Court Opinion

ID: 4664585
Source: CourtListenerOpinion
Date Created: 2021-03-03 19:02:26.855893+00
Date Added: 2024-06-11T08:02:37.114328
License: Public Domain

Filed 3/3/21
               CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

               SECOND APPELLATE DISTRICT

                         DIVISION SIX

SAN LUIS OBISPO LOCAL                  2d Civ. No. B296968
AGENCY FORMATION                    (Super. Ct. No. CV130383)
COMMISSION et al.,                   (San Luis Obispo County)

  Cross-complainants and
Appellants,

v.

CITY OF PISMO BEACH et al.,

  Cross-defendants and
Respondents.

      Even broadly construed statutes have boundaries. It is the
Legislature’s responsibility to amend statutes. Courts may not
do so under the guise of implied powers.
      A city and a developer applied to the San Luis Obispo Local
Agency Formation Commission (LAFCO) to annex a parcel of real
property to the city. LAFCO denied the application and the city
and developer brought an action to challenge that decision.
LAFCO prevailed and brought this action to recover attorney fees
under an indemnity agreement contained in the annexation
application. The trial court granted the city and developer
judgment on the pleadings because LAFCO has no authority to
require such fees. We affirm.
                               FACTS
                             Background
       Local agency formation commissions are established in
each of California’s 58 counties by the Cortese-Knox-Hertzberg
Act (CKH Act). (Gov. Code,1 § 56000 et seq.) Their purpose is to
ensure planned, well-ordered, efficient urban development
patterns. (§ 56300, subd. (a).) Included in their powers is the
power to approve or disapprove applications for an annexation to
a city. (§ 56375, subd. (a).) Their operating costs are divided one-
third each among the county, the cities, and independent special
districts. (§ 56381, subd. (b)(1)(A).)
       Local agency formation commissions may also establish a
schedule of fees and service charges. (§ 56383, subd. (a).) The
fees and charges shall not exceed the costs of the services
provided. (Id., subd. (b).)
                               Dispute
       Central Coast Development Company (Central Coast) owns
a 154-acre parcel of property within the sphere of influence of the
City of Pismo Beach (City). Central Coast wants to construct 252
single family residences and 60 senior housing units on the
parcel. The City approved Central Coast’s application for a
development permit for the property. The City and Central Coast
applied to LAFCO to annex the property.
       The LAFCO application signed by the City and Central
Coast contained the following indemnity agreement:

      1All statutory references are to the Government Code
unless stated otherwise.

                                 2.
       “As part of this application, Applicant agrees to defend,
indemnify, hold harmless and release the San Luis Obispo Local
Agency Formation Commission (LAFCO), its officers, employees,
attorneys, or agents from any claim, action or proceeding brought
against any of them, the purpose of which is to attack, set aside,
void, or annul, in whole or in part, LAFCO’s action on the
proposal or on the environmental documents submitted to or
prepared by LAFCO in connection with the proposal. This
indemnification obligation shall include, but not be limited to,
damages, costs, expenses, attorneys’ fees, and expert witness fees
that may be asserted by any person or entity, including the
Applicant, arising out of or in connection with the application. In
the event of such indemnification, LAFCO expressly reserves the
right to provide its own defense at the reasonable expense of the
Applicant.” (Italics added.)
       LAFCO denied the annexation application. The City and
Central Coast sued LAFCO. LAFCO prevailed and presented a
bill to the City and Central Coast for more than $400,000 in
attorney fees and costs. The City and Central Coast refused to
pay.
       The Special District Risk Management Authority
(SDRMA), a public entity self-insurance pool, paid for LAFCO’s
fees and costs. LAFCO and the SDRMA sued the City and
Central Coast to recover its fees and costs. The suit was based on
the indemnity provision of the annexation application.
       The trial court granted the City and Central Coast
(hereafter collectively “the City”) judgment on the pleadings
against LAFCO and the SDRMA (hereafter collectively
“LAFCO”). The court denied LAFCO’s request for leave to amend
its pleadings.

                                3.
                            DISCUSSION
                                  I
                              Contract
       LAFCO contends the indemnity agreement is a valid
contract provision.
       A contract requires consideration. (US Ecology, Inc. v.
State of California (2001) 92 Cal.App.4th 113, 128.)
Consideration consists of either a benefit to the promisor or a
detriment to the promisee. (Speirs v. BlueFire Ethanol Fuels,
Inc. (2015) 243 Cal.App.4th 969, 987.) A promise to do something
the promisor is legally bound to do is not consideration. (General
Motors Acceptance Corp. v. Brown (1934) 2 Cal.App.2d 646, 650.)
       LAFCO has a statutory duty to accept all completed
applications (§ 56658, subd. (e)) and to review and approve or
disapprove the application (§ 56375, subd. (a)(1)).
       LAFCO argues it has the power under section 56383,
subdivision (a) to charge fees to cover its costs. These fees
include fees for filing and processing applications. (§ 56383,
subd. (a)(1).) LAFCO claims it is entitled to charge anticipated
attorney fees as part of the application fee. It contends the
indemnification agreement is given in consideration for not
requiring anticipated attorney fees to be paid as part of the
application fee at the beginning of the process.
       As we explain, section 56383 does not apply to post-
administrative matters, such as the action that generated the
fees at issue here. LAFCO has given no consideration in
exchange for the indemnity agreement.

                                4.
                                    II
                    Authority Under Section 56383
       LAFCO contends it has the authority under section 56383
to require the indemnity agreement.
       Section 56383, subdivision (a)(1)-(4) provides: “The
commission may establish a schedule of fees and a schedule of
service charges pursuant to this division, including, but not
limited to, all of the following: [¶] (1) Filing and processing
applications filed with the commission. [¶] (2) Proceedings
undertaken by the commission and any reorganization
committee. [¶] (3) Amending or updating a sphere of influence.
[¶] (4) Reconsidering a resolution making determinations.”
       LAFCO ignores subdivision (b) of section 56383. That
section provides that the fees and charges “shall be imposed
pursuant to Section 66016.” (§ 56383, subd. (b).)
       Section 66016, subdivision (a) provides, in part: “Prior to
levying a new fee or service charge, or prior to approving an
increase in an existing fee or service charge, a local agency shall
hold at least one open and public meeting, at which oral or
written presentations can be made, as part of a regularly
scheduled meeting. Notice of the time and place of the meeting,
including a general explanation of the matter to be considered,
and a statement that the data required by this section is
available, shall be mailed at least 14 days prior to the meeting to
any interested party who files a written request with the local
agency for mailed notice of the meeting on new or increased fees
or service charges.”
       LAFCO did not comply with section 66016, subdivision (a).
When a statute mandates a particular procedure, it does not

                                 5.
imply that the procedure may be avoided by inserting a provision
in an application form.
       Moreover, section 56383 contemplates that the fees charged
thereunder will be limited to those necessary to the
administrative process, not to post-decision court proceedings.
Section 57200, subdivision (a)(1) requires LAFCO’s executive
officer to execute and file a certificate of completion upon the
“completion of all commission actions,” including the time period
allowed to file and act upon requests for reconsideration. Section
56383, subdivision (c) provides, in part: “The executive officer
shall provide the applicant with an accounting of all costs
charged against the deposited amount. If the costs are less than
the deposited amount, the executive officer shall refund the
balance to the applicant after the executive officer verifies the
completion of all proceedings. If the costs exceed the deposited
amount, the applicant shall pay the difference prior to the
completion of all proceedings.”
       The clear mandate of section 56383, subdivision (c) is that
the executive officer must settle the costs charged under the
section at the end of the administrative proceedings. The section
does not provide for costs that may accrue thereafter.
       LAFCO cites section 56107, subdivision (a) for the
proposition that the CKH Act must be liberally construed to
effectuate its purposes. Yes, liberal construction requires broad
rather than narrow construction. (McKeag v Bd. of Pension
Commrs. (1942) 21 Cal.2d 386, 390.) But the construction may
not be so broad as to ignore the express mandates of the statute.
Nothing in section 56383, no matter how broadly construed,
authorizes the indemnity agreement.

                                6.
                                  III
               Power Implied from LAFCO’S Purpose
       LAFCO contends that it has the power implied from its
purpose to require the indemnity agreement.
       LAFCO relies on Zack v. Marin Emergency Radio Authority
(2004) 118 Cal.App.4th 617. In Zack, the question was whether a
joint powers agency had the implied power to construct and
operate an emergency communications system. The court
recognized that such agencies have implied powers necessarily
arising or reasonably inferred from those expressly granted, or
indispensable to fulfill the purposes for which it was organized.
(Id. at p. 633.) But Zack did not involve attorney fees. We are
constrained by Code of Civil Procedure section 1021. That
section provides: “Except as attorney’s fees are specifically
provided for by statute, the measure and mode of compensation of
attorneys and counselors at law is left to the agreement, express
or implied, of the parties; but parties to actions or proceedings
are entitled to their costs, as hereinafter provided.”
       Here attorney fees in post-administrative actions are not
“specifically provided for by statute.” Nor is there a valid
agreement for such fees. LAFCO’s remedy is with the
Legislature.
       The judgment is affirmed. Costs are awarded to
respondents.
       CERTIFIED FOR PUBLICATION.

                                    GILBERT, P. J.
We concur:

             YEGAN, J.              PERREN, J.

                               7.
         Ginger E. Garrett, Barry T. LaBarbera,* Judges

           Superior Court County of San Luis Obispo
               ______________________________

      McCormick, Barstow, Sheppard, Wayte & Carruth, James
P. Wagoner, Timothy J. Buchanan, Brandon M. Fish and Lejf E.
Knutson for Cross-complainants and Appellants San Luis Obispo
Local Agency Formation Commission and Special District Risk
Management Authority
      Best Best & Krieger, Clark H. Alsop and Gregg W. Kettles
for California Association of Local Agency Formation
Commissions as Amicus Curiae on behalf of Cross-complainant
and Appellant San Luis Obispo Local Agency Formation
Commission.
      Office of the County Counsel County of Santa Clara, James
R. Williams, County Counsel, Steve Mitra, Assistant County
Counsel, Christopher R. Cheleden, Lead Deputy County Counsel,
and John A. Castro, Deputy County Counsel, for California State
Association of Counties as Amicus Curiae on behalf of Cross-
complainants and Appellants San Luis Obispo Local Agency
Formation Commission and Special District Risk Management
Authority.
      Richards, Watson & Gershon, T. Peter Pierce, Saskia T.
Asamura and Kyle H. Brochard for Cross-defendant and
Respondent City of Pismo Beach.

*Barry T. LaBarbera, retired judge of the San Luis Obispo Sup.
Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the
Cal. Const.

                                8.
      Jackson Tidus, Michael L. Tidus, Gregory P. Regier and
Nedda Mahrou for Cross-defendant and Respondent Central
Coast Development Company.

                               9.