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Comcast of Sacramento I, LLC v. Sacramento Metropolitan Cable Television Commission

United States District Court, E.D. California

April 5, 2017




         Plaintiffs Comcast of Sacramento I, Comcast of Sacramento II, and Comcast of Sacramento III brought this action against defendant the Sacramento Metropolitan Cable Television Commission, seeking return of a security deposit provided by plaintiffs' predecessor-in-interest to defendant some thirty-three years ago. (Compl. (Docket No. 1).) Plaintiffs now move for summary judgment against defendant, and defendant cross-moves for summary judgment against plaintiffs. (Pls.' Mot. (Docket No. 21); Def.'s Cross-Mot. (Docket No. 22).)

         I. Factual and Procedural Background[1]

         Plaintiffs are mutually affiliated limited liability companies which provide cable television service in Sacramento County. (See Docket No. 18; Decl. of Lee-Ann Peling (“Peling Decl.”) ¶ 2 (Docket No. 21-2); Def.'s Mot., Mem. (“Def.'s Mem.”) at 1 n.3, 12 (Docket No. 22-1).) Defendant is a municipal authority which “administer[s] and enforce[es] cable television franchises and licenses” in Sacramento County. (Decl. of Robert Davison ¶ 2 (Docket No. 22-3).)

         In 1984, plaintiffs' predecessor-in-interest (“predecessor”) provided a $250, 000 deposit to defendant as security for its performance of various obligations the county imposed upon it as a cable franchisee. (See Decl. of Jill Rowe (“Rowe Decl.”) ¶ 3 (Docket No. 21-3); Def.'s Req. for Judicial Notice Ex. A, Sacramento Cnty. Code § 5.50.702 (Docket No. 22-4).[2]) In 1992, defendant refunded all but $100, 000 of the deposit to the predecessor after it had satisfied some of those obligations. (Rowe Decl. ¶ 4.) Pursuant to Sacramento County Code section 5.50.702, defendant was to hold the remaining $100, 000 (“security deposit”) in an interest-bearing account until “termination of the [predecessor's] franchise and satisfaction of any damages . . . which may be due” to defendant, at which time the security deposit and its accrued interest would be returned to the predecessor. (Sacramento Cnty. Code § 5.50.702.)

         After 1992, plaintiffs became successors-in-interest to the predecessor's franchise and the security deposit. (See Rowe Decl. ¶ 4.)

         In 2006, California passed the Digital Infrastructure and Video Competition Act (“DIVCA”), which divested municipal authorities of all “franchise-granting authority” for “video service[s]” and vested such authority in the California Public Utilities Commission (“CPUC”). Cal. Pub. Util. Code § 5840(a); Cty. of Los Angeles v. Time Warner NY Cable LLC, No. CV-12-06655 SJO (JCx), 2013 WL 12126774, at *2 (C.D. Cal. July 3, 2013). Pursuant to DIVCA, plaintiffs switched to a CPUC-issued franchise in 2011. (Davison Decl. ¶ 5.) At that time, the defendant-issued franchise plaintiffs had been operating under terminated by operation of law. (Steiner Decl. ¶ 6.)

         Following the termination of plaintiffs' franchise with defendant, plaintiffs and defendant became embroiled in a dispute over the amount of fees plaintiffs are required to pay defendant under DIVCA. (See Davison Decl. ¶ 8.) Under DIVCA, plaintiffs are required to pay: (1) an annually determined administrative fee to CPUC (“CPUC fee”), Cal. Pub. Util. Code § 441; (2) a state franchise fee of five percent of gross revenues to defendant (“state franchise fee”), Id. § 5840(q)(1); and (3) a public, educational, and government programming fee of one percent of gross revenues to defendant (“PEG fee”), Id. § 5870(n). The parties disagree about whether plaintiffs are entitled to deduct their CPUC fee payments from their state franchise fee payments under federal law, and whether payments they collect from their subscribers to pay PEG fees must be included in their gross revenues for purposes of calculating their state franchise fees.

         On November 10, 2014, plaintiffs sent a letter to defendant demanding return of the security deposit. (Steiner Decl. Ex. 1 at 33-36, Security Deposit Demand.) Contending that plaintiffs underpaid state franchise fees for the 2011 and 2012 calendar years by $334, 610, defendant rejected plaintiffs' demand and notified them that it would be keeping the security deposit as a partial set-off against the amount allegedly owed. (Davison Decl. ¶¶ 6, 8.) In March 2015, defendant transferred the security deposit from the interest-bearing account it had been held in to defendant's general account. (See Peling Decl. ¶ 4.) The security deposit, with interest, totaled $227, 639.45 at the time of transfer. (Rowe Decl. ¶ 5.)

         On June 8, 2016, plaintiffs filed this action. (Compl.) Plaintiffs allege causes of action for conversion and “common count” against defendant, seeking payment of the security deposit, interest the deposit accrued up to the date it was transferred to defendant's general account, and prejudgment interest calculated at seven percent per annum the deposit accrued from the date it was transferred to the date judgment is entered in this case. (Id. at 4; Pls.' Mot., Mem. (“Pls.' Mem.”) at 11 (Docket No. 21-1).) According to plaintiffs, the total amount sought as of April 3, 2017 is $260, 818.16. (See Pls.' Mem. at 11.)

         Plaintiffs now move for summary judgment against defendant. (Pls.' Mot.) Defendant cross-moves for summary judgment against plaintiffs. (Def.'s Cross-Mot.) Defendant bases its Cross-Motion on three affirmative defenses: (1) immunity under California Government Code section 815, (2) expiration of the applicable statute of limitations, and (3) right to set off plaintiffs' security deposit and its accrued interest against state franchise fees allegedly owed by plaintiffs for the 2011 and 2012 calendar years. (See Def.'s Mem. at 4-5, 12.)

         II. Legal Standard

         Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A material fact is one that could affect the outcome of the suit, and a genuine issue is one that could permit a reasonable jury to enter a verdict in the non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “[W]here the operative facts are substantially undisputed, and the heart of the controversy is the legal effect of such facts, such a dispute effectively becomes a question of law that can, quite properly, be decided on summary judgment.” Joyce v. Renaissance Design Inc., No. CV 99-07995 LGB (EX), 2000 WL 34335721, at *2 (C.D. Cal. May 3, 2000); see also Braxton-Secret v. A.H. Robins Co., 769 F.2d 528, 531 (9th Cir. 1985) (“[W]here the palpable facts are substantially undisputed, [the controverted] issues can become questions of law which may be properly decided by summary judgment.”).

         III. Discussion

         Defendant focuses exclusively on affirmative defenses in its Cross-Motion. It does not dispute that absent the issues raised in its affirmative defenses, plaintiffs are entitled to the security deposit and its accrued interest under their conversion and “common count” causes of action.

         To succeed on a conversion claim under California law, plaintiffs must establish: “(1) [their] ownership or right to possession of the [disputed] property; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages.” Mendoza v. Rast Produce Co., 140 Cal.App.4th 1395, 1405 (5th Dist. 2006) (quoting Burlesci v. Petersen, 68 Cal.App.4th 1062, 1066 (1st Dist. 1998)). Here, it is undisputed that plaintiffs' predecessor provided a $250, 000 deposit to defendant and that plaintiffs are successors-in-interest to the remaining portion of that deposit and its accrued interest. (See Rowe Decl. ¶ 3; Davison Decl. ¶ 4.) It is also undisputed that after plaintiffs' franchise with defendant terminated, at which time the security deposit became due to plaintiffs, (see Sacramento Cnty. Code § 5.50.702), defendant transferred the security deposit to its general account, causing monetary loss to plaintiffs. (See Peling Decl. ¶ 4; Davison Decl. ¶ 9.) Thus, plaintiffs have established a facially valid conversion claim in this action.

         Plaintiffs state a second cause of action for “common count.” “A common count is not a specific cause of action, however; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness . . . .” McBride v. Boughton, 123 Cal.App.4th 379, 394, (1st Dist. 2004) (citing Zumbrun v. Univ. of S. California, 25 Cal.App.3d 1, 14-15 (2d Dist. 1972)). “When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, ” it “must stand or fall with [the specific] cause of action.” Id. (citing Zumbrun, 25 Cal.App.3d at 14 and Farmers Ins. Exch. v. Zerin, 53 Cal.App.4th 445, 459-60 (3d Dist. 1997)). Because plaintiffs' “common count” claim appears to seek the same relief and be based on the same facts as their conversion claim, the court will decide their “common count” claim together with their conversion claim.

         Having addressed the facial validity of plaintiffs' claims, the court next addresses whether plaintiffs' claims survive defendant's affirmative defenses.

         A. Immunity Under California Government Code Section 815

         Defendant contends that plaintiffs' claims are barred under California Government Code section 815 (“section 815”) because they are not statutory causes of action. (Def.'s Mem. at 4.) Section 815 states that “[e]xcept provided by statute . . . [a] public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or a public employee or any other person.” Cal. Gov't Code § 815(a).

         Plaintiff correctly notes, however, that section 815's bar on non-statutory claims does not apply to claims based on contract. See Cal. Gov't Code § 814 (noting that section 815 does not “affect[] liability based on contract”). “Whether an action is based on contract or tort depends upon the nature of the right sued upon, not the form of the pleading or relief demanded.” Util. Audit Co. v. City of Los Angeles, 112 Cal.App.4th 950, 958 (2d Dist. 2003). An action “based on breach of promise . . . is contractual.” Id. An action “based on breach of a noncontractual duty . . . is tortious.” Id. ...

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