By Cori Badgley
In Los Altos Golf and Country Club v. County of Santa Clara (June 30, 2008) 2008 Cal.App.Lexis 1149, plaintiffs brought a class action demanding a refund from the City of Los Altos of sewer service charges paid by plaintiffs on the grounds that the fees violated Article XIII D of the California Constitution and the Health and Safety Code. Instead of allowing plaintiffs to make any substantive arguments, the City and the County ("Respondents") claimed that the case should be dismissed because the plaintiffs had failed to pay the fees under protest, as required by the Health and Safety Code. The Court of Appeal, Sixth Appellate District agreed with the Respondents and dismissed the case. Sewer service charges must first be paid under protest in order to later request a refund.
The crux of this case involved the detailed statutory interpretation of various provisions of the local municipal code, the Health and Safety Code, and the Revenue and Taxation Code. Sewer service charges are generally governed by Article 4, Chapter 6, Part 3, Division 5 of the Health and Safety Code. Section 5472 of Article 4 states:
After fees, rates, tolls, rentals or other charges are fixed pursuant to this article, any person may pay such fees, rates, tolls, rentals or other charges under protest and bring an action against the city or city and county . . .
If this was the only sentence you read, you would easily conclude that payment under protest is required. However, that section later states:
Payments made and actions brought under this section, shall be made and brought in the manner provided for payment of taxes under protest and actions for refund thereof in Article 2, Chapter 5, Part 9, of Division 1 of the Revenue and Taxation Code. . .
In addition, section 5473.8 of the Health and Safety Code makes all laws applicable to the levy, collection and enforcement of general taxes applicable to sewer-related charges. Neither Article 1 nor Article 2 of Chapter 5 in the Revenue and Taxation Code contain provisions for payment under protest. In fact, the payment under protest provisions were previously repealed by the legislature.
Relying on the applicability of the Revenue and Taxation Code to sewer-related charges, plaintiffs argued that although sewer service charges may be paid under protest, it was not required pursuant to the scheme laid out for general taxes. The court had a different perspective. When the legislature repealed the protest procedures for property taxes under Articles 1 and 2 of Chapter 5, the legislature chose not to repeal the protest requirement under section 5472 of the Health and Safety Code. Therefore, the court reasoned that the legislature thus intended that anyone desiring a refund must first pay the charge under protest.The specific requirement in the Health and Safety Code trumped the generally applicable requirements in the Revenue and Taxation Code.
Because plaintiffs failed to protest their charges upon payment, they were barred from now coming before the court to request a refund, no matter how valid their substantive claims were.
Cori Badgley is an associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.