Judge James C. Chalfant, Case 19STCP01720 2023-04-13 Tentative Ruling

Respondents City of Carson (“City”) and Carson City Council (“City Council”) (collectively, “City”) demur to the Fourth Amended Complaint (“4thAC”) filed by Petitioner Watson Land Company (“Watson”).

The court has read and considered the moving papers, opposition, and reply,[1] and renders the following tentative decision.

Petitioner Watson filed the Petition against the City on May 6, 2019. The operative pleading is the 4thAC filed January 30, 2023, alleging claims for (1) declaratory relief and (2) traditional or administrative mandamus. The 4thAC alleges in pertinent part as follows.

Watson is a developer and manager of industrial properties and owns real property in the City. 4thAC, ¶9. In 2017, the City enacted an urgency ordinance that established a moratorium on the establishment, expansion, or modification of truck yards, logistics facilities, hazardous materials or waste facilities, container storage, and container parking (“Moratorium”). 4thAC, ¶16. The Moratorium was intended to provide time for the City to establish a citywide community facilities district (“CFD”) to pay for infrastructure maintenance. 4thAC, ¶17. The Moratorium was extended on May 2, 2017 and again on March 20, 2018. 4thAC, ¶16.

According to the City, the need for a CFD was based on an influx of new development and was necessary to fund municipal services associated with new industrial and multi-family residential development. 4thAC, ¶19. Unlike development impact fees, a CFD is intended to pay for ongoing services. 4thAC, ¶19. The City Council had authority to the Moratorium if the developer or tenant agreed to participate in a CFD to pay for ongoing City services – including road and landscape maintenance, lighting, public safety, storm water management -- to the City’s satisfaction. 4thAC, ¶18.

On September 18, 2018, the City Council adopted Resolution 18-083, stating its intent to form the Carson CFD pursuant to the Mello-Roos Community Facilities Act of 1982 (“Mello-Roos Act”). 4thAC, ¶¶ 2, 20. The Carson CFD was formed with a single parcel owned by a company, CalPak, which had requested City approval to construct an industrial building that was prohibited under the Moratorium. 4thAC, ¶21. The City Council conditioned approval of CalPak’s project on the annexation of its property into the Carson CFD and payment of a special parcel tax. 4thAC, ¶21. The boundary of the Carson CFD consisted of CalPak’s single property, with all other property within the City’s boundaries labeled as the “Future Annexation Area.” 4thAC, ¶21. None of the property owners in the Future Annexation Area were allowed to vote on the establishment of the Carson CFD, the inclusion of their property in the Future Annexation Area, or the amount of the special parcel tax. 4thAC, ¶21.

At a public hearing on November 7, 2018, the City Council adopted Resolution 18-119 to establish the single-parcel Carson CFD for CalPak. 4thAC, ¶22. It also approved Resolution 18-120 to levy the special parcel tax upon CalPak and Resolution 18-121 to declare that CalPak had voted in favor of the special parcel tax. 4thAC, ¶22. Watson’s lawsuit does not challenge any of these Resolutions. 4thAC, ¶25.

On April 2, 2019, the City Council adopted Resolution 19-009, which outlined the administrative annexation procedures for properties within the Future Annexation Area. 4thAC, ¶23. Approved as part of Resolution 19-009 were a March 2019 Fiscal Impact Analysis for Citywide Future Development (“2019 FIA”), the Rate and Method of Apportionment of Special Tax, a form copy of a Unanimous Approval of Annexation to a CFD, a form copy of an Amendment to the Notice of Special Tax Lien, and a change to the special tax rate. 4thAC, ¶23. The public did not vote on the administrative procedure, the decision to levy a special parcel tax, or the amount of the special parcel tax. 4thAC, ¶23.

The 2019 FIA recommended that, because residential projects cause the fiscal impacts which the City wanted to address via the Carson CFD, the City should establish a Special Funding District (“SFD”) to mitigate those impacts. 4thAC, ¶24. The City did not follow this recommendation or impose annexation requirements on residential developments except for multi-family units. 4thAC, ¶24.

After Watson filed this lawsuit, on January 12, 2021, the City Council adopted Resolution 21-003 rescinding the annexation administrative procedures, tax rate, and 2019 FIA adopted in Resolution 19-009. 4thAC, ¶25. The City Council did not replace the 2019 FIA or establish new administrative procedures to annex properties within the Future Annexation Area. 4thAC, ¶25. The lack of uniform criteria fosters the City’s abuse of discretion whereby it compels any property owner that wishes to develop property to be annexed to the Carson CFD and pay the resulting special parcel tax in perpetuity. 4thAC, ¶¶ 26-27. The payment of a lump sum special parcel tax is not a real alternative because the lump sum will be a large amount and the property owner does not benefit from the Carson CFD. 4thAC, ¶28. Watson does not know of any property owner who has chosen to make a lump sum payment over annexation. 4thAC, ¶28. The City has used this leverage to engage in an illegal pattern and practice of compelling property owners one- by-one to levy the special parcel tax and approve the annexation of their property to the Carson CFD. 4thAC, ¶29.

On February 2, 2021, Watson submitted a Development Permit Application for a design overlay review (“DOR”) permit, No. 1860-2021. 4thAC, ¶31. The DOR permit would allow Watson to demolish an existing building at 2277 E. 220th Street and replace it with a Class A light industrial building (“Building I”). 4thAC, ¶31. On March 4, 2021, the City sent Watson a letter which included the requirement that Watson either agree to annex the property to the Carson CFD or establish a funding mechanism to provide an ongoing source of funds. 4thAC, ¶32. Watson must also pay the special tax provided in the rescinded 2019 FIA, subject to annual adjustments. 4thAC, ¶32.

Watson responded that the City cannot impose this requirement as a condition of development approval. 4thAC, ¶33. On May 13, 2021, the City replied that it is requiring Watson’s proposed development to mitigate its impacts on City services by funding the ongoing costs permitted by the Carson CFD. 4thAC, ¶34. City staff stated that it has been using the 2019 FIA to determine those impacts in the Carson CFD. 4thAC, ¶34. Accordingly, the City refused to issue permits for Building I until Watson agrees to pay the special parcel tax and annex its property into the Carson CFD, based on the amount in the disapproved 2019 FIA. 4thAC, ¶34.

Watson has also applied for building permits to demolish two industrial buildings and replace them with a single building on Bonita Street (“Building II”). 4thAC, ¶35. On September 1, 2022, the City informed Watson that it is required to mitigate its impacts on City services and must establish a funding mechanism to provide an ongoing source of funds at a rate comparable to the uniformed-standardized citywide rate under Resolution 19-009 and the 2019 FIA. 4thAC, ¶36.

On October 21, 2022, the City requested a $5,000 payment for annexation of the property for Building II into the Carson CFD. 4thAC, ¶37. Watson paid this fee under protest. 4thAC, ¶37. On December 13, 2022, the City approved Watson’s proposal for Building II conditioned on payment of the special parcel tax and annexation to the Carson CFD. 4thAC, ¶38. When Watson replied that it paid the fee under protest, the City replied on January 13, 2023 that it cannot accept payment under protest because annexation into the Carson CFD is voluntary. 4thAC, ¶¶ 39-40. Watson must either voluntarily annex and drop its protest or retrieve the $5,000 check. 4thAC, ¶40.

The City refuses to issue building permits for Building II until Watson agrees to pay for the “voluntary” annexation without protest. 4thAC, ¶41. An annexation cannot be voluntary when the City conditions building permits on an agreement for annexation. 4thAC, ¶41. The City has not informed Watson of any funding mechanism that would be an acceptable alternative to Carson CFD annexation for either Building I or II. 4thAC, ¶42. Watson therefore is required to vote in favor of annexing each of Building I and II into the Carson CFD and levying the special tax without protest in order to obtain the DOR permit and building permits. 4thAC, ¶42.

Watson is under contractual obligation to demolish and replace Building II by March 31, 2024. Because the City refuses to issue the building permits to Watson that it has already approved, Watson has been required to pay the $5,000 and withdraw its language protesting the payment. 4thAC, ¶51. If Watson prevails in this lawsuit, it will seek removal of the property underlying Building II from the Carson CFD and a refund of all fees and taxes. 4thAC, ¶51.

Watson is challenging the City’s conditions for approval of Buildings I and II on its vote in favor of Carson CFD annexation and payment of the special property tax in perpetuity as imposed in violation of law. 4thAC, ¶53. In 1982, the Legislature enacted the Mello-Roos Act to provide a method of imposing special parcel taxes to finance certain public capital facilities. 4thAC, ¶57. Watson enjoys the constitutional right to be free from taxes on its properties other than as approved by voters in a manner consistent with Articles XIII A (Prop 13), XIII C and XIII D (Prop 218) of the California Constitution. 4thAC, ¶61. Under Government Code (“Govt. Code”) section 53326, a community services district may be established to finance certain services provided that the levy of any special taxes is submitted to the qualified voters of the Carson CFD, and to the qualified electors of the territory to be annexed by the Carson CFD. 4thAC, ¶57.

The City’s special parcel tax scheme violates the First Amendment because it curtails Watson’s freedom to vote for the special parcel tax and annexation of property to the Carson CFD. 4thAC, ¶64. It requires unanimous approval of the tax and annexation to obtain approval of Buildings I and II. 4thAC, ¶64. Each property owner must mark the ballot in favor of levying the special parcel tax and annexing its property into the Carson CFD before the City will approve a project. 4thAC, ¶67. This also violates the property owner’s right to vote in secret. 4thAC, ¶67. The City’s conditions for approval compel Watson’s waiver of its First Amendment rights and rights under California Constitution XII A, XIII C, and XIII D in violation of the unconstitutional conditions doctrine. 4thAC, ¶68.

Under the Fifth and Fourteenth Amendments of the U.S. Constitution and Article 1, section 7(a) of the California Constitution, Watson is entitled to due process, including adequate notice and an opportunity to be heard in a meaningful manner. 4thAC, ¶¶ 69-70. The City has prevented Watson from challenging the imposition of the special parcel tax and Carson CFD annexation. 4thAC, ¶71.

The City also has violated substantive due process because there is no rational connection or nexus between the amount of the special tax, the impacts of the proposed developments, and the activities to be funded by the tax. 4thAC, ¶72. A special tax must be fairly related and proportional to the benefits provided to the landowner and the City does not rely on any fiscal impact analysis to show a causal nexus or to demonstrate that the tax rate is proportional to the burden the projects would place on the community. 4thAC, ¶73.

Watson does not challenge the legality of Resolutions 18-083, 18-119, 18-120, 18-121, and 21-003. 4thAC, ¶¶ 74, 81. Watson asserts that under the U.S. Constitution, California Constitution, and the Mello-Roos Act the City cannot condition approval of its projects on a vote to impose a special parcel tax or approve annexation of the underlying property into the Carson CFD. 4thAC, ¶¶ 74, 78.

Watson seeks a declaration, writ of mandate, and injunction prohibiting the City from conditioning approval of Buildings I and II on Watson’s agreement to vote in favor of annexing the underlying properties into the Carson CFD or to pay the special parcel tax. 4thAC Prayer for Relief, ¶¶ 1-3. If Watson is forced to vote in favor of annexation of either property, it seeks an injunction removing the properties from the Carson CFD and reimbursement of all associated fees and taxes. 4thAC Prayer for Relief, ¶4. Watson also seeks attorneys’ fees, costs, and litigation expenses. 4thAC Prayer for Relief, ¶5.

On May 8, 2019, the court granted Watson’s ex parte application to serve the City by publication in the Daily Breeze newspaper and by posting at City Hall. Watson published the Summons in the Daily Breeze on May 10, 17, and 24, 2019.

On May 8, 2019, Watson personally served the City with the Petition and Summons.

On June 12, 2019, Watson filed the First Amended Complaint (“FAC”) and served the City by electronic mail.

On August 19, 2019, the court ordered the case transferred to Department 1 (Hon. Samantha Jessner) for reassignment to an independent calendar court. On August 28, 2019, Department 1 reassigned the case to Department 12 (Hon. Barbara Meiers). At some point, the case was reassigned to Department 45.

On February 9, 2021, Department 45 (Hon. Mel Red Recana) granted Watson’s motion for leave to file an amended complaint. On February 11, 2021, Watson filed the Second Amended Complaint (“SAC”) and served the City by electronic mail. On February 12, 19, and 26, 2021, Watson served the City with the Summons by publication in the Daily Breeze.

On March 16, 2021, Department 45 denied Watson’s request for entry of default against the City.

On December 30, 2021, Department 45 denied Watson’s motion for a preliminary injunction enjoining the City from requiring that Watson either annex its property into the Carson CFD or establish a funding mechanism to provide an ongoing source of funds for ongoing services acceptable to the City prior to permit approval for Building I.

On March 23, 2022, Department 45 sustained City’s demurrer to the SAC, with leave to amend for five of the six causes of action.

On April 12, 2022, Watson filed a Third Amended Complaint (“TAC”) and served the City by electronic mail.

On December 5, 2022, during a hearing on the City’s demurrer to the TAC, Department 45 granted Watson’s motion for leave to file a mandamus cause of action and deem it served and filed on April 12, 2022. Department 45 struck the TAC that Watson already had filed and sent the case to Department 1 (Hon. Michelle Williams Court) for reassignment.

On December 14, 2022, Watson filed a new TAC and served the City via electronic mail.

On December 30, 2022, Department 1 reassigned the case to this court (Department 85).

On January 31, 2023, the court granted leave to amend to file the 4thAC and vacated hearing on the City’s demurrer to the TAC. Watson filed the 4thAC on January 30, 2023 and served it via electronic mail on January 31, 2023.

Demurrers are permitted in administrative mandate proceedings. CCP §§1108, 1109. A demurrer tests the legal sufficiency of the pleading alone and will be sustained where the pleading is defective on its face.

Where pleadings are defective, a party may raise the defect by way of a demurrer or motion to strike or by motion for judgment on the pleadings. CCP §430.30(a); Coyne v. Krempels, (1950) 36 Cal.2d 257. The party against whom a complaint or cross-complaint has been filed may object by demurrer or answer to the pleading. CCP §430.10. A demurrer is timely filed within the 30-day period after service of the complaint. CCP §430.40; Skrbina v. Fleming Companies, (1996) 45 Cal.App.4th 1353, 1364.

A demurrer may be asserted on any one or more of the following grounds: (a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading; (b) The person who filed the pleading does not have legal capacity to sue; (c) There is another action pending between the same parties on the same cause of action; (d) There is a defect or misjoinder of parties; (e) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain; (g) In an action founded on a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct; (h) No certificate was filed as required by CCP sections 411.35 or 411.36. CCP §430.10.

A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. CCP §430.30(a); Blank v. Kirwan, (1985) 39 Cal.3d 311, 318. The face of the pleading includes attachments and incorporations by reference (Frantz v. Blackwell, (1987) 189 Cal.App.3d 91, 94), but it does not include inadmissible hearsay. Day v. Sharp, (1975) 50 Cal.App.3d 904, 914.

The sole issue on demurrer for failure to state a cause of action is whether the facts pleaded, if true, would entitle the plaintiff to relief. Garcetti v. Superior Court, (“Garcetti”) (1996) 49 Cal.App.4th 1533, 1547; Limandri v. Judkins, (1997) 52 Cal.App.4th 326, 339. The question of plaintiff’s ability to prove the allegations of the complaint or the possible difficulty in making such proof does not concern the reviewing court. Quelimane Co. v. Stewart Title Guaranty Co., (1998) 19 Cal.4th 26, 47.

The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. Marshall v. Gibson, Dunn & Crutcher, (1995) 37 Cal.App.4th 1397, 1403. This rule does not apply to allegations expressing mere conclusions of law, or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken. Vance v. Villa Park Mobilehome Estates, (1995) 36 Cal.App.4th 698, 709.

For all demurrers filed after January 1, 2016, the demurring party must meet and confer in person or by telephone with the party who filed the pleading for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. CCP §430.31(a). As part of the meet and confer process, the demurring party must identify all of the specific causes of action that it believes are subject to demurrer and provide legal support for the claimed deficiencies. CCP §430.31(a)(1). The party who filed the pleading must in turn provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency. Id. The demurring party is responsible for filing and serving a declaration that the meet and confer requirement has been met. CCP §430.31(a)(3).

“[A] demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” State ex rel. Metz v. CCC Information Services, Inc., (2007) 149 Cal.App.4th 402, 413.

If a demurrer is sustained, the court may grant leave to amend the pleading upon any terms as may be just and shall fix the time within which the amendment or amended pleading shall be filed. CCP §472a(c). However, in response to a demurrer and prior to the case being at issue, a complaint or cross-complaint shall not be amended more than three times, absent an offer to the trial court as to such additional facts to be pleaded that there is a reasonable possibility the defect can be cured to state a cause of action. CCP §430.41(e)(1).

The Mello-Roos Act (Govt. Code §53311 et seq.) was promulgated to provide an alternative for financing public facilities in developing areas. Azusa Land Partners v. Department of Industrial Relations, (“Azusa”) (2010), 191 Cal. App. 4th 1, 18; Friends of the Library of Monterey Park v. City of Monterey Park, (1989) 211 Cal.App.3d 358, 376.

Any local agency may establish a CFD to provide for and finance the cost of eligible public facilities. Govt. Code §§ 53313, 53318; Azusa, supra, 191 Cal. App. 4th at 18. A “local agency” includes any city, county, or any other municipal corporation, district, or political subdivision of the state. Govt. Code §53317(h).

Alternatively, proceedings for CFD establishment shall be instituted by the legislative body when a petition is filed with the clerk of the legislative body requesting the institution of the proceedings and signed by landowners owning the requisite portion of the area of the proposed district, describing the boundaries of the territory that is proposed for inclusion in the area and specifying the type or types of facilities and services to be financed by the district,. Govt. Code §53318(c).

Within 90 days of either a written request by two members of the legislative body, or of a petition requesting the institution of proceedings for the establishment of a CBD is filed with the legislative body and the payment of any fee required under Govt. Code section 53318(d), the legislative body shall adopt a resolution of intention to establish a CFD. Govt. Code §53320. The resolution must (a) state that a CFD is proposed to be established under the Mello-Roos Act and describe the boundaries of the territory proposed for inclusion, (b) state the proposed name for the CFD in the appropriate form, and (c) describe the public facilities and services proposed to be financed by the CFD. Govt. Code §53321. It must also fix a time and place for a public hearing on the establishment of the CFD, which shall be between 30 and 60 days after the adoption of the resolution. Govt. Code §53321(e). The legislative body shall then publish a notice of the hearing in a newspaper of general circulation published in the area of the proposed CFD. Govt. Code §53322(a).

If (1) at least 50% of the registered voters, or six registered voters, whichever is more, residing within the proposed CFD territory, or (2) the owners of at least half the area of land in the proposed CFD territory and not exempt from the special tax, file written protests against the CFD’s establishment, and those protests are not withdrawn so as to reduce their value below a majority, no further proceedings to create the CFD or authorize the specified special tax shall occur for one year from the date of the legislative body’s decision. Govt. Code §53324(a).

At the public hearing, the legislative body may modify the resolution of intention by eliminating proposed facilities or services, changing the rate or method of apportionment of the proposed special tax to reduce the maximum special tax for all or a portion of property owners within the proposed CFD, or removing territory from the proposed CFD. Govt. Code §53325. If the legislative body proposes to modify the resolution of intention in a way that will increase the probable special tax to be paid by the owner of any lot or parcel, it shall direct that a report be prepared with a brief analysis of the impact of the proposed modifications on the probable special tax to be paid by the owners of lots or parcels in the CFD. Govt. Code §53325. The legislative body shall receive and consider the report before approving the modifications or any such resolution of formation. Govt. Code §53325. The legislative body shall not modify the resolution of intention to increase the maximum special tax or to add territory to the proposed CFD. Govt. Code §53325.

At the conclusion of the hearing, the legislative body may abandon the proposed establishment of the CFD or may, after passing upon all protests, determine to proceed with establishing the CFD. Govt. Code §53325. If it proceeds, it shall adopt a resolution of formation that establishes the CFD and contains all the information required of a resolution of intention. Govt. Code §53325.1(a). If a special tax is proposed to be levied in the CFD to pay for any facilities or services, and a majority protest has not eliminated the tax, the resolution must also (1) state that the proposed tax is not precluded by majority protest and (2) identify the facilities or services proposed to be funded with the special tax. Govt. Code §53325.1(a).

After CFD formation and a determination to levy special taxes, the legislative body shall submit the levy of any special taxes to the qualified electors of the proposed CFD or annexation territory in the next general election or in a special election to be held between 90 and 180 days of the adoption of the resolution of formation. Govt. Code §53326(a). If at least 12 persons have been registered to vote within the CFD’s territory for each of the 90 days preceding the close of the protest hearing – not necessarily the same 12 persons throughout – the vote shall be by the registered voters of the proposed CFD, with each voter having one vote. Govt. Code §53326(b). Otherwise, the vote shall be by the landowners of the proposed district and each person who is the owner of land at the close of the protest hearing, or the authorized representative thereof, shall have one vote for each acre or portion of an acre of land that he or she owns within the proposed CFD that is not exempt from the special tax. Govt. Code §53326(b). To pass, the proposition to levy special taxes must receive 2/3 of the votes cast. Govt. Code §53329.5.

After the canvas of returns of the election, the legislative body may impose any special tax specified in the resolution of formation if two-thirds of the votes cast upon the question of levying the tax are in favor. Govt. Code §53328.

An alternate and independent procedure allows the legislative body to form a CFD that initially consists solely of territory proposed for annexation to the CFD in the future, with the condition that a parcel or parcels within that territory may be annexed and subjected to the special tax only with the unanimous approval of their owner or owners at the time of annexation. Govt. Code §53328.1(a).

The appropriations limit for the CFD, the applicable rate of the special tax and the method of apportionment and manner of collection of that tax, and the authorization to incur bonded indebtedness for the CFD shall be specified and be approved by the unanimous approval of the owner or owners of each parcel or parcels at the time that the parcel or parcels are annexed to the CFD. Govt. Code §53328.1(a)(3). No additional hearings or procedures are required, and the unanimous approval shall be deemed to constitute a unanimous vote in favor of the appropriations limit for the CFD, the authorization to levy the special tax on the parcel or parcels, and the authorization to incur bonded indebtedness for the CFD. Govt. Code §53328.1(a)(3).

The legislative body may, by ordinance, levy the special taxes at the rate and apportion them in the manner specified in the resolution of formation. Govt. Code §53340(a). If the CFD’s creation included an area proposed for annexation in the future by unanimous approval, the legislative body may also by ordinance provide for the levy of special taxes on those parcels at the rate or rates to be approved unanimously by the owner or owners of each parcel or parcels to be annexed to the CFD. Govt. Code §53340(a). Any action to annul the levy of special taxes or an increase therein must commence within 30 days of the tax’s approval by voters. Govt. Code §53341.

The city has the obligation to pay the principal and interest on each of the bonds issued for the CFD. Azusa, supra, 191 Cal. App. 4th at 18. The bonds are considered special obligations of the city payable solely from net special tax revenues. Id. at 18. The tax is levied against the real property within the CFD’s geographic boundaries. Id. at 18.

Although unpaid taxes constitute a lien on the real property, they do not constitute a personal indebtedness of any landowner, the developer, or any future property owner. Id. at 18. When the developer sells the individual parcels of land that have been developed into homes, the tax obligation shifts from the developer to the homeowner; the developer is under no further obligation to pay taxes on that property. Id. at 18.

The special tax is collected by the county treasurer-tax collector in the same manner as ad valorem property taxes, and the proceeds are transferred to the CFD's fiscal agent. Id. at 18. The fiscal agent then distributes the tax money as specified by the various funding agreements. Id. at 18.

On September 18, 2018, the City Council adopted Resolution 18-083 (Resolution of Intention), which defines the services and boundaries of the Carson CFD and the Future Annexation Area. City RJN Ex. 1. Any annexation of property to the Carson CFD from the Future Annexation Area requires unanimous approval of the property owners of those parcels but does not require any further public hearings or additional proceedings. Ex. 1. The proposed rate and apportionment of the special tax for the Carson CFD is set forth. Ex. 1.

On November 7, 2018, the City Council adopted Resolutions 18-119, 18-120, and 18-121. City RJN Exs. 2-4. Resolution 18-119 (Resolution of Formation) provides that all prior proceedings for the establishment of the Carson CFD are valid and conformed with the Mello-Roos Act (Govt. Code §53311 et seq.). City RJN Ex. 2. It sets forth the boundaries of the Carson CFD and the Future Annexation Area and expresses an intent to allow future qualifying projects the opportunity to voluntarily annex into the Future Annexation Area. Ex. 2. The City would levy the special tax on all non-exempt real property within the Carson CFD to pay for services. Ex. 2.

Resolution 18-120 calls for an election among the 12 qualified electors within the Carson CFD at the time to levy the special tax. City RJN Ex. 3. Per the approved ballot, this tax would start at no more than $1,971.51 per year and increase to $9,189.21 per year, subject to an index. City RJN Ex. 3.

Resolution 18-121 declares that the vote passed with a two-third majority and established the Carson CFD with the authority to levy the special taxes. City RJN Ex. 4.

On November 20, 2018, the City adopted Ordinance 1814, which authorizes and levies the special tax within the Carson CFD beginning in the 2018-2019 fiscal year and thereafter. City RJN Ex. 5.

On April 2, 2019, the City passed Resolution 19-009, which adopted administrative procedures for the annexation of properties in the Future Annexation Area and levying the special tax upon such properties. The Resolution defined a “Qualifying Project” for annexation into the Carson CFD. City RJN Ex. 6. It also approved the determinations of the 2019 FIA, which included the special tax rate for each category of project annexed into the Carson CFD. Ex. 6. These special tax rates correspond to the share of the cost of Carson CFD services for that type of property. Ex. 6. The Resolution also provided that the unanimous approval of a landowner needed for Carson CFD annexation would be fulfilled if the landowner seeks improvements on a parcel that constitute a Qualifying Project, the landowner files the appropriate application and pays the required fee, the City assesses a special tax rate that complies with the 2019 RIA, and the property owner submits a unanimous approval in the form attached to Resolution 19-009. City RJN Ex. 6.

On January 12, 2021, the City passed Resolution 21-003, which repealed Resolution 19-009. City RJN Ex. 7.[3] The recitals to Resolution 21-003 explain that the City Council determined that the 2019 FIA’s land use categories and zones do not fit within the tax formula of the Carson CFD, and individual annexation of property at a public hearing has provided more transparency. Ex. 7.

In its Answer to the FAC filed on July 16, 2019, the City admitted that the Carson CFD initially consisted of only one parcel of property. Opp. RJN Ex. 1 (Answer, ¶54). Watson did not vote on the formation of the Carson CFD boundary, the Future Annexation Area, or the amount of the taxes to be levied. Ex. 1 (Answer, ¶58). Although the Future Annexation Area consists of the entire City’s boundaries, the City only levied the special tax against the one parcel in the Carson CFD. Ex. 1 (Answer, ¶20).

The SAC had six causes of action and sought the invalidation and recission of the Resolutions that establish the future annexation requirement. SAC, ¶¶ 83-86; SAC Prayer for Relief, ¶1. The City demurred to the SAC, asserting that three causes of action were barred by the 30-day statute of limitations under the Mello Roos Act, Govt. Code section 53341. City RJN Ex. 8, p. 10. The gravamen of these claims was to challenge the election which authorized the City’s levy of special taxes to fund the Carson CFD. Ex. 8, p. 11. To the extent that the SAC was an as-applied challenge, the issue was not ripe. Ex. 8, p. 10.

On March 23, 2022, Department 45 (Judge Recana) sustained the City’s demurrer to the SAC’s six causes of action. Ex. 8. The first cause of action alleged that Defendants failed to allowed registered voters in the City to vote on the special taxes in the Carson CFD and Future Annexation Area, the second cause of action alleged that the City’s voting scheme for annexing properties into the Carson CFD violates Watson’s constitutional rights because it was deprived of the right to vote on the formation of the Carson CFD boundary, the Future Annexation Area, and the amount of taxes to be levied. Ex. 8, p. 13. The sixth cause of action alleged that the City Council did not establish legal criteria to guide staff in annexing properties into the Carson CFD and the approval predicated on the property owner’s agreement to annex its property into the Carson CFD or agreement to a special tax does not conform to the mandatory statutory criteria and constitutional protections that are relevant to the approvals or licenses the property owner seeks. Ex. 8, p. 14.

The court found that each of the three causes of action was ultimately aimed at attacking, reviewing, setting aside, voiding, or annulling the special tax under the Resolutions and Ordinance 1814. Ex. 8, pp. 15, 17. The first cause of action pertains to the City’s general electing and voting procedures, the second cause of action pertains to Watson’s right to vote, and the sixth cause of action pertains to the City’s general authority to levy the special tax and failure to conform to mandatory statutory criteria and constitutional protections. Ex. 8, pp. 14-15.

These allegations just provide different reasons why Watson should not be subject to the tax. Ex. 8, p. 15. The nature of the right sued upon is Watson’s right to not incur a special tax when the City failed to follow the proper voting, election, and other procedures necessary to authorize the special tax. Ex. 8, p. 17. Indeed, the SAC’ prayer seeks to invalidate or rescind the Resolutions. Ex. 8, p. 17. Watson fails to articulate how the nature of these causes of action is not to attack, review, set aside, void or annul the special tax. Ex. 8, p. 17. Watson failed to file the complaint within 30 days of when the special tax was approved by the voters, which is when the statute of limitations runs under Govt. Code section 53341. City RJN Ex. 8, pp. 15, 20. Altlhough Watson asserted that a theory of continuous violation per Howard Jarvis Taxpayers Ass’n v. City of La Habra (2001) 25 Cal.4th 809, the court rejected it. Ex. 8, pp. 19-20.

Because the third cause of action’s declaratory relief claim -- the City lacked authority to levy special taxes within the Future Annexation Area due to violations of both the U.S. and state Constitutions – was wholly derivative of the other causes of action, it suffered the same defect. Ex. 8, p. 24. The fourth and fifth causes of action for injunction and reverse validation also failed. Ex. 8, p. 24-26.

The Petition alleged three causes of action for reverse validation of the Carson CFD and CFD Resolutions and mandamus. Taber Decl., ¶3. It also alleged causes of action for declaratory and injunctive relief, seeking an order preventing the City from conditioning projects on annexation into the Carson CFD and payment of the special tax. Flowers Decl., ¶2. During an ex parte hearing on May 8, this court (Department 85) warned Watson that it would not proceed on both a mandamus petition and a reverse validation action. Taber Decl., ¶4.

On May 30, 2019, the City sent a meet and confer letter asserting that the Petition’s three causes of action were barred by the statute of limitations, warning that Watson’s failure to cure the defective pleading would compel the City to file a demurrer. Flowers Decl., ¶2, Ex. A.

On June 12, 2019, Watson filed the FAC alleging three causes of action for reverse validation, declaratory relief, and injunctive relief. Flowers Decl., ¶2; Taber Decl., ¶5. Because the FAC no longer included a mandamus claim, the parties stipulated for the case to be reassigned to an I/C department. Flowers Decl., ¶2.

After the City repealed Resolution 19-009 through Resolution 21-003 on January 12, 2021, Watson filed an ex parte application for leave to file an SAC to recognize these changes. Taber Decl., ¶¶ 8-9. On February 9, 2021, the I/C court granted Watson leave to file the SAC. Taber Decl., ¶9.

On February 11, 2021, Watson filed the SAC. Flowers Decl., ¶3. On March 9, 2021, the City sent notice to Watson that it intended to demur to the SAC because it purported to invalidate Resolution 21-003 and raise time-barred challenges to other Resolutions. Flowers Decl., ¶3, Ex. B. The City did not schedule an in-person or telephonic meet and confer. Taber Decl., ¶13. At the hearing, the court sustained the demurrer to the SAC with 20-day leave to amend. Taber Decl., ¶14.

On April 12, 2022, Watson filed the TAC, which had causes of action for declaratory relief and mandamus but not reverse validation. Taber Decl., ¶15. Watson did not have leave to add the mandamus cause of action. Taber Decl., ¶15; Flowers Decl., ¶4.

On May 6, 2022, counsel for City informed Watson that it intended to demur to the first cause of action based on the statute of limitations. Flowers Decl., ¶4, Ex. C. The City also intended to file a motion to strike the second cause of action for mandamus because Watson had added it without leave of the court. Flowers Decl., ¶4, Ex. C.

The parties had a telephonic meet and confer on May 20, 2022 but were unable to reach an agreement. Flowers Decl., ¶4. At another conference on May 23, 2022, Watson requested that the City stipulate to allow Watson to add the mandamus cause of action and the City refused. Taber Decl., ¶17. On May 27, 2022, Watson obtain a hearing date for a motion for leave to amend the TAC to add the mandamus cause of action. Taber Decl., ¶17.

On May 31, 2022, the City filed a demurrer to the TAC. Flowers Decl., ¶4. On October 20, 2022, Watson filed a motion for leave to amend to add the mandamus cause of action. Flowers Decl., ¶4. On December 5, 2022, Department 45 granted leave to amend and ordered that Watson refile the TAC within ten days. Flowers Decl., ¶4.

On December 12, 2022, Watson requested the City to stipulate that it could file a TAC with new factual allegations about Building II so that Watson would not need to file a 4thAC. Taber Decl., ¶19. Because the City refused, Watson refiled the TAC without the new allegations on December 14, 2022. Flowers Decl., ¶5; Taber Decl., ¶19.

On January 13, 2023, the City sent a letter reiterating its issues with the TAC. Flowers Decl., ¶5, Ex. D. Watson did not respond to requests to meet and confer. Flowers Decl., ¶5.

The City filed a demurrer to the TAC on January 18, 2023. Flowers Decl., ¶5. On January 19, 2023, Watson sent the City a letter asking it to withdraw the demurrer for failure to sufficiently meet and confer and because the City knew that Watson wanted to amend to include allegations about Building II. Taber Decl., ¶20.

On January 30, 2023, Watson filed a motion for leave to amend and file a 4thAC. Flowers Decl., ¶5. This court (Department 85) granted leave to amend on January 31, 2023. Traxler Decl., ¶2. Watson filed the 4thAC that day with allegations about Building II but no new cause of action. Taber Decl., ¶23. No new meet and confer occurred between that date and the instant demurrer. Taber Decl., ¶24.

The City demurs to the 4thAC, asserting that the statute of limitations has passed for both declaratory relief and mandamus.

1. The Limitations Periods for Challenges to CFD Formation and the Special Tax

The City points out (Dem. at 12-13) that a reverse validation action to challenge the validity of a public agency’s actions must be brought within 60 days under CCP section 860 et seq. “If no action is brought within the 60-day timeframe for a reverse validation, the public is forever barred from contesting the validity of the agency's action in a court of law.” Golden Gate Hill Development Co., Inc. v. Co. of Alameda, (2015) 242 Cal.App.4th 760, 767. This means that “unless an ‘interested person’ brings an action of his own under section 863 within the 60-day period, the agency's action will become immune from attack whether it is legally valid or not.” City of Ontario v. Super. Ct., (1970) 2 Cal.3d 335, 341-42.

The time limitation to challenge the validity of a special tax levied under the Mello-Roos Act is expressly shortened to 30 days. Govt. Code §53359. Thus, after the election on the levy of special taxes is held, there is a short period within which an action may be filed to attack the district’s formation and determination to levy the special tax. New Davidson Brick Co. v. County of Riverside, (“New Davidson”) (1990) 217 Cal.App.3d 1146, 1150-51. Govt. Code section 53341 states: “Any action or proceeding to attack, review, set aside, void, or annul the levy of a special tax or an increase in a special tax pursuant to this chapter shall be commenced within 30 days after the special tax is approved by the voters. . .” This section has been applied to challenges made on the grounds of the validity of a CFD’s formation. See New Davidson, supra, at 1150-51.

Based on the foregoing, any challenge to the formation of a CFD must be brought within 60 days and any challenge to the levy of special taxes must be filed within 30 days of the election on the levy of special taxes.

The City contends that the 4thAC’s first and second causes of action are barred by the statute of limitations. Dem. at 18-23.

The first cause of action for declaratory relief (previously the third cause of action) contends that “[t]he Defendants curtail Watson’s free choice to decide whether to vote for the levy of the special parcel tax, the amount of the special parcel tax, and annexation of its properties. Under the City's scheme, Watson has no free choice and must give its “unanimous approval” of the special parcel tax and annexation, or its Buildings I and II will be disapproved. 4thAC, ¶64. The first cause of action further alleges that “[t]he Defendants require that each property owner must mark the ballot in favor of levying the special parcel tax and annexing its property into the Carson CFD and then submit the open ballot to City officials so that the City officials can confirm the specific property owner voted ‘yes’.” 4thAC, ¶67 (emphasis added). Dem. at 18.

In addition, the first cause of action alleges that the City has violated Watson’s Fifth Amendment rights, that the “special tax rate is not ‘proportional’ to the burden that the property will place on the community,” and that a judicial declaration should issue that Defendants cannot lawfully condition Watson’s Projects on a vote to impose a special parcel tax or approve annexation of its Property into the Carson CFD because such a condition violates the United States and California Constitutions and the Mello-Roos statute. 4thAC, ¶¶ 69-74 (emphasis added). Dem. at 18.

The City argues that, despite the 4thAC’s assertion to the contrary, the first cause of action continues to challenge the formation of the Carson CFD and the levy of the special tax, as demonstrated by its allegation of the following:

“The Defendants also violated the Fifth Amendment of the United States Constitution substantive due process protections by conditioning development approval on Watson agreeing to pay a nominal tax, set on an ad hoc basis, to fund local services, but without any rational connection or nexus between the amount of the tax, the impacts of the proposed development, and the activities to be funded by the tax. [¶] The special parcel tax must be fairly related to benefits provided the landowners in the CFD and proportional, which ensures that the amount of the tax is not more than the property’s burden or fair share. There is no fiscal impact analysis that the Defendants rely upon to satisfy constitutional requirements that there be a nexus between the tax rate imposed (which as conditions of approval are also exactions) and the impacts attributed to the property or whether the tax rate is “proportional” to the burden that the property will place on the community.” 4thAC, ¶¶ 71-72 (emphasis added); Dem. at 18.

Lastly, the first cause of action seeks a prohibitory injunction “commanding Defendants immediately cease and desist the imposition of a requirement for Watson and any other property owner to pay a special parcel tax or annex property into the CFD as a condition of any type of City approval or license.” (Emphasis added). It alleges that “[t]here is a serious risk of harm to Watson and other property owners absent injunctive relief. Defendants have an obligation to comply with the Constitutions and applicable statutory law, and not violate Watson’s rights.” FAC, ¶76. The 4thAC’s addition of factual allegations showing that the City is expanding the Carson CFD does not alter the nature of the; the City could apply the Carson CFD any number of times and Watson will still be challenging the formation of the Carson CFD and the levy of special taxes. Dem. at 19.

The second cause of action for mandamus similarly alleges: “Defendants have a clear, present, and mandatory duty not to violate state and federal law in the ways described above. Watson has a clear, present and beneficial right in Defendant’s performance of its duties and actions in a manner prescribed by and in obedience to California and federal laws, including the United States Constitution and the California Constitution.” 4thAC, ¶78. Watson claims that “the Court can compel the Defendants to follow these mandatory laws and constitutional requirements.” 4thAC, ¶80. Despite its assertion that Watson does not seek a writ regarding the legality of Resolutions 18-083, 18-119, 18-120, 18-121, and 21-003, the Prayer for Relief #2 requests a writ of mandate directing the City to refrain from conditioning approval for its industrial projects on agreeing to vote in favor of annexing Buildings I and II into the Carson CFD and payment of the special parcel tax. This challenge is exactly what is prohibited by the statute of limitations. Dem. at 19.

The City notes that “[i]t is an elementary principle of modern pleading that the nature and character of a pleading is to be determined from its allegations, regardless of what it may be called, and that the subject matter of an action and issues involved are determined from the facts alleged rather than from the title of the pleadings….” B.L.M. v. Sabo & Deitsch, (1997) 55 Cal.App.4th 823, 842 (citation and internal quotations omitted). Despite Watson’s attempts to alter the nature of its claims in the 4thAC, they still fall within the statute of limitations for a reverse validation action. The only question in this case is the validity of the legislative enactments at issue and the period within which Watson could bring a challenge to those legislative enactments. The City has already conclusively established that an attack to the voting and election procedures the City used in enacting the Resolutions is barred by Government Code section 53341. City RJN Ex. 8, pp. 15-16. Thus, it is still clear that the gravamen of Watson’s challenge is to the formation of the CFD and the levy of special taxes, both of which occurred on November 7, 2018, and for which the statute of limitations passed well-before Watson filed its Complaint on May 8, 2019. Dem. at 19-20.

In all of Watson’s pleadings, it has challenged the City’s alleged efforts to require annexation into the Carson CFD and levy the special tax on properties. The 4thAC challenges the City’s alleged actions in the same way but does not alter the application of the statute of limitations provided in the Mello-Roos Act. It phrases the matter differently. See FAC ¶¶ 55-74. Its requested relief is aimed at attacking, reviewing, setting aside, voiding, or annulling the special tax enacted under the Resolutions for which the statute of limitations has passed. Govt. Code § 53341. Such a claim is time-barred, no matter how Watson tries to plead it and no matter to which court department Plaintiff tries to transfer this case. Dem. at 20.

As a threshold matter, the court must determine which form of mandamus applies to the second cause of action. CCP section 1094.5 is the administrative mandamus provision which structures the procedure for judicial review of adjudicatory decisions rendered by administrative agencies. Topanga Ass’n for a Scenic Community v. County of Los Angeles, (1974) 11 Cal.3d 506, 51415. Administrative mandamus lies when by law a hearing is required to be given, evidence is required to be taken, and discretion in the determination of facts is vested in the inferior tribunal, corporation, board, or officer. CCP §1094.5(a). A traditional writ of mandate is the method of compelling the performance of a legal, ministerial duty required by statute. See Rodriguez v. Solis, (1991) 1 Cal.App.4th 495, 501-02. Generally, mandamus will lie when (1) there is no plain, speedy, and adequate alternative remedy, (2) the respondent has a duty to perform, and (3) the petitioner has a clear and beneficial right to performance.” Pomona Police Officers’ Assn. v. City of Pomona, (1997) 58 Cal.App.4th 578, 583-84 (internal citations omitted).

Whatever else the 4thAC alleges, its principal claim is a challenge to the City’s conditioning approval of Buildings I and II on Watson’s vote in favor of annexation of its property to the Carson CFD and payment of the special property tax in perpetuity. 4thAC, ¶53. The City’s conditions for approval compel Watson’s waiver of its First Amendment rights and rights under California Constitution XII A, XIII C, and XIII D in violation of the unconstitutional conditions doctrine. 4thAC, ¶68. Under the U.S. Constitution, California Constitution, and Mello-Roos Act, the City cannot condition approval of its projects on a vote to impose a special parcel tax or approve annexation of the underlying property into the Carson CFD. 4thAC, ¶¶ 74, 78. Watson seeks a declaration, writ of mandate, and injunction prohibiting the City from conditioning approval of Buildings I and II on Watson’s agreement to vote in favor of annexing the underlying properties into the Carson CFD or to pay the special parcel tax. 4thAC Prayer for Relief, ¶¶ 1-3.

Watson’s claim that the City may not coerce a vote by Watson in favor of annexation is based on mandatory statutory and constitutional duties. Neither party points to a hearing required by law to address this coerced agreement. As such, Watson’s mandamus claim lies in traditional mandamus. CCP section 1085 et seq. is silent on which statute of limitations governs an action for a traditional writ of mandate. Green v. Obledo, (1981) 29 Cal. 3d 126, 141, n. 10. The courts resolve the issue based on the nature of the underlying right or obligation that the action seeks to enforce. Id.

The City argues that this traditional mandamus cause of action is barred by the statute of limitations, and also by the validation statutes. Watson couches its requests for relief in different terms than its prior complaints, but the ultimate result sought is still the same. Since the gravamen of the mandamus cause of action is identical to the gravamen of the prior causes of action, Department 45’s reasoning regarding the applicability of the Mello-Roos statute of limitations (Govt. Code §53341) applies no matter the form of the cause of action. The second cause of action for mandamus is an action “to attack, review, set aside, void, or annul the levy of a special tax” under the Mello-Roos Act, and is subject to a 30-day statute of limitations. Thus, the 4thAC’s traditional mandamus claim fails. Dem. at 22.

The City contends that the 4thAC’s first cause of action for declaratory relief similarly is time-barred. Declaratory relief is an equitable remedy, not an independent cause of action, and it fails when the underlying right sued upon fails. “The nature of the right sued upon and not the form of the action, nor the relief demanded, determines the applicability of the statute of limitations.” Maguire v. Hibernia S. & L. Soc., 23 Cal.2d 719, 733; Snyder v. Cal. Ins. Guarantee Assn. (2014) 229 Cal.App.4th 1196, 1208 (“All civil actions for declaratory relief are subject to statutes of limitations.”). An action for declaratory relief may not be used to circumvent the statute of limitations. Tostevin v. Douglas, (1958) 160 Cal. App. 2d 321, 330. Because Watson’s underlying challenge to the election, levy of special taxes, and annexation requirements is barred by the statute of limitations, Watson has not alleged an actual controversy.

The City notes that Department 45 previously held that the SAC’s declaratory relief claim (third cause of action) is based on the allegations that Defendants did not have authority to levy special taxes within the Future Annexation Area due to their alleged violations of California laws and the U.S. Constitution, and that this claim is wholly derivative of the first, second, and sixth causes of action. As such, this claim is subject to demurrer for failure to state facts sufficient to constitute a cause of action. . .” City RJN, Ex. 8, pp. 26-27. Dem. at 21.

The court does not agree. As stated ante, the gravamen of Watson’s claim is that the City is coercing it to vote in favor of Carson CFD annexation and payment of the special property tax in perpetuity as conditions for approval of Buildings I and II. 4thAC, ¶53. This coerced vote compels a waiver of Watson’s First Amendment rights and rights under California Constitution XII A, XIII C, and XIII D in violation of the unconstitutional conditions doctrine and the Mello-Roos Act. 4thAC, ¶¶ 68, 74; 4thAC Prayer for Relief, ¶¶ 1-3. The 4thAC also expressly disavows challenging the Resolutions that formed the Carson CFD. 4thAC, ¶¶25, 74.

The nature of the right sued upon – that is, the primary interest invaded by the defendant’s wrongful conduct -- determines the statute of limitations. Barton v. New United Motor Mfg., Inc., (1996) 43 Cal.App.4h 1200, 1207. The 4thAC alleges Watson’s right not to be coerced into annexing its property into the Carson CFD and does not concern the formation of the Carson CFD or levy of the special tax. Indeed, Watson’s whole point is that it is outside the Carson CFD and does not want to be part of it. Yet, the City’s development conditions for two Watson’s projects compel it to do so.[5] As such, it is not barred by the validation statute’s 60-day limitations period to challenge the formation of a CFD or by the 30-day limitations period in Govt. Code section 53359 to challenge the levy of special taxes. Watson is not contending that the Carson CFD was not lawfully formed or that the special taxes for properties within the Carson CFD were wrongly calculated. It is contending that it cannot be compelled to vote in favor of joining the Carson CFD and agree to the special tax imposed.

Watson’s claims accrued when the City notified it for each property that a condition for approval of the Building I and II projects required either Watson’s agreement to annex the property into the Carson CFD or establish a funding mechanism acceptable to the City to pay the special tax. For Building I, this occurred no earlier than the City’s March 4, 2021 letter stating as much. 4thAC, ¶32. For Building II, this occurred on September 1, 2022. 4thAC ¶36. The TAC was filed on April 12, 2022 alleging the City’s coercion with respect to Building I. Taber Decl., ¶15. The 4thAC filed on January 31, 2023 alleges the City’s coercion with respect to Building II. Taber Decl., ¶22. Thus, Watson filed its as-applied fact allegations for Building I within 13 months of accrual, and for Building II within five months of accrual. The City does not provide the correct statute of limitations or show that it has passed for either claim. Therefore, the demurrer must be overruled.

Department 45’s demurrer ruling for the SAC does not foreclose this ruling on Watson’s as-applied claim. Judge Recana essentially found that the first cause of action alleged that Defendants failed to allowed registered voters in the City to vote on the special taxes in the Carson CFD and Future Annexation Area, and that the second cause of action alleged that the City’s voting scheme for annexing properties into the Carson CFD violates Watson’s constitutional rights because it was deprived of the right to vote on the formation of the Carson CFD boundary, the Future Annexation Area, and the amount of taxes to be levied. City RJN Ex. 8, p. 13. The sixth cause of action alleged that the City Council did not establish legal criteria to guide staff in annexing properties into the Carson CFD and the approval predicated on the property owner’s agreement to annex its property into the Carson CFD or agreement to a special tax does not conform to the mandatory statutory criteria and constitutional protections that are relevant to the approvals or licenses the property owner seeks. Ex. 8, p. 14.

The court found that each of the three causes of action was ultimately aimed at attacking, reviewing, setting aside, voiding, or annulling the special tax under the Resolutions and Ordinance 1814. Ex. 8, pp. 15, 17. The three claims just provided different reasons why Watson should not be subject to the special tax. Ex. 8, p. 15. The nature of the right sued upon was Watson’s right to not incur a special tax when the City failed to allow it to participate in voting, election, and other procedures necessary to authorize the special tax. Ex. 8, p. 17. Indeed, the SAC’ prayer seeks to invalidate or rescind the Resolutions. Ex. 8, p. 17. The third cause of action’s declaratory relief claim – that the City lacked authority to levy special taxes within the Future Annexation Area due to violations of both the U.S. and state Constitutions – was wholly derivative of the other causes of action and suffered the same defect. Ex. 8, p. 24.

Thus, Judge Recana’s ruling was based on a conclusion that Watson was challenging the formation of the Carson CFD and the amount of taxes to be levied. As the City describes it, Judge Recana found that Watson’s attack on the voting and election procedures the City used in enacting the CFD Resolutions and the levy of the special tax is barred by Govt. Code section 53341. Reply at 2. That is not the case for the 4thAC’s claim of unlawful coercion. Only the SAC’s sixth cause of action comes close to addressing this issue, but it only alleged that the City Council did not establish legal criteria to guide staff in annexing properties into the Carson CFD predicated on the property owner’s agreement to annex its property into the Carson CFD or agreement to a special tax that conformed to the mandatory statutory and constitutional protections. While the 4thAC still complains about the ad hoc nature of City staff’s property-by-property coercion (see 4thAC, ¶29), its gravamen is not about the lack of legal criteria but rather the involuntary nature of the required approval of annexation and payment of special tax. It is not a challenge to the special tax levied pursuant to the Mello-Roos Act and Govt. Code section 53341’s 30-day limitations period does not apply. Nor does the validation statute’s 60-day limitations period apply because Watson is not challenging the validity of any agency action to which the validation statutes would apply. Opp. at 18-19.

The facts alleged in the 4thAC also differ in two key aspects from the SAC. First, the SAC was filed on February 11, 2021, before the March 4, 2021 date when the City conditioned Watson’s DOR permit for Building I on its agreement to either annex the property to the Carson CFD or established a funding mechanism to provide an ongoing source of funds. 4thAC, ¶32. It also was before the same condition was imposed for Building II on September 1, 2022. 4thAC, ¶36. According to the 4thAC, the lack of legal criteria alleged in the SAC’s sixth cause of action ripened into an illegal condition. This as-applied challenge did not exist when Judge Recana made his demurrer ruling. Second, the SAC sought recission of the Resolutions forming the Carson CFD and levying the special taxes. SAC Prayer for Relief, ¶1. The 4thAC does not do so. 4thAC Prayer for Relief, ¶¶ 1-3. Because of these differences, Department 45’s ruling on the demurrer for the SAC does not govern the City’s demurrer to the 4thAC.

The City asserts that any challenge to its authority to levy the special tax is barred because Resolution 18-121 and Ordinance 1814 gave it that authority. Reply at 7. Not so. These City Council actions only gave the City the authority to levy the special tax within the Carson CFD. City RJN Ex. 5. The City has admitted that the Carson CFD initially consisted only of one parcel of property, that it only levied the tax against that Property and not the Future Annexation Area, and that Watson did not vote. Opp. RJN Ex. 1 (Answer, ¶¶ 20, 54, 58). The special taxes of the Carson CFD did not apply to Buildings I or II at the time of the Carson CFD’s formation and can only apply if Watson voluntarily annexes those properties to the Carson CFD afterwards. Govt. Code §53328.1(a). The key to Watson’s position is the word “voluntary”.

The City cites Watson’s opposition (Opp. at 12) as evidence that Watson admits that the annexation of its properties is voluntary. Reply at 6. This misstates Watson’s assertions. Watson asserts that it paid the annexation fee under protest because it needed the permit to demolish and replace Building II by March 2024 to avoid a breach of contract. 4thAC, ¶¶ 37, 51. The City refused to process the annexation payment and gave Watson the permit only when Watson withdrew the protest. 4thAC, ¶¶ 39-40. This alleged coercion does not affect Watson’s claim for Building II and has no bearing on Building I. The 4thAC does not object to voluntary annexation. It alleges that annexation cannot be voluntary when the City conditions building permits for an approved project on annexation and forces the property owner to waive any right to protest, as here. 4thAC, ¶41.

The City asks what this action is if not a challenge to the special tax? Reply at 3. The answer is that it is a challenge to Watson’s compelled agreement for annexation of its property to the Carson CFD and levy of a special tax. The action is not a reverse validation action, and the 30-day statute of limitations in Govt. Code section 53341 to challenge the levy of a special tax and the validation statute’s 60-day limitations period to challenge the formation of a CFD do not apply. The City has failed to show what the correct limitations period is or that the action is time-barred under such limitations period.

The City’s demurrer to the 4thAC is overruled. The City has 20 days to answer only.

[1] The City’s 17-page opening brief violates the 15-page limit of CRC 3.1113(d). Its counsel is admonished that the court will strike any City brief violating the required page limits in the remainder of this case. The Cit also failed to lodge a courtesy copy of its reply in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing.

[2] Respondents request judicial notice of (1) Resolution 18-083 adopted by the City on September 18, 2018 (City RJN Ex. 1); (2) Resolution 18-119 adopted by the City on November 7, 2018 (City RJN Ex. 2); (3) Resolution 18-120 adopted by the City on November 7, 2018 (City RJN Ex. 3); (4) Resolution 18-121 adopted by the City on November 7, 2018 (City RJN Ex. 4); (5) Ordinance 1814 adopted by the City on November 20, 2018 (City RJN Ex. 5); (6) Resolution 19-009 adopted by the City on April 2, 2019 (City RJN Ex. 6); (7) Resolution 21-003 adopted by the City on January 12, 2021 (City RJN Ex. 7); and (8) the court’s decision on the City’s demurrer to the SAC dated March 23, 2022 (City RJN Ex. 8). Watson’s objections are overruled. The court judicially notices RJN Exhibits 1-7. Evid. Code §452(b). The court does not need to judicially notice City RJN Exhibit 8; a court always may review anything in the existing court file.

Watson requests judicial notice of the City’s Answer to the FAC, dated July 16, 2019. Opp. RJN Ex. 1. As with the other court filing, the court need not judicially notice a filing in the present case.

[3] Watson contends that the City did so to avoid a reverse validation trial. As a result of the repealof Resolution 19-009, there is no resolution establishing the procedure for the City to require property owners to annex their property into the Carson CFD and pay the special parcel tax. 4thAC, ¶25. Instead, the City engages in the illegal pattern of compelling property owners one-by-one to approve annexation of their property into the Carson CFD and vote to levy the special parcel tax. 4thAC, ¶26. Opp. at 8.

[4] The city objects to the Declaration of Arlene M. Taber as inappropriate on demurrer. The court has considered this evidence only to gain an understanding of the course of proceedings and not for the merits of the demurrer.

[5] The City’s position is that Watson’s annexation into the CFD is voluntary – apparently because Watson could choose not to annex its property – is an issue for trial that does not bear on the City’s statute of limitations arguments. The court cannot decide the merits of the voluntariness/coercion issue on demurrer.