In City of Dinuba v. County of Tulare, (— Cal.Rptr.3d —, 2007 2050879, Cal., July 19, 2007), the Supreme Court of California considered whether a county was immune from liability under the Tort Claims Act in a lawsuit brought against it by a city’s redevelopment agency that sought to recover tax revenue that was misallocated by the county.
The Supreme Court found that the county was not immune from liability because the redevelopment agency was not seeking money damages for an injury as defined by the Tort Claims Act.
Facts
In 2002, the City of Dinuba Redevelopment Agency (“Agency”) hired a private consultant to audit the tax assessment and allocation procedures of the County of Tulare (“County”). During the audit, the consultant discovered that the County had failed to assign the proper tax rate code to certain parcels within the Agency’s redevelopment area. As a result, the Agency did not receive tax increment revenue to which it was entitled for 2002 and also for the four previous years. The County had divided the funds to which the Agency was entitled among other entities in the area. The Agency brought the errors to the County’s attention and the County corrected the current assessment roll. The County refused to make retroactive corrections so that the Agency could recover the previously misallocated tax increment revenue.
The Agency filed a formal tort claim with the County asking for the full amount of the funds to which it was entitled for the previous four years. The County did not act on the claim and the Agency filed a lawsuit. The trial court found that County was immune from liability under the Tort Claims Act. The Agency appealed and a California Court of Appeal found that the County was not immune from liability. The County appealed to the California Supreme Court.
Decision
The Supreme Court affirmed the decision of the Court of Appeal. The County has “a mandatory duty to collect property tax, then allocate and distribute the appropriate amount to various taxing entities pursuant to a complex statutory scheme.” The Community Redevelopment Law provides that redevelopment projects are to be financed through tax increment financing. Under tax increment financing, the County is responsible for assigning to the Agency the amount of taxes resulting from the increase in value of the properties within the redevelopment area. In its lawsuit, the Agency sought to recover the funds that it was rightfully owed. The Supreme Court concluded that the Agency was not seeking damages for an injury within the meaning of the Tort Claims Act and, therefore, the County was not immune from liability under the Act.
Government Code section 860.2 provides that a public entity or public employee is not liable for an injury caused by “[a]n act or omission in the interpretation or application of any law relating to a tax.” The County asserted that section 860.2 immunizes it from liability. The Court disagreed. Section 860.2 limits governmental liability for an injury which is defined under section 810.8 as “death, injury to a person, damage to or loss of property, or any other injury that a person may suffer to his person, reputation, character, feelings or estate, of such nature that it would be actionable if inflicted by a private person.” The County’s failure to properly allocate and distribute tax revenue to other public entities is not an “injury” as defined under these statutes.
Furthermore, the Tort Claims Act is “concerned with shielding public entities from having to pay money damages for torts.” Liability for contract claims and for the recovery of relief other than money damages is not covered by the Act. Here, the Agency did not seek money damages; it sought to compel the County to perform its express statutory duty. “While compliance with the duty may result in the payment of money, that is distinct from seeking damages.” Therefore, the Act does not bar the Agency’s lawsuit.
The Supreme Court concluded that mandamus is available to the Agency to compel the County to comply with its statutory duty to correctly calculate and distribute tax revenue. The Agency, therefore, may pursue its case against the County because the County is not immune from liability under the Tort Claims Act.