On Tuesday, February 16th, the California Court of Appeals for the 4th District upheld a lower court’s ruling and found that substantial evidence supported the trial court’s decision that the City of San Juan Capistrano (“the City”) did not waive the one year claim filing period under Government Code Section 911.2 by providing a Refund Program for overpaid water rates with a different claim filing deadline.
The City’s tiered water rate program was found to be unconstitutional in a prior opinion of the Court. The City offered refunds to its ratepayers, for a portion of the time the rates were overpaid, in exchange for a release of any other claims against the City related to the illegal water rates charged by the City prior to July 1, 2014. Any claims for such Refund Program had to be filed by October 1, 2015. The relevant Plaintiffs did not sign the release and did not receive a refund. Instead they filed a claim under Government Claims Act on September 30, 2015. Other Plaintiffs did sign and received a refund but filed a claim on December 5, 2015. Both claims were rejected by the City as untimely (filed more than one year after August 19, 2014, the date that the last tiered rate invoice was due). Plaintiffs sued alleging that the City extended the claims period by the Refund Program, or in the alternative waived the Claim filing deadline. They also alleged that the Release was unconscionable and in violation of public policy and that the City breached an implied contract. Trial Court found in favor of the City on all causes of action.
The Court of Appeals affirmed. It found that release was not in violation of public policy as it did not release liability for future tortious conduct (Civil Code Section 1668) but past claims. It confirmed trial court’s dismissal of implied contract causes of action, as such cannot be maintained against a public entity. It also upheld rulings in favor of the City on the remaining contract related causes of action. Most significantly the opinion affirms the trial court’s ruling that the City did not waive the one-year statutory claim filing period by providing the Refund Program, nor did extend such period by setting the deadline for signing up for the program after the one-year filing period.
The Court opined that in order for a waiver of the filing period to occur, the City must have intended for that waiver to take place and expressed that intention to induce reliance. There was no evidence to support such finding. The Court also rejected Plaintiff’s arguments that the City extended the filing period by instituting the Refund Program as the Plaintiff’s failed to raise equitable tolling arguments in their objections to the statement of decision in the court below.
The decision confirms that the City handled the Refund Program and the subsequent claims in legally supportable manner. Please give OMLO a call with any questions regarding this ruling or for any assistance in any related issues.
Certified for Publication with exception of Part III of the opinion dealing with Breach of Contract and Covenant of Good Faith and Fair Dealing.