Ct.App. 2/3 B200831 Super. Ct. No. BC361469 Court: Superior County: Los Angeles Judge: Anthony J. Mohr
The opinion of the court was delivered by: Baxter, J.
Code of Civil Procedure section 313 provides that the "general procedure" for the presentation of claims for money or damages against a local government entity is prescribed by the Government Claims Act (Gov. Code, § 810 et seq.). In Ardon v. City of Los Angeles (2011) 52 Cal.4th 241, 251 (Ardon), we held that the Government Claims Act permits a class action claim by taxpayers against a local government entity for the refund of an unlawful tax "in the absence of a specific tax refund procedure set forth in an applicable governing claims statute." In the case now before us, the defendant local government entity asserts that its municipal code contains an "applicable governing claims statute" barring class action claims for a tax refund. We find that a local ordinance is not a "statute" within the meaning of the Government Claims Act and therefore affirm the Court of Appeal.
The current dispute arises out of a class action lawsuit filed in November 2006 by plaintiff John W. McWilliams, a resident of defendant City of Long Beach (the City), filed on behalf of himself and similarly situated individuals challenging the City's telephone users tax (TUT) and seeking refund of the taxes paid. McWilliams asserts that Long Beach Municipal Code section 3.68.50, subdivision (d) exempted from the TUT all amounts that "are exempt from or not subject to" the federal excise tax on telephone service and that the City has for some time mischaracterized the charges subject to the federal excise tax.
The particulars of the mischaracterization are not at issue in this proceeding. It is enough for our purposes to relate that the Internal Revenue Service, following several adverse court decisions, announced in 2006 that it would cease collecting the federal excise tax on long distance and bundled services and allow federal taxpayers to obtain a refund by checking a box on their federal tax returns. In August 2006, McWilliams served a demand on the City and its officers to refund the money he asserted that the City had improperly collected on certain telephone services "during the prior two years." The City did not respond. Instead, in September 2006, the City Council amended its TUT ordinance to remove any reference to the federal excise tax--but did so without seeking the approval of the voters under article XIII C of the California Constitution, commonly known as Proposition 218. The complaint alleges that the City unlawfully collected and continues to collect the TUT "on services that have been conclusively determined to be non-taxable under the Federal Excise Tax."*fn1
The class action complaint asserted six causes of action: (1) declaratory and injunctive relief challenging the collection of the TUT; (2) declaratory and injunctive relief challenging the City Council's amendment to the TUT ordinance; (3) money had and received; (4) unjust enrichment; (5) a violation of due process because of the City's failure to provide either a pre-deprivation or post-deprivation remedy; and (6) a writ of mandate requiring the City to provide a pre-deprivation or post-deprivation remedy. The City demurred to the complaint, arguing (among other things) that Long Beach Municipal Code sections 3.48.060 and 3.68.160 disallow class claims for a refund. The trial court ruled that class claims for a refund were barred under Woosley v. State of California (1992) 3 Cal.4th 758, and sustained the demurrer with leave to amend. When McWilliams stated he would not be amending his complaint, the trial court entered an order dismissing the case.
The Court of Appeal stayed the appeal for three years pending this court's resolution of Ardon. In Ardon, we explained that Woosley v. State of California, supra, 3 Cal.4th 758, had not erected a categorical bar to class claims for a tax refund: "All that Woosley demands is that a court first examine the claims statutes at issue in a claim for a taxpayer refund to determine whether the Legislature contemplated a class claim under the applicable California code." (Ardon, supra, 52 Cal.4th at p. 251.) Woosley did not analyze the applicability of Government Code section 910.*fn2 Ardon, on the other hand, did address the applicability of section 910 and held that class claims for tax refunds against a local governmental entity are permissible under section 910 "in the absence of a specific tax refund procedure set forth in an applicable governing claims statute." (Ardon, supra, 52 Cal.4th at p. 253.)
After lifting the stay, the Court of Appeal held that "[t]he City is not authorized under the Government Claims Act to establish its own claims procedure for TUT refunds" and that "McWilliams can file a class claim for a TUT refund" under Ardon, supra, 52 Cal.4th 241. Accordingly, the Court of Appeal reversed the trial court's order with respect to the first, second, third, and fourth causes of action.
We granted the City's petition for review to decide (1) whether the exception to the Government Claims Act for "[c]laims under . . . [a] statute prescribing procedures for the refund . . . of any tax" in section 905, subdivision (a), excludes local charter provisions and ordinances prescribing procedures for a tax refund; (2) if so, whether the application of the Government Claims Act to local tax refund claims violates the home rule taxing power of charter cities; and (3) whether article XIII, section 32 of the California Constitution requires that a tax refund proceeding be expressly authorized by the legislative body of the local government entity.
The Government Claims Act (Act) "established a standardized procedure for bringing claims against local governmental entities." (Ardon, supra, 52 Cal.4th at p. 246; see Stats. 1959, ch. 1724, § 1, p. 4133, enacting former § 700 et seq.; now § 900 et seq.) The purpose of the Act "is to provide the public entity sufficient information to enable it to adequately investigate claims and to settle them, if appropriate, without the expense of litigation." (City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 455.) On August 11, 2006, prior to filing this class action, McWilliams served a demand on the City in the form of a letter on behalf of himself and all similarly situated taxpayers seeking a refund of the TUT. The question in this appeal is whether McWilliams was entitled to present this claim on behalf of the entire class or, instead, whether each member of the putative class must present an individual claim prior to filing suit.
According to the Act, "all claims for money or damages against local public entities" are to be presented "in accordance with Chapter 1 (commencing with Section 900) and Chapter 2 (commencing with Section 910)," except as provided in section 905. (§ 905.) One of the exceptions in section 905 is for "[c]laims under the Revenue and Taxation Code or other statute prescribing procedures for the refund . . . of any tax . . . or any portion thereof . . . ." (§ 905, subd. (a).) When a claim is excepted from the Act by section 905 and is "not governed by any other statutes or regulations expressly relating thereto," the claim "shall be governed by the procedure prescribed in any charter, ordinance or regulation adopted by the local public entity." (§ 935, subd. (a).)
We discussed the operation of these provisions in Ardon. The claim in Ardon, like the claim here, involved a class action lawsuit for refund of a TUT, but (unlike the City here) the defendant City of Los Angeles did not identify any municipal ordinance that prescribed procedures for a refund of the tax. (Ardon, supra, 52 Cal.4th at p. 246, fn. 2.) Ardon held that claims for tax refunds against a local governmental entity, including class claims, are permitted by section 910 "in the absence of a specific tax refund procedure set forth in an applicable governing claims statute." (Ardon, supra, 52 Cal.4th at p. 253.) Because Ardon's particular claim "did not involve any applicable municipal code or statute governing claims for refunds" (id. at p. 251), we did not decide whether a local charter provision or ...