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Clovis Unified School District et al v. John Chiang

November 20, 2012

CLOVIS UNIFIED SCHOOL DISTRICT ET AL., PLAINTIFFS AND RESPONDENTS,
v.
JOHN CHIANG, AS STATE CONTROLLER, ETC., ET AL., DEFENDANTS AND APPELLANTS.



(Super. Ct. No. 06CS00748)

The opinion of the court was delivered by: Butz , J.

Clovis Unif. School Dist. v. Chiang

CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 Clovis Unified School Dist. v. Chiang (2010) 188 Cal.App.4th 794 (Clovis I), we upheld an argument from the plaintiff school districts and community college districts here (collectively, plaintiffs) that the State Controller's (the Controller) so-called contemporaneous source document rule (the CSDR) was an invalid underground regulation under the state Administrative Procedure Act, in the context of the state-mandated reimbursement process. The Controller had used the CSDR to reduce certain state-mandated reimbursement claims from the school district plaintiffs.

Now, plaintiffs seek attorney fees for their efforts, relying on the private attorney general doctrine codified in Code of Civil Procedure section 1021.5 (hereafter, section 1021.5). We conclude, however, that the trial court erred in finding that plaintiffs met the "financial burden" requirement of section 1021.5; plaintiffs had ample financial incentive to pursue this litigation. Consequently, we reverse the trial court orders awarding section 1021.5 attorney fees to plaintiffs.*fn1

FACTUAL AND PROCEDURAL BACKGROUND

Under California's Constitution, if the state imposes any "new program or higher level of service" on any local government (including a school district), the state must reimburse the locality for the corresponding costs. (Cal. Const., art. XIII B, § 6.)

Pursuant to statutes governing the state mandate process, once the Commission on State Mandates (the Commission) determines that a state program constitutes a reimbursable state mandate, it adopts regulatory "parameters and guidelines" (P&G's) to govern the reimbursement process. (Gov. Code, §§ 17551, subd. (c), 17553, 17557.) The Controller, in turn, then issues nonregulatory "claiming instructions" for each Commission-determined mandate, based on the P&G's. (Gov. Code, § 17558.)

In their complaints for declaratory relief and petitions for writ of mandate, the school district plaintiffs (comprising Clovis, Fremont, Newport-Mesa, Norwalk-La Mirada, Riverside, Sweetwater, and San Juan) alleged that the CSDR constituted an invalid underground regulation under the state Administrative Procedure Act. (Gov. Code, § 11340 et seq.) The Controller used the CSDR in auditing employee salary and benefit costs in reimbursement claims for the following four state-mandated school district programs during the relevant fiscal years 1998 to 2003: (1) the School District of Choice Program; (2) the Emergency Procedures, Earthquake Procedures and Disasters Program; (3) the Intradistrict Attendance Program; and (4) the Collective Bargaining Program. (Clovis I, supra, 188 Cal.App.4th at p. 799.)

In Clovis I, we agreed with the school district plaintiffs that the Controller's CSDR was an invalid underground regulation. We concluded that the CSDR improperly imposed more onerous reimbursement claim requirements in terms of contemporaneous documentation than did the CSDR's corresponding regulatory P&G from the Commission. We also concluded that the Controller could reaudit the relevant reimbursement claims without using the CSDR. (Clovis I, supra, 188 Cal.App.4th at pp. 801-807, 812-813.) The Controller did so; more on that later.

As for the community college district plaintiffs (comprising San Mateo, Santa Monica, State Center, and El Camino), their complaint for declaratory relief and petition for writ of mandate (appended to the complaints and petitions of the school district plaintiffs) alleged that another state mandate auditing rule used by the Controller--the "Health Fee Rule"--constituted an invalid underground regulation for the Health Fee Elimination Program; or, alternatively, that the ...


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