Opinion
D059228 Super. Ct. No. 37-2010-00091207-CU-WM-CTL
11-10-2011
CITY OF SAN DIEGO, Petitioner, v. SUPERIOR COURT OF SAN DIEGO COUNTY, Respondent; SAN DIEGO CITY EMPLOYEES RETIREMENT SYSTEM, Real Party in Interest.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Proceedings in mandate after superior court granted motion to transfer venue to Los Angeles. Joan M. Lewis, Judge. Petition granted in part.
In this writ proceeding, we grant in part petitioner the City of San Diego's (the city) request for relief from an order directing the transfer to Los Angeles of the city's underlying petition for a writ of mandate.
In its underlying petition, which it filed in the Superior Court in and for the County of San Diego (the trial court), the city alleges that real party in interest San Diego Employees' Retirement System (SDCERS) has improperly calculated the city's obligations to it. Although, as we explain, SDCERS is a local agency and entitled under Code of Civil Procedure section 394 to protection from presumed bias in the county where the city is located, because no jury is required in the city's action, SDCERS's rights under section 394 may, at this point, be fully vindicated by way of an order requesting that the chairperson of the Judicial Council assign a disinterested judge from a neutral county to hear the city's case. Thus, we direct the trial court to enter an order requesting assignment of a disinterested judge from a neutral county.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
FACTUAL AND PROCEDURAL BACKGROUND
On May 3, 2010, the city filed its petition for a writ of mandate in the trial court in which it alleges SDCERS has erroneously inflated the city's contributions to SDCERS by making the city solely responsible for $80 million in investment losses the retirement system has experienced. The city alleges that under section 143 of the city's charter both the city and its employees are required to bear the risk of such losses and that contributions from both the city and its employees should be increased to account for the investment losses.
Section 143 of the city's charter states: "The retirement system herein provided for shall be conducted on the contributory plan, the City contributing jointly with the employees affected thereunder. Employees shall contribute according to the actuarial tables adopted by the Board of Administration for normal retirement allowances, except that employees shall, with the approval of the Board, have the option to contribute more than required for normal allowances, and thereby be entitled to receive the proportionate amount of increased allowances paid for by such additional contributions. The City shall contribute annually an amount substantially equal to that required of the employees for normal retirement allowances, as certified by the actuary, but shall not be required to contribute in excess of that amount, except in the case of financial liabilities accruing under any new retirement plan or revised retirement plan because of past service of the employees. The mortality, service, experience or other table calculated by the actuary and the valuation determined by him and approved by the board shall be conclusive and final, and any retirement system established under this article shall be based thereon. Funding obligations of the City shall be determined by the Board on an annual basis and in no circumstances, except for court approved settlement agreements, shall the City and the Board enter into multi-year contracts or agreements delaying full funding of City obligations to the system. When setting and establishing amortization schedules for the funding of the unfunded accrued actuarial liability, the Board shall place the cost of the past service liability associated with a new retirement benefit increase on no greater than a fixed, straight-line, five year amortization schedule. Effective July 1, 2008, the Board shall place the cost associated with net accumulated actuarial losses on no greater than a fifteen year amortization schedule and the Board shall place the benefit associated with net accumulated actuarial gains on no less than a five year amortization schedule. Notwithstanding the above, the Board shall retain plenary authority and fiduciary responsibility for investment of moneys and administration of the system as provided for in article XVI, section 17 of the California Constitution. The setting and establishing of amortization schedules by the Board pursuant this section is not intended and shall not be interpreted to preclude the City from issuing pension obligation bonds or other similar instruments containing repayment terms exceeding fifteen years." (San Diego City Charter, art. IX, § 143.)
SDCERS responded to the petition by filing a demurrer. The trial court heard and overruled the demurrer on September 24, 2010. On November 19, 2010, the trial court heard and granted motions to intervene filed by the San Diego Police Officers Association, the San Diego Firefighters Association and the San Diego Municipal Employees Association. Later, by way of stipulation, the American Federation of State, County, and Municipal Employees, Local 127, AFL-CIO, was also permitted to intervene.
Shortly after American Federation of State, County, and Municipal Employees, Local 127, AFL-CIO, was permitted to intervene, SDCERS and the labor organizations moved separately to transfer the case under the provisions of section 394 and alternatively under section 397. The city opposed SDCERS's motion on the grounds that by filing its demurrer SDCERS had waived its right to transfer the action under section 394.
The trial court heard the separate motions to transfer on February 10, 2011, and granted SDCERS's motion. The court found SDCERS had not waived its right to have the case transferred. At the hearing the city asked that in lieu of ordering a transfer to a neutral county, the trial court request that the chairperson of the Judicial Council assign a disinterested judge from a neutral country to hear the case. The trial court denied the city's request and ordered the case be transferred to Los Angeles. The trial court did not rule on the separate motion of the labor organizations.
The city challenged the trial court's transfer order by filing a petition for a writ of mandate in this court. We issued an order to show cause and stayed the trial court's order.
DISCUSSION
I
Section 394 provides in pertinent part:
"(a) An action or proceeding against a county, or city and county, a city, or local agency, may be tried in the county, or city and county, or the county in which the city or local agency is situated, unless the action or proceeding is brought by a county, or city and county, a city, or local agency, in which case it may be tried in any county, or city and county, not a party thereto and in which the city or local agency is not situated. . . . When the action or proceeding is one in which a jury is not of right, or in case a jury is waived, then in lieu of transferring the cause, the court in the original county may request the chairperson of the Judicial Council to assign a disinterested judge from a neutral county to hear that cause and all proceedings in connection therewith. . . ."
"(b) For the purposes of this section, 'local agency' shall mean any governmental district, board, or agency, or any other local governmental body or corporation, but shall not include the State of California or any of its agencies, departments, commissions, or boards."
The purpose underlying these venue provisions is to guard against local prejudices which sometimes exist in favor or against some litigants within a county and to secure to both parties to a suit a trial upon neutral grounds. (See Garrett v. Superior Court (1974) 11 Cal.3d 245, 248.) "[A]s remedial legislation the section is to be liberally construed." (Ibid.; see also H.K.H. Co. v. Superior Court (1979) 95 Cal.App.3d 39, 41.) Thus, when the venue and transfer provisions of section 394 apply, they are mandatory and the party requesting a transfer is not required to show that any actual or possible prejudice exists in the place where an action was initiated. (City of Alameda v. Superior Court (1974) 42 Cal.App.3d 312, 316-317.)
II
Relying on Adams v. Superior Court (1964) 226 Cal.App.2d 365, 368-369, the city argues, as it did in the trial court, that by filing a demurrer before moving to transfer the action SDCERS waived its right to transfer under section 394. Like the trial court we reject this contention.
In Adams v. Superior Court the County of Riverside sued residents of the Counties of Orange and Ventura for breach of contract. The defendants initially attacked the complaint by way of a demurrer and while the demurrer was pending, the defendants also moved for a transfer under section 394. The trial court denied the motion to change venue and the defendants sought relief by way of a petition for a writ of mandate. At the time this court ruled on the merits of the defendants' petition, the trial court had not yet ruled on the pending demurrer. We granted the defendants' petition in part.
We rejected the defendants' contention that after they filed their motion to transfer, the trial court lost its power to rule on the pending demurrers. We stated: "[T]he right to change of venue may be waived [citations]; a lack of diligence in prosecuting a motion to effect such a change constitutes such a waiver [citations]; and, by analogy, the failure of the petitioners to assert their right to a transfer of the subject action for trial to a neutral county until after their demurrers had been submitted for decision constituted a waiver of that right as it applied to the trial of the issues of law raised by those demurrers." (Adams v. Superior Court, supra, 226 Cal.App.2d at pp. 368-369.) Thus, we expressly permitted the Riverside trial court to rule on the pending demurrers in the period between the filing of our opinion and its finality; however, by way of our opinion we nonetheless issued a writ directing that the action be transferred to San Bernardino under the provisions of section 394. (Ibid.)
Under Adams v. Superior Court it is clear that, by filing a demurrer in the trial court, SDCERS waived the right to have the legal issues raised in its demurrer decided in a neutral county. However, it is equally clear that under Adams v. Superior Court, whatever further questions of law or fact remain to be determined are subject to a motion under section 394. Thus, SDCERS's did not waive its right to bring a motion under section 394.
II
Although not raised in the trial court, we asked the parties to brief us on the question of whether section 394 applies to an action between a city and an entity that was created and exists under the authority of the city charter.
In response to our question and relying on Moreland Investment Co. v. Superior Court (1980) 106 Cal.App.3d 1017, 1021 (Moreland), the city argues that SDCERS is not a local agency within the meaning of section 394, subdivision (b). We reject this argument as well.
In Moreland a privately owned public utility, San Diego Gas & Electric (SDG&E), brought an eminent domain action in the Superior Court in and for the County of San Diego against the corporate owner of real property, whose principal place of business was in Ventura County. The landowner moved to transfer the action to a neutral county under section 394 and the trial court denied its motion. We denied the landowner's petition for a writ of mandate.
Although as a public utility SDG&E had the power of eminent domain, provided utility service to 93 percent of the area of the San Diego county, employed 4,000 workers in the county, and 23 percent of its shares were owned by county residents, we rejected the landowner's argument that it was a local agency within the particular meaning of section 394. "The cases so far applying section 394 have involved agencies which were clearly governmental in the sense their origins were political, in the provisions of statutes or the California Constitution. [Citations.] These cases discuss what makes an agency 'local,' but do not deal in depth with the question what is an 'agency,' or more precisely, a 'governmental district, board, or agency, or any other local governmental body or corporation,' within the meaning of Code of Civil Procedure section 394, subdivision (3), defining local agency. [Citation.] The cases do establish the intent of the Legislature in enacting the statute was to guard against local prejudice and secure a trial on neutral ground. Being remedial, the statute is to be construed liberally to prevent trial in a county where the jurors may have more than an 'academic interest' in the outcome. [Citations.] The possibility of local bias arises when the challenged agency has the power to levy local taxes [citations], or when the governing board of the agency is appointed by or has close relationships with the local political governing body, [citations]. Here, SDG&E charges local rates and has hiring and firing power over 4,000 persons. However, SDG&E is a private shareholder corporation rather than a political entity or subdivision. [¶] . . . [¶]
"Although Moreland's arguments might be highly persuasive in the context of a traditional motion to change the place of trial for reasons of convenience or fairness, these arguments do not resolve the issue whether SDG&E is a 'governmental' agency, as required by section 394. We find no warrant in the statutes to treat as 'governmental' all corporations with extensive local ties. There are two striking differences between a regulated private utility such as SDG&E and any of the political entities held to be within section 394 in the cases we have cited. First, as we have already noted, those entities are publicly created and directly responsive to popular pressure, while SDG&E is owned by private shareholders and is accountable to a state regulatory commission, hence far less susceptible to local influence. Second, most of the agencies in the cases we have cited possessed powers of local taxation or other revenue-raising devices such that they were directly in a position to pass on their acquisition costs to the local taxpayers. In the case of SDG&E, however, it cannot directly pass on its eminent domain costs to the ratepayers. It is regulated by the Public Utilities Commission and must justify as reasonable any proposed rate increases. [Citation.] The utility may not pass on the entire cost of acquired property to the ratepayers, but rather, is limited to a reasonable return on the property, less than a speculative profit but comparable to a fair return on investment property. [Citation.] The shareholders are expected to bear some of the costs of acquisitions while ratepayers make a partial contribution. [Citation.]" (Moreland, supra, 106 Cal.App.3d at pp. 1020-1022, italics added, fn. omitted.)
As we pointed out in Moreland, in a number of prior cases where litigants were found to be local agencies within the meaning of section 394, the agencies were clearly governmental in that they were created by statutory or constitutional provisions, had a governing board which had a close relationship with or was appointed by a local political governing body and/or had some direct power over local fiscal circumstances. (See, e.g., Garrett v. Superior Court, supra, 11 Cal.3d 245 [Riverside County Flood Control and Water Conservation District]; Westinghouse Electric Corp. v. Superior Court (1976) 17 Cal.3d 259 [San Francisco Bay Area Rapid Transit District, "Bart"]; H.K.H. Co. v. Superior Court, supra, 95 Cal.App.3d 39 [Calexico City Housing Authority]; Marin Community College Dist. v. Superior Court (1977) 72 Cal.App.3d 719 [Marin Community College District].) Here, SDCERS is far more similar to those agencies than to SDG&E. SDCERS has its origins in the city charter, which authorized the city council to create it. (San Diego City Charter, § 141.) It is governed by a board, the majority of which are appointed by the city's mayor and confirmed by its city council. (San Diego City Charter, § 144(a).) Most importantly, it has the power to determine the city's annual obligation to it. (San Diego City Charter, § 143.) SDCERS's exercise of that substantial power over the city's finances is of course the very subject of the city's underlying petition, in which it alleges SDCERS has unlawfully required that the city pay SDCERS the entire $80 million in investment losses SDCERS experienced. That obligation, if not diminished by way of the city's action against SDCERS, would in turn be borne by the city's taxpayers.
Given SDCERS's origins, the composition of a majority of its board and its substantial power over the city's finances, SDCERS is plainly the type of local entity which might engender the sort of bias which is the subject of section 394 and its remedial provisions. (See Garrett v. Superior Court, supra, 11 Cal.3d at p. 248.) Thus, we have no difficulty concluding SDCERS is a local agency within the meaning of the statute and entitled to invoke its protections.
III
As we noted, at the hearing on SDCERS's motion, in lieu of transferring the case to the Superior Court in and for the County of Los Angeles, the city asked that the trial court request appointment of a disinterested judge from a neutral county. Where, as here, the case does not require a jury, such an appointment is an alternative expressly provided by section 394. In nonetheless denying the city's request, the trial court stated that it believed it would be more expeditious to transfer the case to Los Angeles than to request such an appointment from the chairperson of the Judicial Council. In this regard we note the city itself repeatedly asserted its need for a prompt resolution of its contentions and its concern that a then-scheduled trial date of April 29, 2011, would be vacated.
A trial court has discretion in selecting a transferee county or in the alternative requesting appointment of a disinterested judge. (See McCarthy v. Superior Court (1987) 191 Cal.App.3d 1023, 1034.) In light of the vigor with which the city urged its need for a prompt resolution of the merits of its claims, we cannot fault the trial court for selecting what it believed was the most expedient remedy, transfer to Los Angeles.
However, we must also note the trial date, which was of such concern to the city when it opposed SDCERS's motion, has passed while the city's petition in this court has been pending. Thus, with respect to proceedings following the finality of our opinion, the relative speed with which the Los Angeles Superior Court, as opposed to a neutral judge appointed by the chairperson of the Judicial Council, might be able to resolve the merits of the city's claims no longer appears to be a matter of paramount importance. On the other hand, we note that both the city and SDCERS are public agencies located in San Diego and represented by local counsel. Given these circumstances, it is plain that appointment of a neutral judge could save the parties, and the local taxpayers who are funding both sides of this litigation, considerable amounts in litigation expenses.
We recognize SDCERS has argued that transfer to Los Angeles would be preferable because any further appellate proceedings would be heard in the Second District of the Court of Appeal, rather than in this court, which sits in San Diego. SDCERS suggests the presumed bias of the trial court also existed here because members of this court are confirmed by voters in San Diego County. This contention has no merit. Section 394 by its terms does not govern the appellate forum of a given case, but is limited to venue of trial court proceedings. By providing for appointment of a neutral judge where there is no jury, the Legislature plainly contemplated that appeals in such cases would be heard in the appellate district where those cases originated. Moreover, we note that members of this court are confirmed by voters in Inyo, Imperial, Orange, Riverside and San Bernardino Counties as well as San Diego County. Thus, there is no basis to presume any bias on the part of an appellate panel of this court.
Here, in the absence of any other factor, the savings that appointment of a neutral judge might afford the parties and the taxpayers who support them, weighs heavily in favor of seeking such an appointment. Thus, we will direct the trial court to request the chairperson of the Judicial Council to appointment a disinterested judge from a neutral county.
Let a peremptory writ of mandamus issue directing the trial court to vacate the order transferring the case to Los Angeles and to request the chairperson of the Judicial Council appoint a disinterested judge from a neutral county to hear the city's case and all proceedings in connection therewith. The stay issued by this court on March 11, 2011, is vacated. Each party to bear its own costs in the writ proceeding.
Let a peremptory writ of mandamus issue directing the trial court to vacate the order transferring the case to Los Angeles and to request the chairperson of the Judicial Council appoint a disinterested judge from a neutral county to hear the city's case and all proceedings in connection therewith.3 The stay issued by this court on March 11, 2011, is vacated. Each party to bear its own costs in the writ proceeding.
SDCERS has argued the city's petition is fatally defective because it did not name the labor organizations as real parties in interest. As the city points out, the labor organizations were not the moving parties below and have not sought to intervene in this writ proceeding. Given these circumstances, we deny SDCERS's request that we dismiss the petition.
BENKE, Acting P. J.
WE CONCUR:
HUFFMAN, J.
NARES, J.