Judge Salvatore Sirna, Case Number: 21PSCV00526, Date: 2023-08-16 Tentative Ruling

Judge: Salvatore Sirna, Case: 21PSCV00526, Date: 2023-08-16 Tentative Ruling

Case Number: 21PSCV00526 Hearing Date: September 28, 2023 Dept: G

Defendant City of Baldwin Park’s Motion for an Automatic Stay of Proceedings

Respondent: Plaintiff Independent Cities Risk Management Authority

TENTATIVE RULING

Defendant City of Baldwin Park’s Motion for an Automatic Stay of Proceedings is CONTINUED to be heard concurrently with Plaintiff Independent Cities Risk Management Authority’s Motion for Summary Judgment on January 17, 2024.

BACKGROUND

This is a breach of contract action arising from a municipal insurance agreement. Plaintiff Independent Cities Risk Management Authority (ICRMA) is a joint powers authority formed for purposes of self-insurance pooling among its members. ICRMA required members to pay for deficiencies in funding for certain liability program years and gave members the option of paying the assessment over a ten-year period. At the time of this assessment, Defendant City of Baldwin Park (the City) was a member of the ICRMA. The City elected to make installment payments and tendered the first two payments in 2018 and 2019.

On July 1, 2019, the City terminated its membership with ICRMA. Pursuant to ICRMA’s bylaws, ICRMA then invoiced the City for $114,935 in exit fees due August 16, 2019; $57,468 in exit fees due August 12, 2020; and $131,234.84 in assessment payments due August 12, 2020. ICRMA alleges the City refused to pay the invoiced amounts.

On June 24, 2021, ICRMA filed a complaint against the City and Does 1-50, alleging (1) breach of contract and (2) declaratory relief.

On June 28, 2023, the City filed an ex parte application for an order shortening the time to hear a motion for an automatic stay of proceedings. On June 29, the court granted the City’s motion and set a hearing for the motion to stay proceedings on August 16. On August 16, the court continued the hearing in order for parties to submit additional briefing.

A hearing on the motion is set for September 28, 2023. A hearing on a motion for summary judgment is set for January 17, 2024, with a mandatory settlement conference on February 8 and a post-mediation status conference/trial setting conference on February 26.

ANALYSIS

The City moves for an automatic stay of the present action because of an appeal pending in a separate but similar action. For the following reasons, the court CONTINUES the City’s motion.

Legal Standard

“Trial courts generally have the inherent power to stay proceedings in the interests of justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33 Cal.App.4th 1484, 1489.) They also have inherent powers to manage and fashion procedures to control litigation and ensure the orderly administration of justice. (Cottle v. Superior Court (1992) 3 Cal.App.4th 1367, 1376-79; see also Code Civ. Proc., § 128, subd. (a)(3) and (a)(5).)

Discussion

Here, the City moves for a stay pending the resolution of an appeal in City of Redondo Beach v. Independent Cities Risk Management Authority, Case No. BC674909 (Redondo Beach case). The City argues that case involves the same issues as this action, including whether ICRMA had the authority to issue the November 2016 assessment to its members and (2) whether the November 2016 assessment was calculated in accordance with ICRMA’s governance documents. In opposition, ICRMA argues the City has waived any challenge to the November 2016 assessment by voting for the assessment and by agreeing to pay the assessment. In response, the City argues the doctrine of waiver is not applicable because ICRMA’s actions were voided by the November 2016 assessment’s alleged noncompliance with ICRMA’s governing documents.

Both parties agree that the binding agreement in this case is the Joint Exercise of Powers Agreement for Insurance and Risk Management Purposes. (City Suppl. Brief, p. 8:3-5; ICRMA Supp. Brief, p. 3:12-26.) The agreement creates the ICRMA for the purposes of developing and designing risk management programs for its membership and vests ICRMA with the authority to establish bylaws for its risk management programs. (City Suppl. Brief, Ex. 3., art. 2, 9.) In this case, the City argues it cannot be held liable for breach of contract because the November 2016 assessment was not conducted in accordance with ICRMA’s bylaws. In other words, the City argues ICRMA’s alleged failure to satisfy the conditions of its governing documents excuses the City’s nonperformance. (See Mainieri v. Magnuson (1954) 126 Cal.App.2d 426, 429 [failure to perform condition precedent can excuse performance dependent on that condition].)

“[A] contract entered into by a governmental entity without the requisite constitutional or statutory authority is void and unenforceable.” (Air Quality Products, Inc. v. State of California (1979) 96 Cal.App.3d 340, 349.) While the City relies on this rule in its argument, it does not argue the ICRMA lacked authority to issue assessments that bind its members. (City Suppl. Brief, p. 6:26-7:28.) Instead, it uses this rule to argue the November 2016 assessment itself is void because it did not comply with ICRMA’s bylaws. (City Suppl. Brief, p. 7:18-28.) But this argument fails as the November 2016 assessment is not a contract and instead constitutes ICRMA’s performance of its obligations pursuant to the joint powers agreement. This is an important distinction as issues involving the performance of contractual obligations can be waived in contrast with a contract that is void. (Compare Spellman v. Dixon (1967) 256 Cal.App.2d 1, 4 [“[A] contracting party may waive provisions placed in a contract solely for his benefit.”], with Tufeld Corporation v. Beverly Hills Gateway, L.P. (2022) 86 Cal.App.5th 12, 27 [“[I]f a contract is void and not merely voidable, the equitable defenses of estoppel, laches, and waiver do not apply.”].)

Because this case involves ICRMA’s contractual obligations pursuant to the joint powers agreement as opposed to the validity of the joint powers agreement itself, the court finds the doctrine of waiver and estoppel are applicable. Thus, even if the November 2016 assessment was not conducted in accordance with ICRMA’s bylaws, the City may still be liable if ICRMA can establish the City waived any defects with the assessment. Because the issue of waiver requires a review of the material facts and is addressed by ICRMA’s separate motion for summary judgment, the court finds the City’s request for a stay to be premature.

Accordingly, the court will CONTINUE the City’s motion to be heard concurrently with ICRMA’s motion for summary judgment.

CONCLUSION

Based on the foregoing, the City’s motion is CONTINUED to be heard concurrently with ICRMA’s motion for summary judgment on January 17, 2024.