California Supreme Court: The Claims Presentation Requirements Of The Tort Claims Act Applies To Lawsuits For Breach Of Contract

Under the so-called Tort Claims Act (Government Code § 810 et seq.), a tort lawsuit against a public agency may not be filed in court unless the plaintiff has first presented a claim to the public agency. Although the claims presentation requirement also applies to lawsuits for breach of contract, convincing a trial court of this can be a challenge. That is about to change: in City of Stockton v. Superior Court of Sacramento County (Civic Partners Stockton, LLC), 68 Cal. Rptr. 3d 295, __ Cal. 4th __ (2007), the California Supreme Court announced that the claims presentation requirement applies to lawsuits for breach of contract.

Facts

Civic Center Partners and the City of Stockton entered into contracts for the rehabilitation of Hotel Stockton and for development of a cinema near the hotel.

The City entered into a lease with Civic Center Partners for the hotel. But the City ultimately repudiated the lease. Without the lease, Civic Center Partners could not finance the renovation of the hotel or the cinema.

The City offered to let Civic Center Partners use the hotel for senior housing. Civic Center Partners spent $600,000 to convert the hotel to senior housing. But the City entered into a hotel development agreement with another developer, and gave that developer Civic Center Partners’ architectural plans.

Civic Center Partners sued the City but did not first present a claim to the City. The trial court ruled that the claims presentation requirements did not apply. The Court of Appeal reversed.

Decision

The California Supreme Court affirmed the Court of Appeal’s decision. The Supreme Court zeroed-in on the source of confusion: the so-called Tort Claims Act is a misnomer because the Act is not limited to torts. The Court proposed that the Act be called the "Government Claims Act."

The Court pointed out that the Government Claims Act plainly states that claims for money or damages against local public entities must be presented to the local entity before a lawsuit is filed (Government Code § 905). A contract claim is a claim for money or damages, the Court reasoned.

The Court explained that the chief purpose of the claims requirement is to provide local public agencies with sufficient information to adequately investigate and settle claims, if appropriate, without the expense of litigation.

Finally, the Court reviewed the legislative history to Government Code § 905, and determined that the Legislature intended for the claims presentation requirement to apply to contract claims.