved an appeal taken from a validation judgment, not a subsequent collateral attack

on a prior validation judgment. (Id. at p. 905.) Here, the ruling that the settlement

agreement was properly the subject of a validation action became “forever binding and

conclusive” when the validation judgment became final, as did the validation judgment’s

permanent injunction against any challenge to the validity of the settlement agreement.

(Code Civ. Proc., § 870, subd. (a).)

       Plaintiffs argue that “prior validation does not preclude a subsequent challenge

when new facts are discovered,” based on the circumstance that the facts underlying their

challenge to the settlement agreement—namely, those underlying Mr. Postmus’s 2010

indictment and 2011 conviction—were not publicly known at the time of the 2007

validation action. We disagree, however, that the case law plaintiffs cite supports the

notion that matters validated in a validation judgment may nevertheless be collaterally

challenged on the basis of later discovered facts. In Fontana, the plaintiffs did not

challenge any matter that had previously been validated, but rather a later bond issuance

purporting to implement, but in fact violating the terms of, a previously validated

redevelopment plan. (Fontana, supra, 153 Cal.App.4th at p. 913.) Similarly, the

plaintiffs in Starr v. City and County of San Francisco (1977) 72 Cal. App. 3d 164

challenged a later “repayment contract and project lease entered into ostensibly ‘pursuant

to’” a previously validated financing agreement and settlement agreement, but which

contained “terms so new and materially different” that the court found they were not and

                                              8
could not have been considered as part of the validation proceedings. (Id. at p. 178-179.)

Here, in contrast, plaintiffs seek to collaterally attack precisely the agreement that was

one of the subjects of the previous validation proceedings, on the basis of later discovered

facts. Plaintiffs’ approach runs squarely afoul of the principle that a validation judgment,

once any appeals are exhausted, is “forever binding and conclusive.” (Code Civ. Proc.,

§ 870, subd. (a).)

       In short, the claim that plaintiffs seek to assert is barred by the effect of the 2007

validation judgment. As such, even if they could amend their complaint to adequately

allege standing, to allow them to do so would be futile, so it would not be appropriate to

allow them leave to amend. Because the effect of the validation judgment is dispositive,

we need not and do not address the parties’ arguments regarding the applicability or

inapplicability of Government Code sections 1090 and 1092 to payments in satisfaction

of a court judgment.

                                     III. DISPOSITION

       The petition for writ of mandate is granted. Let a peremptory writ of mandate

issue, directing the Superior Court of San Bernardino County to vacate its order

overruling petitioner’s demurrer, and to enter a new order sustaining the demurrer

without leave to amend.

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       Petitioner is directed to prepare and have the peremptory writ of mandate issued,

copies served, and the original filed with the clerk of this court, together with proof of

service on all parties. Petitioner shall recover its costs, if any.

       CERTIFIED FOR PUBLICATION

                                                                      HOLLENHORST
                                                                               Acting P. J.
We concur:

       MCKINSTER
                                   J.

       MILLER
                                   J.

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