Justia California Court of Appeals Opinion Summaries

A California corporation that manufactures medical devices sought to connect two properties it owns, separated by a public street, into a single microgrid using its own private equipment. The microgrid would supplement its energy needs by drawing power from the local regulated utility when necessary. The company claimed it had obtained local approvals and that its microgrid complied with Public Utilities Code section 218, which defines when an entity is not considered a regulated "electrical corporation." However, Southern California Edison (SCE) declined to support the company’s plan, citing concerns about safety and operational control, and asserting that it had discretion to deny facility modifications or connections that could affect its distribution system.The California Public Utilities Commission (PUC) initiated a rulemaking process to develop a policy framework for microgrids, as mandated by Senate Bill No. 1339. In the fifth phase of this process, the PUC adopted tariffs for multi-property microgrids proposed by investor-owned utilities but declined to adopt the company’s proposed changes to SCE’s tariff rules. The PUC found that the company’s proposals could allow an unregulated entity to compel changes to, or control, regulated utility infrastructure, potentially compromising safety and reliability. The company’s application for rehearing was denied, with the PUC reiterating that the proposed rule changes conflicted with statutory requirements, including sections 218, 399.2, and 451.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the PUC’s decisions. The court held that the PUC had not abused its discretion, misinterpreted the statutes, or failed to proceed as required by law. It found that the PUC’s decisions were consistent with applicable law and legislative intent, particularly the priority given to safety and the requirement that regulated utilities maintain control over their distribution systems. The court affirmed the PUC’s decisions. View "Applied Medical Resources Corp. v. Public Utilities Commission" on Justia Law

Three individuals filed a class action lawsuit against San Francisco, challenging new water rates adopted by the city’s Public Utility Commission in May 2023. The plaintiffs alleged that the new rates violated Proposition 218 of the California Constitution by including costs unrelated to the actual provision of water service, resulting in charges that exceeded the cost of service. Before adopting the new rates, the city provided required notice to ratepayers, including information about a 120-day period for legal challenges under the applicable validation statutes. The plaintiffs sought a refund, declaratory and equitable relief, and a writ of mandate.After the class action was filed, the City litigated the case for over a year. It participated in discovery, case management, and even moved for summary judgment, without initially arguing that the suit was procedurally improper. Eventually, the City moved for judgment on the pleadings, arguing that plaintiffs’ action was subject to the validation statutes, specifically Government Code section 53759 and Code of Civil Procedure sections 860 et seq., which require reverse validation actions attacking agency matters like water rates to be brought within 120 days and with specific notice by publication to all interested parties. The trial court (San Francisco County Superior Court) agreed with the City, finding the statutes mandatory and jurisdictional, and dismissed the case for failure to comply with the procedural requirements, including timely filing and appropriate notice.On appeal, the California Court of Appeal, First Appellate District, Division Two, reviewed the judgment de novo. The court held that compliance with the validation statutes was mandatory and jurisdictional. Plaintiffs’ failure to file a proper reverse validation action and to provide notice by publication deprived the court of jurisdiction. The court rejected arguments that the City had waived these requirements or that good cause existed for noncompliance. The judgment in favor of the City was affirmed. View "Toy v. City & County of S.F." on Justia Law

A California corporation that manufactures medical devices sought to connect two of its properties separated by a public street using a privately owned microgrid, with supplemental power provided by Southern California Edison (SCE). The corporation alleged it would generate electricity solely for its own use and not sell or export power to others. After obtaining local approvals, it sought SCE’s cooperation to connect its properties, but SCE declined, citing concerns about safety, reliability, and loss of control over its distribution grid. The corporation proposed amendments to three SCE tariff rules to require SCE to accommodate such microgrid connections when compliant with state law.The California Public Utilities Commission (PUC) initiated a rulemaking process to facilitate microgrid commercialization under Senate Bill 1339, dividing the process into five tracks. In track five, SCE and other investor-owned utilities submitted proposed tariffs for multi-property microgrids, while the petitioner submitted its own proposed rule changes. The PUC adopted the utility tariffs but rejected the corporation’s proposals, finding they would allow unregulated entities to compel changes to regulated utilities’ infrastructure, violating Public Utilities Code section 218 and undermining safety and reliability. The PUC’s decision was based on statutory requirements and priority for safety. The petitioner’s application for rehearing was denied, with the PUC reiterating that the proposals would effectively circumvent regulation and create risks.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the PUC’s decisions under the standards set forth in Public Utilities Code section 1757.1, applicable to quasi-legislative rulemaking. The court held that the PUC’s decisions were consistent with statutory law, not arbitrary or capricious, adequately supported by findings, and aligned with legislative priorities for safety. The court affirmed the PUC’s decisions and denied relief to the petitioner. View "Applied Medical Resources Corp. v. Public Utilities Commission" on Justia Law

Several plaintiffs brought a class action lawsuit against a city, challenging the validity of recently adopted water rates. They alleged that the city’s new rates, implemented by a resolution passed in May 2023, violated Proposition 218 by including costs for public fire service, resulting in charges exceeding the actual cost of water service. Prior to filing suit, the plaintiffs submitted claims under the Government Claims Act, which were denied. The plaintiffs sought refunds, declaratory relief, equitable relief, and a writ of mandate.After the city litigated the case for more than a year, including discovery and other pretrial activities, it moved for judgment on the pleadings, arguing that plaintiffs failed to bring a reverse validation action as required by Government Code section 53759 and Code of Civil Procedure sections 860 et seq. The San Francisco County Superior Court granted the city’s motion, holding that the validation statutes applied, were both mandatory and jurisdictional, and that plaintiffs had not complied with them in two ways: their suit was time-barred and they failed to follow proper notice procedures, including service by publication.On appeal to the California Court of Appeal, First Appellate District, Division Two, plaintiffs argued that the city had waived the validation requirements by litigating the case and that their action was timely. The appellate court reviewed the matter de novo and held that the validation statutes were mandatory and jurisdictional for challenges to water rates, and plaintiffs’ failure to comply with statutory procedures—including timely filing and notice by publication—was fatal to their claims. The court rejected arguments regarding waiver, good cause, and belated publication, ultimately affirming the trial court’s order and concluding that the procedural requirements for reverse validation actions must be strictly followed. View "Toy v. City and County of S.F." on Justia Law

A utility company, Southern California Gas (SoCalGas), entered into a 2022 franchise agreement with the City of Los Angeles, allowing it to install, maintain, and operate its natural gas system under city streets. In exchange, SoCalGas agreed to pay the City a franchise fee equal to 5.5% of its gross receipts from natural gas sales within the City. Of this, 3.5% was passed to SoCalGas customers as a surcharge, which was later approved by the California Public Utilities Commission (CPUC). The franchise agreement was adopted after extensive, arm’s-length negotiations and CPUC review.A putative class action was filed by a customer, alleging that the surcharge component of the franchise fee constituted an unlawful tax under article XIII C of the California Constitution because it was not submitted for voter approval. The plaintiff argued the fee should have been apportioned between charges for physical use of city property and charges for the general business privilege, with the latter portion requiring voter approval. The Superior Court for Los Angeles County granted summary judgment for the City, finding the franchise fee, including the surcharge, exempt from voter approval as a charge for the use of local government property under section 1, subdivision (e)(4) of article XIII C.The California Court of Appeal, Second Appellate District, affirmed the trial court’s judgment. The Court held that the franchise fee, including the portion passed through as a surcharge, was not a tax within the meaning of article XIII C, section 1, subdivision (e)(4), because it was compensation for the use of city property and not subject to voter approval. The Court further held that the fee did not need to be apportioned or shown to be reasonably related to the value of the franchise, but found that, even if such a requirement existed, the City met it through bona fide negotiations. View "Nguyen v. City of L.A." on Justia Law

A licensed California fisherman sought public access to fish at the Calaveras Reservoir, which is owned by the City and County of San Francisco and managed by the San Francisco Public Utilities Commission. The reservoir, a source of drinking water for millions, is governed by a watershed management plan that currently prohibits public access and fishing. After the City determined that, subject to environmental review and regulatory approval, shoreline fishing could potentially occur without compromising water quality, it began planning for a fishing program, which included infrastructure improvements and compliance with environmental laws.Previously, in a related proceeding, the Alameda County Superior Court ordered the City to determine whether fishing could occur without affecting water purity, but it did not require the City to immediately open the reservoir or apply for a permit. The City complied by starting the environmental review and planning process. Dissatisfied with the pace, the fisherman filed a new petition for a writ of mandate, seeking to compel the City to immediately apply for an amended water supply permit and open the reservoir for fishing. The Superior Court denied the petition, finding no ministerial duty requiring the City to proceed immediately and concluding that legal requirements, including environmental review and program planning, must be satisfied first.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Three, affirmed the lower court's judgment. The appellate court held that the plaintiff had not established a clear ministerial duty requiring the City to immediately apply for a permit or open the reservoir for fishing. The court found that the governing statutes and regulations allow for the exercise of discretion and require compliance with environmental and permitting processes before fishing access can be provided. The judgment was affirmed. View "Dummer v. City and County of S.F." on Justia Law

Mendocino Railway, a California railroad corporation, sought to acquire a 20-acre parcel in Willits, California owned by John Meyer through eminent domain. The property is adjacent to Mendocino Railway’s tracks and was intended for the construction and maintenance of rail facilities supporting ongoing and future freight and passenger operations. The company argued that, as a common carrier public utility under relevant statutes, it had the authority to exercise eminent domain for public use. The evidence at trial included testimony about the history of rail service on the line, Mendocino Railway’s acquisition and operations, including passenger excursions and more limited commuter and freight services, and the necessity of the property for expanding its rail facilities.The Mendocino County Superior Court conducted a bench trial and found that Mendocino Railway failed to qualify as a public utility entitled to exercise eminent domain. The court reasoned that the railway’s primary activity was excursion service, which does not confer public utility status, and was unconvinced by the evidence of passenger and freight services. The court further concluded that, even if Mendocino Railway had public utility status, it did not meet the statutory requirements for eminent domain, finding the primary purpose of the proposed taking to be for private business activities rather than public use. The court also found insufficient evidence regarding the project’s impacts on neighboring residents and questioned the credibility and timing of Mendocino Railway’s site plans.On appeal, the California Court of Appeal, First Appellate District, Division One, reversed the trial court’s judgment. The appellate court held that Mendocino Railway met its burden of proving it was a common carrier public utility under California law, and that it satisfied the statutory requirements for eminent domain: public interest and necessity, proper planning for public good and least private injury, and necessity of the property for the project. The court remanded the case for further proceedings regarding compensation to Meyer. View "Mendocino Railway v. Meyer" on Justia Law

In 2016, the City of Los Angeles established new tiered water rates for residential customers of its Department of Water and Power (LADWP). These rates included a charge that funded a low-income subsidy, which was paid by customers who did not qualify for the subsidy, and utilized progressively increasing charges based on water usage tiers. Stephen and Melinda Dreher, LADWP customers, challenged the constitutionality of two aspects of these rates under article XIII D, section 6 of the California Constitution: (1) the inclusion of a low-income subsidy charge in the rates of non-subsidized customers, and (2) the structure of the tiered rates themselves, arguing they exceeded the proportional cost of water service to each parcel.The Superior Court of Los Angeles County ruled in favor of the Drehers regarding the low-income subsidy charge, finding it unconstitutional and issuing a writ to prevent the City from including this charge in future rates. However, the court denied the Drehers’ request for a refund of previously paid charges, concluding that such a claim was barred because the Drehers had not paid under protest, as required by Health and Safety Code section 5472. The court also found that, aside from the invalid low-income subsidy, the City’s tiered rates complied with constitutional proportionality requirements.On appeal, the California Court of Appeal, Second Appellate District, Division One, affirmed the trial court’s judgment. The appellate court held that the payment under protest requirement of Health and Safety Code section 5472 applies to claims seeking refunds of water delivery charges fixed by city ordinance, and that the Drehers’ failure to comply with this requirement barred their retrospective refund claim. The court further held that the City met its burden to demonstrate that its tiered water rates (excluding the invalid subsidy) did not exceed the proportional cost of service attributable to each parcel, as required by article XIII D, section 6(b)(3). Thus, the judgment was affirmed. View "Dreher v. City of Los Angeles" on Justia Law

Several utility companies operating in California, including in Ventura County, challenged the property tax rates applied to their state-assessed utility property. They argued that the method used to calculate the debt service component of their property tax rate resulted in a higher rate than that applied to locally assessed, nonutility property (referred to as “common property”). The utilities claimed this disparity violated section 19 of article XIII of the California Constitution, which states that utility property “shall be subject to taxation to the same extent and in the same manner as other property.”The utilities filed suit in the Ventura County Superior Court against the County of Ventura and the California State Board of Equalization, seeking partial refunds for property taxes paid between 2018 and 2023. The County demurred, relying on recent appellate decisions that had rejected similar claims. The parties stipulated that the decision in County of Santa Clara v. Superior Court was binding for purposes of this case, and the trial court sustained the demurrer, entering judgment in favor of the County and the Board.On appeal, the California Court of Appeal, Second Appellate District, Division Six, reviewed the case de novo. The court affirmed the trial court’s judgment, holding that article XIII, section 19 does not require that utility property be taxed at the same or a comparable rate as nonutility property. Instead, the provision is an enabling clause that allows utility property to be subject to property taxation, but does not mandate rate equivalence. The court also found that the general uniformity requirement in article XIII, section 1 does not override the Legislature’s authority to implement reasonable distinctions in tax treatment for utility property. The judgment in favor of the County and the Board was affirmed. View "Pacific Bell Telephone Co. v. County of Ventura" on Justia Law

Several public utility companies challenged the property tax rates imposed by a California county, arguing that the “debt service component” of the county’s property tax rate for utility property was higher than the average rate for non-utility (common) property. The utilities claimed this violated article XIII, section 19 of the California Constitution, which states that utility property “shall be subject to taxation to the same extent and in the same manner as other property.” The utilities sought a partial refund of property taxes for several fiscal years, asserting that the constitutional provision required rate equality between utility and common property.The Superior Court of Riverside County allowed two local water districts to intervene, as they relied on property tax revenue for bond payments. The county demurred, relying on a recent decision from the California Court of Appeal, Sixth Appellate District, which had rejected a similar claim by utilities in another county. The utilities conceded that this precedent was binding on the trial court but preserved their arguments for appeal. The trial court sustained the demurrer without leave to amend and dismissed the case.The California Court of Appeal, Fourth Appellate District, Division Two, reviewed the case. It considered the text, structure, and legislative history of article XIII, section 19, as well as recent appellate decisions from other districts. The court held that the constitutional provision does not require that utility and common property be taxed at the same rates. Instead, it authorizes local ad valorem taxation of utility property, replacing the prior system of state-level in-lieu taxation, but does not impose a rate limitation. The court also found that prior California Supreme Court precedent did not mandate rate equality. The judgment dismissing the utilities’ lawsuit was affirmed. View "Pacific Bell Telephone Co. v. County of Riverside" on Justia Law