Howard Jarvis Taxpayers Ass'n v. Bay Area Toll Auth.

51 Cal.App.5th 435

265 Cal.Rptr.3d 235

HOWARD JARVIS TAXPAYERS ASSOCIATION et al., Plaintiffs and Appellants,

v.BAY AREA TOLL AUTHORITY et al., Defendants and Respondents.

Randall Whitney, Plaintiff and Appellant,

v.Metropolitan Transportation Commission, Defendant and Respondent.

A157598

A157972

Court of Appeal, First District, Division 2, California.

Filed June 29, 2020

Attorneys for Appellant: Howard Jarvis Taxpayers Foundation, Jonathan M. Coupal, Timothy A. Bittle, Sacramento, Laura E. Dougherty

Attorneys for Respondent: Orrick Herrington & Sutcliffe, Brian P. Goldman, San Francisco, Michael C. Weed, Sacramento, Megan McCauley, Adrienne D. Weil, Remcho, Johansen & Purcell, Robin B. Johansen, Sacramento, Thomas A. Willis, Margaret R. Prinzing, Oakland

Kline, P.J.

These consolidated appeals challenge a toll increase for seven Bay Area bridges that was submitted to the voters as Regional Measure 3 in 2018, and approved by a 55 percent majority. Revenue from the toll increase is to be applied toward various designated highway and public transit improvement projects and programs. Appellants contend that most of the revenue will not be used for the benefit of those who use the bridges and pay the toll but rather for the benefit of those who use other means of transportation. For this reason, they maintain the toll increase is a tax for which the California Constitution requires a two-thirds majority vote, and therefore is invalid. The trial court granted motions for judgment on the pleadings in favor of respondents. We affirm.

BACKGROUND

Respondent Metropolitan Transportation Commission (MTC) is a "local area planning agency" created by the Legislature "to provide comprehensive regional transportation planning for the region comprised of the City and County of San Francisco and the Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma." ( Gov. Code, § 66502.) Respondent Bay Area Toll Authority (BATA) is a "public instrumentality governed by the same board as that governing" the MTC, but "a separate entity from" the MTC. ( Sts. & Hy. Code, § 30950.)¹ BATA "is responsible for the administration of all toll revenues from state-owned toll bridges within the geographic jurisdiction of" the MTC. (§ 30950.2, subd. (a).)

In 2017, the Legislature passed Senate Bill No. 595 (Sen. Bill 595) by margins of 67 percent in the Senate and 54 percent in the Assembly. The bill stated the Legislature's intent "to require the Metropolitan Transportation Commission to place on the ballot a measure authorizing the voters to approve an expenditure plan to improve mobility and enhance travel options on the bridges and bridge corridors to be paid for by an increase in the toll rate on the seven state-owned bridges within its jurisdiction." (Stats. 2017, Sen. Bill 595 (2017–2018 Reg. Sess.), ch. 650, § 1.) Senate Bill 595 enacted statutes directing the Board of Supervisors for the City and County of San Francisco and Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma to call a special election at which a proposed toll increase for the seven state-owned Bay Area bridges would be submitted to the voters as "Regional Measure 3" (RM3). (§ 30923, subds. (a), (b) & (c).)² BATA was directed to "select an amount of the proposed increase in the toll rate, not to exceed three dollars" and "determine the ballot question, which shall include the amount of the proposed toll increase selected pursuant to subdivision (a) and a summary of the Regional Measure 3 expenditure plan." (§ 30923, subd. (c)(2).) The "Regional Measure 3 expenditure plan," set forth in section 30914.7, described 35 specific projects and programs for improvements to highways and public transportation that "have been determined to reduce congestion or to make improvements to travel in the toll bridge corridors," to be funded by toll bridge revenues in an amount specified for each of the lists projects and programs. (§ 30914.7.)

On January 24, 2018, BATA adopted Resolution No. 123, calling for the counties to place RM3 on the ballot for the June 5, 2018, election. The ballot question posed in RM3 was as follows: "BAY AREA TRAFFIC RELIEF PLAN. Shall voters authorize a plan to reduce auto and truck traffic, relieve crowding on BART, unclog freeway bottlenecks, and improve bus, ferry, BART and commuter rail service as specified in the plan in this voter pamphlet, with a $1 toll increase effective in 2019, a $1 increase in 2022, and a $1 increase in 2025, on all Bay Area toll bridges except the Golden Gate Bridge, with independent oversight of all funds?" On June 5, 2018, voters approved RM3 by a 55 percent margin (< https://mtc.ca.gov/our-work/fund-invest/toll-funded-investments/reginional-measure-3> [as of 6/29/20] ).³

Appellants Howard Jarvis Taxpayers Association (HJTA) and three named individuals filed a complaint against BATA and the California Legislature, seeking to invalidate the toll increases. The first cause of action alleged the toll increase was a tax that Senate Bill 595 "authoriz[ed] BATA to impose" and both Senate Bill 595 and the toll increase were invalid due to failure to comply with article XIII A, section 3, subdivision (a), of the California Constitution : "Any change in state statute which results in any taxpayer paying a higher tax must be imposed by an act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature." ( Cal. Const., art. XIII A, § 3, subd. (a).)⁴ The second cause of action alleged the toll was a local tax imposed by BATA, and was invalid for failure to comply with article XIII C, § 2, subdivision (d): "No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote."

Separately, respondent Randall Whitney filed a lawsuit against MTC alleging Senate Bill 595 and RM3 were unconstitutional for failure to comply with the two-thirds vote requirement of article XIII C.

BATA and the Legislature each moved for judgment on the pleadings against the HJTA complaint on the basis that the bridge toll increase was imposed by the Legislature in Senate Bill 595, with certain aspects of implementation delegated to BATA, and was not a tax as defined by the California Constitution, but rather a charge for entrance to and use of state-owned property (art. XIII A, § 3). These motions were granted without leave to amend. As to the first cause of action, the court held the Legislature "met its burden to show the applicability of the exception for ‘entrance to or use of state property’ from the general definition of ‘tax’ in article XIII A, section 3(b)(4)," and therefore the toll increase was not a tax subject to the two-thirds vote requirement. The court granted BATA's motion as to the second cause of action because the definition of tax in article XIII C applies only to local governments and the toll increase was imposed by the Legislature, with BATA "charged with implementing that state mandate."

MTC also moved for judgment on the pleadings, arguing it was not a proper defendant because the Legislature, not MTC, enacted Senate Bill 595 and mandated the special election seeking voter approval for the increased tolls. The trial court granted this motion, too, without leave to amend, because the Legislature imposed the toll increase and MTC's responsibility "merely consists of overseeing transportation projects funded by the bridge toll revenues after they are collected and preparing a summary of the expenditure plan under Regional Measure 3." The court noted that Whitney's "conflation of [MTC] with" BATA did not help his argument because BATA had only limited areas of discretion and was "required to carry out the increase enacted by the Legislature."

HJTA and Whitney each appealed. Whitney, who had represented himself in the trial court, substituted HJTA's counsel for the appeal. We granted appellants’ unopposed motion to consolidate the appeals.

DISCUSSION

" ‘A judgment on the pleadings in favor of the defendant is appropriate when the complaint fails to allege facts sufficient to state a cause of action. ( Code Civ. Proc., § 438, subd. (c)(3)(B)(ii).) A motion for judgment on the pleadings is equivalent to a demurrer and is governed by the same de novo standard of review.’ ( Kapsimallis v. Allstate Ins. Co. (2002) 104 Cal.App.4th 667, 672 [128 Cal.Rptr.2d 358].) ‘All properly pleaded, material facts are deemed true, but not contentions, deductions, or conclusions of fact or law....’ ( Ibid. ) Courts may consider judicially noticeable matters in the motion as well. ( Ibid. )" ( People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777, 174 Cal.Rptr.3d 626, 329 P.3d 180.)

Appellants argue that the toll increase at issue here is a tax, and is invalid because Senate Bill 595 was not approved by a two-thirds majority of the Legislature and RM3 was not approved by a two-thirds majority of the electorate. Pursuant to article XIII A, section 3, subdivision (a), "[a]ny change in state statute which results in any taxpayer paying a higher tax must be imposed by an act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature ...."⁵ Article XIII C, section 2, requires that all tax increases imposed by local governments be approved by the voters.⁶ A "general tax"—"any tax imposed for general governmental purposes"—may be approved by a majority vote. (Art. XIII C, § 3, subd. (b).) A "special tax"—one imposed "for specific purposes" or by "special purpose districts or agencies"—requires approval by a two-thirds vote. (Art. XIII C, §§ 2, subd. (a), 3, subd. (d).)

Appellants’ case turns on the definition of "tax" in the California Constitution, which in turn depends on whether the increase was imposed by the Legislature (art. XIII A, § 3, subd. (b)) or by local government (art. XIII C, § 1, subd. (e)). Unde...