Judge Mitchell L. Beckloff, Case 19STCP03681 2023-01-25 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 19STCP03681, Date: 2023-01-25 Tentative Ruling

On August 27, 2019, Petitioners, Angela Flores, Marysia Wojick and Priscela Izquierdo (collectively, Petitioners) filed a petition for a writ of mandate seeking a court order compelling Respondent, The People of the State of California, acting by and through the Department of Transportation (Caltrans), to comply with the Roberti Law (Government Code sections 54235 to 54238.9) and Roberti Regulations (California Code of Regulations, title 21, sections 1475 to 1491) and the corresponding Emergency Regulations adopted May 31, 2019. (See generally Second Amended Petition (SAP); Caltrans’ Request for Judicial Notice (RJN) Ex. 1.)[1]

In the underlying proceeding, Caltrans and Petitioners disputed the price of surplus homes Caltrans offered for sale. The issue concerned price. More specifically, was Caltrans required to sell its surplus homes at the “original acquisition price,” or at the original acquisition price adjusted for inflation? Caltrans asserted it had the authority to adjust the offer price for inflation.

On October 22, 2020, the trial court (Hon. James C. Chalfant) denied the petition. The court explained “[m]andamus will not lie to compel Caltrans to offer the properties to Petitioners at any price other than the inflation adjusted price. Caltrans also has the right to include terms in the sale contracts that clarify and protect its rights as a contracting public entity.” (RJN, Ex. 2, p. 18.) Petitioners appealed the ruling.

“On appeal, the parties’ dispute centers on whether Caltrans may be compelled, through a writ of mandamus and injunctive relief, to sell appellants the homes at the original purchase price without adjusting for inflation.” (Flores v. Department of Transportation (2022) 76 Cal.App.5th 678, 680.)

In July 2021, while the appeal was pending, the Legislature amended several sections of the Roberti Law, including Government Code section 54237.9. In the amendments, the Legislature added a sentence specifically precluding any adjustment to the original acquisition price for inflation in the sale of surplus residential property. (Gov. Code, § 54237.9; RJN, Ex. 7) Government Code section 54237.9 states in full:

“Notwithstanding any other provision in this article, except for subdivision (f) of Section 54237, the price of property sold pursuant to this article shall not be less than the price paid by the Department of Transportation for original acquisition of the property. The original acquisition price shall not be adjusted for inflation, except as provided in subdivision (f) of Section 54237.”

Effective July 23, 2021—while Petitioners’ appeal was pending—the Legislature made clear: “The original acquisition price shall not be adjusted for inflation . . . .” (Gov. Code, § 54237.9.)

In the Court of Appeal, the parties disputed whether the amended version of Government Code section 54237.9 could be applied to their dispute. Ultimately, the Court of Appeal reversed the court’s earlier decision. The Court of Appeal remanded the matter and instructed the court to apply the current version of Government Code section 54237.9 to the parties’ dispute. (RJN, Ex. 3, p. 8. [“The judgment is reversed and remanded for the trial court to apply the revised version of section 54327.9 in adjudicating the petition.”][Emphasis added].)

The Court of Appeal held: “It is unclear whether our holding that the sales price is to be calculated utilizing the revised language in section 54237.9 means the parties will agree on the calculation. It is appropriate for the trial court to consider in the first instance what new calculations are compelled by our decision.” (RJN, Ex. 3, p. 8.)

Caltrans previously advised the court it evaluated the financial information submitted for each Petitioner (in 2017) to determine whether each Petitioner was eligible to purchase Caltrans’ surplus property and, if so, the affordable prices of the properties. (Case No. BS173007, Opposition Brief filed October 29, 2018, pp. 4:26-5:2.)[2] Caltrans calculated the “affordable price of the properties . . . based on submitted income documentation.” (Id. at p. 5:3-4.) For each of the Petitioners, “the income was so low that an affordable price could not be calculated as the calculation resulted in less than zero; thus, resulting in an affordable price below the original acquisition price paid by Caltrans when it first acquired the properties.” (Id. at p. 5:4-6.) Caltrans advised the court Caltrans acquired Petitioner Flores’ property for $23,733, Petitioner Wojcik’s property for $32,600 and Petitioner Izquierdo’s property for $314,000. (Id. at p. 5:21-25.)

On remand, the court and the parties agreed the court would reconsider the matter (as instructed by the Court of Appeal) on briefing by the parties.

Caltrans argues the Court of Appeal decision makes clear Petitioners now “must comply with all of the new laws and regulations such that they will have to provide the following information in order to calculate the affordable price for their respective homes.” (Opening Brief 6:21-24 [emphasis added].) Caltrans specifically argues under the amended law:

“[Petitioner’s] eligibility and ability to qualify to purchase their respective homes must be re-evaluated based on the current law and regulations. Accordingly, a new appraisal of the homes is required and Petitioners must provide new (updated) income information for the purposes of calculating a new affordable price in accordance with the new law and regulations.” (Caltrans Opening Brief 3:11-16.)

Caltrans argument relies on California Code of Regulations, title 21, sections 1481 and 1481.2. The current regulations were adopted in December 2021 after Caltrans last determined the Calculated Affordable Price of the properties. According to Caltrans, the current regulations contain requirements different than those in 2017 when Caltrans last determined Petitioner’s eligibility to purchase the properties.

Petitioners argue Caltrans is required to sell the surplus property to them at the price Caltrans calculated as the Calculated Affordable Price in 2018. Despite California Code of Regulations, title 21, section 1475, subdivision (h) expressly governing the requirements of sale for

property offered for sale . . . between July 26, 2106 and December 12, 2021 and did not enter escrow . . .”, Petitioners assert the “Court should ignore 21 CCR 1475(h) as contrary to law.” (Pet’s’ Opening Brief 5:26-27.) Petitioners do not cite any specific legal authority to authorize the court to ignore a regulation. The Court of Appeal opinion does not provide such authority.

The Court of Appeal instructed this court “to apply the revised version of section 54327.9 in adjudicating the petition.” (Emphasis added.) Government Code section 54327.9 states:

“Notwithstanding any other provision of this article, except for subdivision (f) of Section 54237, the price of property sold pursuant to this article shall not be less than the price paid by the Department of Transportation for original acquisition of the property. The original acquisition price shall not be adjusted for inflation, except as provided in subdivision (f) of Section 54237.

Petitioners sought certain relief in their petition. The finds Petitioners are entitled to relief—the sales price calculated by Caltrans is invalid under Government Code section 54237.9. The Court of Appeal reversed the judgment in favor of Caltrans. Caltrans may not—as it purported to do until the Court of Appeal required otherwise—to sell surplus property to Petitioners at a price adjusted for inflation. That is, Caltrans incorrectly determined the sales price of Petitioners’ properties.

Accordingly, based on the relief requested in the SAP, (1) Caltrans may not sell its surplus properties to Petitioners at the calculated affordable price adjusted for inflation based on Government Code section 54327.9, and (2) Caltrans shall recalculate the sales price for Petitioners’ properties in compliance with Roberti Law and applicable regulations. Finally, the court declares Caltrans may not adjust sales prices for surplus residential properties by inflation. Such relief is consistent with the petition’s prayer.

To the extent Petitioners contend the court should apply current law as to one issue raised by their petition (Government Code section 54327.9) but not others, Petitioners ignore the Court of Appeal’s decision here. “[T]he relief sought is prospective.” (RJN, Ex. 3, p. 7.) Petitioners “seek a writ of mandate and/or injunction compelling Caltrans to sell them homes they currently rent at a certain price and to re-draft the sales offers accordingly.” (RJN, Ex. 3, p. 7-8.) It is clear Caltrans may not lawfully proceed pursuant to the sales price it previously provided to Petitioners. Caltrans must therefore recalculate the sale price of the properties consistent with the law. The court cannot know in advance how Caltrans might make that calculation or what that calculation might be. If Petitioners take issue with Caltrans actions, Petitioners may seek their legal remedies.

Based on the foregoing, Petitioners are entitled to relief. Caltrans is ordered to determine the Calculated Affordable Price of Petitioners’ properties without reference to adjustments for inflation.

[1] Caltrans request for judicial notice (RJN) of exhibits 1 through 9 is granted.

[2] Petitioners’ request for judicial notice of Caltrans’ Opposition Brief in Case No. BS173003 filed October 29, 2018 is granted. (See Pets’ Opening Brief 3:10-11.)