Johnson v. Cnty. of Mendocino

25 Cal.App.5th 1017

236 Cal.Rptr.3d 444

Michael JOHNSON et al., Plaintiffs and Appellants,

v.COUNTY OF MENDOCINO, Defendant and Respondent.

A152004

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

Filed August 8, 2018

Attorney for Appellants: Lawrence Elliot Rosen, Redwood City.

Attorneys for Amicus Curiae: Jonathan M. Coupal, Timothy A. Bittle, Sacramento, Trevor A. Grimm, Los Angeles, Laura E. Murray.

Attorneys for Respondent: Office of the County Counsel, Katharine L. Elliott, County Counsel, Ukiah, Christian M. Curtis, Chief Deputy.

Kline, P.J.

This appeal arises out of a challenge to the validity of a Mendocino County ballot measure, Measure AI, which imposed a tax on commercial cannabis businesses (Mendocino County Code, § 6.32.010 et seq.) and which was approved by a simple majority of county voters. Michael Johnson, Pebbles Trippet, Terry Johnson, Noel Manners, Paula Deeter, Ron Edwards, and Ralf Laguna (plaintiffs) appeal the trial court's order of dismissal after the court sustained the demurrer of the County of Mendocino (County) without leave to amend and denied plaintiffs' motion for a preliminary injunction. Plaintiffs contend that under a correct interpretation of article XIII of the California Constitution (article XIII), the tax imposed pursuant to Measure AI was not a general tax but, together with a related advisory measure, amounted to a special tax requiring approval by a supermajority of county voters. In the alternative, plaintiffs contend Measure AI did not involve a tax at all, and instead imposed an unlawful fee. We shall affirm the court's order of dismissal.

PROCEDURAL BACKGROUND

On February 6, 2017, plaintiffs filed a complaint against the County, requesting declarations that (1) the tax proposed by Measure AI was a special tax subject to article XIII C's supermajority vote requirement; (2) because the proposed tax increase received less than two-thirds voter approval, it was defeated; and (3) that measures like Measure AI and its companion advisory measure, Measure AJ, are schemes meant to circumvent the California Constitution's supermajority requirements.

On March 23, 2017, the County filed a demurrer to plaintiffs' complaint.

On April 3, 2107, plaintiffs filed a motion for preliminary injunction.

On June 29, 2017, following a hearing, the court sustained the demurrer without leave to amend and denied plaintiffs' motion for a preliminary injunction.

On July 20, 2017, the court entered an order of dismissal.

On July 24, 2017, plaintiffs filed a notice of appeal.

On December 7, 2017, we granted the unopposed application of Howard Jarvis Taxpayers Association (HJTA) for leave to file an amicus curiae brief in support of plaintiffs' position.¹

DISCUSSION

I. Background

A. Ballot Measures AI and AJ

Measures AI and AJ appeared on the November 8, 2016 ballot in Mendocino County. Measure AI was approved by 63.04 percent of the voters and Measure AJ was approved by 86.54 percent of the voters. We briefly summarize the measures' provisions and related information contained in the Sample Ballot and Voter Information Pamphlet (Pamphlet).

1. Measure AI

The text of Measure AI in the Pamphlet provided: "Shall Chapter 6.32 be added to the Mendocino County Code, placing a business tax on cannabis cultivation and dispensaries (not to exceed 10% of gross receipts) and cannabis distribution, delivery, manufacturing, nurseries, testing laboratories and transportation businesses ($2,500.00 per year, to be adjusted in accordance with Consumer Price Index increases) of medical and nonmedical cannabis where legalized by state law, potentially generating millions of dollars annually to help fund County services?"²

The Impartial Analysis of Measure AI in the Pamphlet described the measure as "a general tax," placed on the ballot by the Board of Supervisors, which must be adopted by a majority of the voters.

The argument in favor of Measure AI stated, inter alia: "A 'YES' vote will make marijuana businesses operating in the unincorporated areas of Mendocino County pay their fair share to support County services." The proponents further argued that the measure "protects the environment and requires marijuana businesses to pay long overdue funding to support general County services, including public health, public safety, and environmental cleanup. ... [¶] ... [¶] A 'YES' vote on Measure AJ (the companion advisory measure) will tell the Board of Supervisors that you want a majority of the proceeds from the 'Marijuana Tax' to be spent for Marijuana Enforcement, Mental Health Services, Repair of County Roads, and Fire and Emergency Medical Services. [¶] Vote 'YES' on Measure AI ... to restore tax fairness and fund County services."

No argument against Measure AI was submitted.

2. Measure AJ

The text of Measure AJ in the Pamphlet provided: "Advisory Vote Only. If Mendocino County adopts business license taxes on cannabis businesses by the adoption of the measure adopting Chapter 6.32, Measure AI, should the County use the majority of that revenue for funding enforcement of marijuana regulations, enhanced mental health services, repair of county roads, and increased fire and emergency medical services?"

The "Impartial Analysis" of Measure AJ stated, inter alia: "The Elections Code provides that a county may seek an advisory measure to allow voters to voice their approval or disapproval of a ballot proposal. This ballot measure seeks voter approval for spending the general tax dollars that would be generated if the voters approve Measure AI, as proposed by the Board of Supervisors. Measure AI is a general tax.... [¶] If the voters approve Measure AJ, it would serve to advise the Board of Supervisors that the voters want a majority of the revenue generated by the Cannabis Business Tax, Measure AI, for enforcement of marijuana regulations, enhanced mental health services, repair of county roads, and increased fire and emergency services. [¶] This is an advisory vote only. The results of this advisory vote will in no manner be controlling of the Board of Supervisors."

The argument in favor of Measure AJ stated, inter alia: "Measure AJ is your opportunity to tell the Board of Supervisors how you want proceeds from Measure AI, the 'Marijuana Tax,' to be spent. [¶] .... The 'Marijuana Tax' is a general tax and can be spent for general county government purposes. [¶] Measure AJ asks the voters if they want a majority of revenue from the 'Marijuana Tax' to be spent for the following services: [marijuana enforcement, mental health, county road repair, and fire and emergency medical services]. [¶] ... [¶] Vote 'YES' on Measure AJ. Tell this and future Boards of Supervisors to spend the 'Marijuana Tax' money to pay for critical County services."

No argument against Measure AJ was submitted.

B. Trial Court's Ruling on the County's Demurrer

In granting the County's demurrer without leave to amend, the trial court rejected plaintiffs' argument that the passage of Measure AI by a simple majority of voters was insufficient under article XIII C because the purported general tax proposed in Measure AI was transformed into a special tax with special purposes by the presence of Measure AJ, the companion advisory measure.

Specifically, the court found that the language of Measure AI made clear "that the tax was designed as a general tax and not a special tax. There is nothing in the ordinance that requires the Board of Supervisors to make specific expenditures with the tax revenue. [¶] The advisory measure [Measure AJ] adopted by the voters is just that, advisory. Advisory measures, even those related to the expenditure of tax revenues, are permissive under the law and merely allow the legislative body to poll it[s] constituents without enacting any law. The legislative body is not bound by such advisory measures. [Citing Howard Jarvis Taxpayers Assn. v. Padilla (2016) 62 Cal.4th 486, 196 Cal.Rptr.3d 732, 363 P.3d 628 and Coleman v. City of Santa Clara (1998) 64 Cal.App.4th 662] Plaintiffs have offered no authority to support their contention that the business tax ordinance adopted by a majority of the voters would have required a supermajority vote."

The court also found that plaintiffs' references to certain provisions of Proposition 26 "reflect[ed] a complete misunderstanding as to its meaning and application to this case. There is no dispute that fees adopted by the legislative body must be reasonably related to the services provided. In this case, plaintiffs are not challenging an adoption of a fee; they are objecting to the imposition of a tax. The provision of Proposition 26 referenced in plaintiffs' moving papers has no bearing on the adoption of a tax."

Finally, because plaintiffs had "conceded that there are no contested facts in this case" and because their "interpretation of the ordinance is not supported by any legal theory[,] leave to amend would be futile." The court also denied plaintiffs' motion for a preliminary injunction.

II. Standard of Review

"An appellate court must independently decide questions of law without deference to the trial court's conclusions. [Citation.] A demurrer tests only the sufficiency of the pleadings and, as such, raises only a question of law. [Citation.] Also, a dispute over the meaning of a constitutional provision presents a question of law. [Citation.]" ( Neilson v. City of California City (2005) 133 Cal.App.4th 1296, 1304-1305, 35 Cal.Rptr.3d 453 ( Neilson ).)

"In reviewing a demurrer that is sustained without leave to amend, an appellate court assumes the truth of (1) all facts properly pleaded by the plaintiff, (2) all facts contained in exhibits to the complaint, (3) all facts that are properly the subject of judicial notice, and (4) all facts that reasonably may be inferred from the foregoing facts. [Citations.] The reviewing court does not assume the truth of contentions, deductions or conclusions of law. [Citation.]

"The reviewing court must reverse the judgment if (1) the complaint, liberally...