California Court of Appeals, Second District, First Division
WATER REPLENISHMENT DISTRICT OF SOUTHERN CALIFORNIA, Plaintiff and Appellant,
CITY OF CERRITOS, Defendant and Respondent.
APPEAL from an order of the Superior Court of Los Angeles County No. VC060489. Raul A. Sahagun, Judge.
Alston & Bird, Edward J. Casey, Neal P. Maguire and Lee J. Rosenberg for Plaintiff and Appellant.
Aleshire & Wynder, Patricia J. Quilizapa and Brandon Dominic Ward for Defendant and Respondent.
MALLANO, P. J.
A trial court in a related action made an interim order that the provisions of article XIII D of the California Constitution invalidated a replenishment assessment (assessment) imposed on the City of Cerritos (City) by the Water Replenishment District of Southern California (District), and thus the City was “entitled to mandamus relief commanding the [District] to vacate the [assessment] imposed by [the District] over the past four years.” (City of Cerritos et al. v. Water Replenishment District of Southern California (Super. Ct. L.A. County, No. BS128136) (Proposition 218 Lawsuit).) Proposition 218, known as the Right to Vote on Taxes Act, was approved by the California voters at the November 5, 1996 General Election, amending the Constitution by adding article XIII D. (See Ballot Pamph., Gen. Elec. (Nov. 5, 1996) text of Prop. 218, p. 108 et seq.) Subsequent to the interim order in the Proposition 218 Lawsuit, the City stopped paying the assessment but continued to produce groundwater. This interim order is not before us for review in this appeal.
We are asked in this appeal to determine whether the trial court erred in denying the District’s application for a preliminary injunction to enjoin the City from producing groundwater unless it pays the delinquent assessment. The District urges that pursuant to Water Code section 60339 the City should be so enjoined because the “pay first, litigate later” doctrine enshrined in section 32 of article XIII of the California Constitution requires the City to pay the assessment until the City receives a final judgment on the Proposition 218 Lawsuit. We agree and conclude that the trial court erred in denying the District’s application for a preliminary injunction because section 60339 authorizes the trial court to grant an injunction against an operator of a water-producing facility from producing groundwater if it is delinquent in the payment of an assessment, and under the doctrine of “pay first, litigate later, ” the City must pay the assessment until there is a final judgment in its Proposition 218 Lawsuit. We reverse the order of the trial court denying the District’s application for a preliminary injunction and direct the court to enjoin the City from producing groundwater during the pendency of the Proposition 218 Lawsuit unless it pays the delinquent assessment.
A. The District
Prior to the formation of the District, groundwater was being produced from the Central Groundwater Basin (Central Basin) and the West Coast Groundwater Basin (collectively Basins) that provide water to residents in Los Angeles County in amounts that “greatly exceeded natural replenishment, creating a condition in the Basins known as ‘overdraft.’ That overdraft condition caused numerous problems, including drastic overall decline of the elevation of the groundwater table and the intrusion of seawater into the Basins.” As a result of these concerns, in 1959 the District was formed by a vote of the citizens of Los Angeles County and pursuant to the Water Replenishment District Act enacted in 1955, codified at section 60000 et seq. (Stats. 1955, ch. 1514, § 1, p. 2755) (Water Replenishment Act). The District manages the Basins, which provide water for almost 4, 000, 000 residents in Los Angeles County. The District replenishes the groundwater under its jurisdiction by, among other things, buying and selling water; exchanging water; storing water; recycling water; injecting water into seawater barriers located along the coast and spreading water at the Montebello Forebay; “build[ing] the necessary works to achieve ground water replenishment”; and “manag[ing] and control[ing] water for the beneficial use of persons or property within the district.” (§ 60221.) On an annual basis, the District conducts an engineering survey to determine the state of groundwater supplies and total production of groundwater for “both the current year and the following year, ” holds a public hearing to determine the estimated costs of replenishing the groundwater supplies, and then adopts a resolution, levying an assessment on the production of groundwater from the Basins. (§§ 60300, 60306, 60315.)
B. The Proposition 218 Lawsuit
1. The 2010–2011 assessment
In May 2010, the District adopted a resolution which levied an assessment on the production of groundwater for the 2010–2011 fiscal year. In August 2010, the City and the cities of Downey and Signal Hill filed the Proposition 218 Lawsuit (petition for a writ of mandate and complaint) against the District, claiming the assessment was invalidated by article XIII D of the California Constitution on the grounds that the District had failed to follow the procedures to increase an assessment. The Proposition 218 Lawsuit alleged causes of action seeking a writ of mandate; declaratory relief; and damages for recovery of the assessment levied and collected by the District, allegedly in violation of Proposition 218 and the Water Replenishment Act. Specifically, the Proposition 218 Lawsuit requested damages for payments made to the District pursuant to each “illegal” assessment in the amount of at least $19 million, according to proof; an accounting and repayment by the District of all fees collected in excess of its statutory authority; and damages, including overpayments resulting from the District’s violation of the Water Replenishment Act, according to proof. The Proposition 218 Lawsuit challenged the District’s assessment for the fiscal year 2010–2011 and earlier years on the ground that “[s]ince the voters passed Proposition 218 in 1996, ... [the District] has consistently disregarded [Proposition 218’s] procedural mandates and its prohibition against imposing excessive fees.” The Proposition 218 Lawsuit sought “mandamus relief commanding [the District] to vacate the [assessment] imposed by [the District] over the past four years, and to comply with [Proposition 218] before imposing any [assessment].” The Proposition 218 Lawsuit also sought declaratory relief as to whether the 2010–2011 and earlier assessment is subject to Proposition 218.
The writ and declaratory relief portions of the Proposition 218 Lawsuit were held before Judge James C. Chalfant. On April 25, 2011, Judge Chalfant ruled that Proposition 218 applied to the assessment; the District had failed to comply with the procedural requirements of Proposition 218; and “[the City, Downey, and Signal Hill] are entitled to mandamus relief commanding the [District] to vacate the [assessment] imposed by [the District] over the past four years, and to comply with the provisions of [Proposition 218] before imposing any new [assessment]” (April 2011 Order). At the hearing, after being informed that the Proposition 218 Lawsuit also alleged claims for damages which had been bifurcated, Judge Chalfant stated, “I didn’t know you had other claims. Let’s talk about what happens. I can’t issue the writ until there’s a final judgment; that means no writ until your damages case is over. You understand that I will have made a ruling here, but there is no writ; they don’t have to do anything until there’s a judgment in the case. [¶]... [¶]... So the last paragraph I’m going to have to delete about preparing a judgment and a writ. The matter will be transferred to the trial court for the other claims. [¶] That’s what I’m going to do. No writ will issue until there’s a judgment. I’m adopting the tentative as my order striking the very last paragraph about preparation of a judgment and writ. [¶] The matter will be transferred to the trial court for resolution of the damages claims.”
The District’s subsequent motion for reconsideration of the April 2011 Order was denied on June 13, 2011.
The Proposition 218 Lawsuit’s claim for monetary relief was transferred to Judge Ralph W. Dau on January 3, 2012.
2. The 2011–2012 assessment
In May 2011, the District adopted a resolution that levied an assessment on the production of groundwater for the 2011–2012 fiscal year.
Subsequently, the Central Basin Municipal Water District and Tesoro Refining and Marketing Company separately filed petitions for mandamus and complaints for declaratory relief, claiming that Proposition 218 applies to the District’s 2011–2012 assessment in, respectively, Central Basin Municipal Water District v. Water Replenishment District of Southern California (Super. Ct. L.A. County, No. BS132202) and Tesoro Refining and Marketing Company v. Water Replenishment District of Southern California (Super. Ct. L.A. County, No. BS134239). The Proposition 218 Lawsuit was ordered related to those cases. According to the District’s opening brief, in September 2012 ...