Filed 6/13/17
                            CERTIFIED FOR PUBLICATION

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                     DIVISION ONE

                                STATE OF CALIFORNIA



EUGENE G. PLANTIER, as Trustee, etc., et         D069798
al.,

        Plaintiffs and Appellants,
                                                 (Super. Ct. No. 37-2014-00083195-
        v.                                       CU-BT-CTL)

RAMONA MUNICIPAL WATER
DISTRICT,

        Defendant and Respondent.



        APPEAL from a judgment of the Superior Court of San Diego County, Timothy

B. Taylor, Judge. Reversed and remanded with directions.

        Patterson Law Group, James R. Patterson, Allison H. Goddard, Catherine S.

Wicker; Carlson Lynch Sweet Kilpela & Carpenter and Todd D. Carpenter for Plaintiffs

and Appellants.

        Jonathan M. Coupal, Trevor A. Grimm and Timothy A. Bittle for Howard Jarvis

Taxpayers Association as Amicus Curiae on behalf of Plaintiffs and Appellants.

        Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall, Gregory V. Moser, John D.

Alessio and Adriana R. Ochoa for Defendant and Respondent.
       Daniel S. Hentschke; Colantuono, Highsmith & Whatley, Michael G. Colantuono

and Eduardo Jansen for California Association of Sanitation Agencies, California State

Association of Counties and League of California Cities as Amicus Curiae on behalf of

Defendant and Respondent.

       Plaintiffs and appellants Eugene G. Plantier, as Trustee of the Plantier Family

Trust (Plantier); Progressive Properties Incorporated (Progressive); and Premium

Development LLC (Premium), on behalf of themselves and all others similarly situated

(collectively plaintiffs), appeal the judgment in favor of defendant and respondent

Ramona Municipal Water District (District or RMWD). In this class action, the trial

court found plaintiffs failed to exhaust their administrative remedies under article XIII D

of the California Constitution in connection with plaintiffs' substantive challenge to the

method used by District to calculate wastewater service "fees or charges"1 between about

2012 and 2014.

       On appeal, plaintiffs contend the trial court erred when it found there was a

mandatory exhaustion requirement in section 6 of article XIII D (hereinafter section 6).2


1       "Because article XIII D provides a single definition that includes both 'fee' and
'charge,' those terms appear to be synonymous in both article XIII D and article XIII C.
This is an exception to the normal rule of construction that each word in a constitutional
or statutory provision is assumed to have independent significance." (See Bighorn-
Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205, 214, fn. 4.) Like our high
court in Verjil, we use the terms "fee or charge" interchangeably in connection with our
discussion of article XIII D. (See ibid.)

2       Although advancing this contention, plaintiffs assume—without discussing—that
the trial court was interpreting section 6 in imposing a mandatory exhaustion requirement
on them, when, in fact, the statement of decision shows the court substantially relied on
section 4 of article XIII D (hereinafter section 4) to support its decision. As discussed
post, section 4 governs "assessments," as opposed to imposition of "fees or charges" that
                                             2
Plaintiffs further contend they took the necessary steps to satisfy the general principle of

exhaustion when they separately satisfied the administrative remedy in the Ramona

Municipal Water District Legislative Code, as amended, which District adopted in 1996

(hereinafter RMWD legislative code); and that, in any event, the exhaustion doctrine in

section 6 should not have been applied to them because the remedy therein was

inadequate and because it was "futile" to purse any administrative remedy under this

constitutional provision.

       As we explain, we independently conclude that plaintiffs' class action is not barred

by their failure to exhaust the administrative remedies set forth in section 6 because

plaintiffs' substantive challenge involving the method used by District to calculate its

wastewater service fees or charges is outside the scope of the administrative remedies,

and because, under the facts of this case, those remedies are, in any event, inadequate.

Reversed.3




is the subject of section 6. In addition, the procedures an agency must follow to impose
an assessment under section 4 are different from those set out in section 6, subdivision (a)
with respect to fees or charges. The parties, however, agree that section 6 governs the
instant appeal.

3       We received and considered in association with this appeal the amicus curiae
briefs, and responses thereto, of the Howard Jarvis Taxpayers Association filed in support
of plaintiffs; and of the California Association of Sanitation Agencies, California State
Association of Counties & League of California Cities, joined by the California Special
Districts Association, filed in support of District. We found the amicus brief of Howard
Jarvis Taxpayers Association —the author and principal sponsor of Proposition 218—
particularly useful in resolving this case.
                                              3
                                     BACKGROUND4

         A. District

         District is a municipal water district organized under the Municipal Water District

Act. (Wat. Code, § 71000 et seq.) District is governed by the RMWD legislative code.

District provides, among others, water and, as relevant here, wastewater services to about

40,000 people living in Ramona, California, an unincorporated community within San

Diego County. Ramona has two wastewater treatment plants, San Vicente and Santa

Maria.

         District uses an "Equivalent Dwelling Unit" (EDU)5 system to calculate

wastewater service fees. "Parcels are assigned EDUs and charged for sewer services on a

per-EDU basis." Charges for such services are "based on estimates of wastewater

capacity needs, flow and strength for different customer types or classes. . . . The District

levies fixed sewer rates based on the number of EDUs assigned to each connection.



4       Because judgment was based solely on plaintiffs' failure to exhaust their
administrative remedies under section 6, we only briefly discuss the underlying lawsuit,
as the court never reached "phase 2," i.e., "phase 1" of the trial, concerning the merits of
plaintiffs' claims. (Compare Capistrano Taxpayers Assn, Inc. v. City of San Juan
Capistrano (2015) 235 Cal.App.4th 1493, 1515 [interpreting subdivision (b)(3) of section
6—the same provision at issue in the instant case—to find that new water rates imposed
by the city violated the constitutional requirement that fees " 'not exceed the proportional
cost of the service attributable to the parcel' " without discussing or analyzing whether the
plaintiff exhausted its administrative remedy in subdivision (a) of section 6 by
challenging the new water rates in writing beforehand and/or by appearing at the public
hearing of the city].)

5       EDU is defined in section 7.52.020 of the RMWD legislative code as "a measure
where one unit is equivalent to two hundred gallons/day of sewage, with suspended solids
of two hundred milligrams per liter, and BOD of two hundred milligrams per liter." BOD
is further defined therein as a "unit of measurement of biochemical oxygen demand . . . ."
                                              4
EDUs are assigned based on the type of development and associated wastewater flow and

loadings."

       Sewer rates for residential customers within District living in single-family homes

and multi-family dwelling units with one or more bedrooms are assigned 1 EDU per

dwelling unit. District has over 20 sewer rate classes for commercial customers; EDUs

are assigned for commercial customers based on such factors as "square footage, number

of washing machines [and] number of students [per school]."

       District has authority to set and collect charges for sewer services. (Wat. Code,

§ 71670.) Revenues collected from service charges are used to pay operating and

maintenance fees. (Id., § 71671.) District is required to recover sufficient revenues to

cover both the operating expenses of the sewer services it provides to customers and

repairs to, and depreciation of, works it owns and/or operates in connection with such

services. If the board of directors (board) of District determines the "revenues . . . will be

inadequate . . . to pay [its] operating expense[s] . . . , to provide for repairs and

depreciation of works owned or operated by it, and to meet all of its obligations[,] the

board shall provide for the levy and collection of a tax . . . sufficient to raise the amount

of money determined by the board to be necessary for the purpose of paying [its]

operating expenses . . . , providing for repairs and depreciation of works owned or

operated by it, and meeting all of its obligations." (Id., § 72092.)

       B. Plaintiffs and Their Operative Complaint

       Since 1998, Plantier has owned a commercial property in Ramona. As such, he

pays wastewater service fees to District.



                                                5
       Progressive, a California corporation, owns a 25,000 square foot office building in

Ramona. Like Plantier, Progressive pays for wastewater services provided by District.

       Finally, Premium, a California limited liability company, owns two properties

located in Ramona. It too pays District for wastewater services.

       Plaintiffs' operative complaint asserted claims on behalf of themselves and all

other District customers who paid a wastewater service fee on or after November 22,

2012.6 The complaint alleged causes of action against District for declaratory relief and

for "refund [of] unlawful sewer service charges." Plaintiffs sought a declaration that

District's method of determining the costs of sewer service based on each parcel's

assigned EDU violated the "proportionally" provision of subdivision (b)(3) of section 6.

Plaintiffs also sought a refund from District of alleged overcharges for wastewater service

fees paid by its customers.

       Specifically, plaintiffs in their operative class action complaint alleged that

District assigned EDU's arbitrarily and without regard to a property's actual wastewater

use and to the proportional cost of providing that property's wastewater service; that

District's EDU-based wastewater billing system was "inconsistent with general practice

among California water districts"; that all District wastewater customers were required to

pay an annual sewer service fee imposed on a per-EDU basis; that at all times relevant,

District's board established the dollar amount of the sewer service fee on an "ad-hoc

basis, without reliance on a rate study or other technical document providing a rational


6      The court in February 2015 granted plaintiffs' motion for class certification. In so
doing, the court ruled class certification applied to both causes of action in plaintiffs'
operative complaint and designated Plantier, Progressive and Premium as class
representatives.
                                              6
basis for [the sewer service fees it] adopted"; that the sewer service charge was a

property-related fee subject to section 6, subdivision (b)(3); that the then-current sewer

service fee for District customers in the San Vicente sewer service area was about $605

per EDU, and about $637 per EDU for the Santa Maria sewer service area; and that the

lack of "any rational relationship between the [sewer service fee] and actual wastewater

use has resulted in the systematic overcharge of wastewater customers for whom the

proportional cost of providing their property with wastewater service is less than their

EDU-based" sewer service fee.

       C. Proposition 218

       California voters in November 1996 passed Proposition 218, which added articles

XIII C and XIII D to the California Constitution. (Paland v. Brooktrails Tp. Community

Services Dist. Bd. of Directors (2009) 179 Cal.App.4th 1358, 1365.) As noted ante, the

instant case concerns article XIII D, which undertook to "constrain the imposition by

local governments of 'assessments, fees and charges.' (Art. XIII D, § 1.)" (Pajaro Valley

Water Management Agency v. Amrhein (2007) 150 Cal.App.4th 1364, 1378.) "Article

XIII D sets forth procedures, requirements and voter approval mechanisms for local

government assessments, fees and charges." (Howard Jarvis Taxpayers Assn. v. City of

Roseville (2002) 97 Cal.App.4th 637, 640.)

       At issue in this case is section 6 (of article XIII D), which sets forth mandatory

procedures an agency, such as District, must follow "in imposing or increasing any fee or

charge." Among other requirements, section 6 mandates that an agency provide "written

notice by mail of the proposed fee or charge to the record owner of each identified parcel

upon which the fee or charge is proposed for imposition" (§ 6, subd. (a)(1)); the amount

                                             7
of the proposed fee or charge (ibid.); the "basis" upon which the fee or charge was

"calculated" and the "reason" for the fee or charge (ibid.); "together with the date, time,

and location of a public hearing on the proposed fee or charge" (ibid.).

       An agency is required to conduct a public hearing on the proposed fee or charge

"not less than 45 days after mailing the notice . . . to the record owners of each identified

parcel" upon which the fee or charge is sought to be imposed. (§ 6, subd. (a)(2).) At the

public hearing, the agency shall "consider all protests against the proposed fee or charge"

and if "written protests against the fee or charge are presented by a majority of owners of

the identified parcels, the agency shall not impose the fee or charge." (Ibid.)

       D. Exhaustion of Administrative Remedies

       On District's motion, the court bifurcated the trial into two phases, as noted. In

phase 1, the court considered the threshold issue of whether Proposition 218 imposed an

exhaustion requirement and, if so, whether plaintiffs satisfied that requirement or were

otherwise excused from doing so. After hearing witness testimony and the argument of

counsel, the court granted District's motion. In so doing, the court in its statement of

decision ruled in part as follows:

       "The court finds there is an exhaustion requirement under Prop. 218. Plaintiffs

argue there isn't one, yet in the next breath argue they complied with it. The court,

acknowledging the dearth of direct authority, holds that the case closest in point is

Wallich's Ranch v. Kern County Pest Control Dist. 87 Cal.App.4th 878 (2001)

[(Wallich's)]. Fairly read, and extended to the facts of this case, Wallich's imposes a

requirement that plaintiffs participate in the annual Prop. 218 process, which is



                                              8
(according to the evidence in this case), inextricably intertwined with the annual budget

process.

       "Cal. Const. art. 13D, § 4 provides: [¶] 'The agency shall conduct a public hearing

upon the proposed assessment not less than 45 days after mailing the notice of the

proposed assessment to record owners of each identified parcel. At the public hearing,

the agency shall consider all protests against the proposed assessment and tabulate

the ballots. The agency shall not impose an assessment if there is a majority protest. A

majority protest exists if, upon the conclusion of the hearing, ballots submitted in

opposition to the assessment exceed the ballots submitted in favor of the assessment. In

tabulating the ballots, the ballots shall be weighted according to the propositional

financial obligation of the affected property.'

       "Participation in a 'public hearing' contemplated by the sentence in bold type

immediately above is a centerpiece of the process set up by Prop. 218. The constitutional

mandate is for the agency board to 'consider all protests,' not just those from a majority.

Obviously, the RMWD Board could not have considered a protest that was never made.

Plaintiffs' contention that [they] were free to ignore this part of the process would be

tantamount to the court excising these provisions from the constitutional scheme. This

the court is not free to do. [Citation.]"

       After finding section 4 (but not section 6) included a mandatory exhaustion

requirement, the court next turned to the issue of whether "plaintiffs made the necessary

effort to give the RMWD Board the opportunity to resolve the dispute short of litigation

and without threatening the viability of the District by not allowing the District to take up



                                              9
a challenge to the EDU scheme in the context of the annual budget process. The court

finds they did not.

       "In order to be meaningful, the effort at exhaustion must set forth at least the

outlines of the basis for the disagreement. Otherwise the exhaustion requirement is just a

mechanical charade. And plaintiff[s'] purported efforts to exhaust their remedies never

did this. The letters were long on summary pronouncements and bald assertions, but

backup for these allegations was not provided. And the District reasonably offered to

receive same."

       The court next rejected plaintiffs' contention it was "futile" for them to appear and

object at the 2012, 2013 and 2014 budgetary hearings because District previously had

rejected their administrative claim raising the same issue that District alleged should have

been raised in connection with those hearings. The court in its statement of decision on

this issue stated it "believed RMWD employees [who testified] to the effect that the

District Board is genuinely interested in input from ratepayers, and that a legitimate,

careful and legally/factually supported challenge to the District's EDU regime in the

context of the annual Prop. 218/budget hearing would have received careful

consideration."

       Finally, the court addressed plaintiffs' contention that they gave District "every

opportunity to act before they commenced litigation." The court found this contention

missed the "point of the exhaustion requirement as laid out in Wallich's: by stubbornly

refusing to participate in the public hearing process, they failed to give the District the

opportunity to act before it set its rates (and consequently its budget) for the 2012-2013

and 2013-2014 fiscal years. The time to protest the EDU regime was in the context of the

                                              10
annual Prop. 218/budget process, when the District was considering rates and revenue

requirements for the coming year. This is what plaintiffs failed to do substantively,

procedurally and temporally. Allowing them to bypass the public hearing process set up

by Prop. 218 and proceed immediately to litigation seeking (according to plaintiffs' trial

brief . . .) a refund of 'excessive fund balances' turns art. 13D, § 4 of the Constitution on

its head and may very well threaten the viability of the RMWD.

       "In light of the foregoing, the court finds the District carried its burden of proof on

the special defense, and the special defense was proven by a preponderance of the

evidence. The District acknowledges the plaintiffs may file another action . . . . For the

present, the case as pled is clearly barred by the failure to exhaust administrative

remedies. Plaintiffs' effort to reach back to November 21, 2012 is clearly untenable due

to their failure to exhaust. RMWD is entitled to dismissal. There is no need for phase 2

of the trial, which was scheduled to start [the following day]."

                                       DISCUSSION

       A. Guiding Principles

       When an applicable statute, ordinance, or regulation provides an adequate

administrative remedy, a party must exhaust it before seeking judicial relief. (Coachella

Valley Mosquito & Vector Control Dist. v. California Public Employment Relations Bd.

(2005) 35 Cal.4th 1072, 1080; see American Indian Model Schools v. Oakland Unified

School Dist. (2014) 227 Cal.App.4th 258, 291.)7 "Exhaustion requires 'a full


7      None of the parties sufficiently briefed or considered the issue of whether the
actions of the District "in imposing or increasing any fee or charge" under section 6 were
"legislative" as opposed to "administrative" in nature. (See Howard v. County of San
Diego (2010) 184 Cal.App.4th 1422, 1431-1432 [noting "[l]egislative actions are political
                                              11
presentation to the administrative agency upon all issues of the case and at all prescribed

stages of the administrative proceedings.' [Citation.] ' "The exhaustion doctrine is

principally grounded on concerns favoring administrative autonomy (i.e., courts should

not interfere with an agency determination until the agency has reached a final decision)

and judicial efficiency (i.e., overworked courts should decline to intervene in an

administrative dispute unless absolutely necessary)." ' " (City of San Jose v. Operating

Engineers Local Union No. 3 (2010) 49 Cal.4th 597, 609 (City of San Jose); see AIDS

Healthcare Foundation v. State Dept. of Health Care Services (2015) 241 Cal.App.4th

1327, 1337.)

       We apply a de novo or independent standard of review in determining whether the

doctrine of exhaustion of administrative remedies applies in a given case. (See Defend

Our Waterfront v. State Lands Com. (2015) 240 Cal.App.4th 570, 580 (Defend our

Waterfront); see also Coastside Fishing Club v. California Fish & Game Com. (2013)

215 Cal.App.4th 397, 414 [noting "[w]hether the doctrine of exhaustion of administrative

remedies applies in a given case is a legal question that we review de novo"].)

       The exhaustion requirement is subject to exceptions, one of which is where the

administrative remedy is inadequate. (City of San Jose, supra, 49 Cal.4th at p. 609.) The


in nature, 'declar[ing] a public purpose and mak[ing] provisions for the ways and means
of its accomplishment,' " in contrast to administrative actions that "apply law that already
exists to determine 'specific rights based upon specific facts ascertained from evidence
adduced at a hearing,' " and further noting that, because an amendment of a general plan
is deemed a legislative action, plaintiffs were not required to seek an amendment to the
general plan to adequately exhaust their administrative remedies].) Nor was counsel at
oral argument able to respond meaningfully to this issue on questioning by the panel. In
any event, because we conclude the administrative remedies in section 6 are inadequate,
we need not decide whether the District's actions were legislative, as opposed to
administrative, in nature.
                                             12
statute, ordinance, regulation, or other written policy establishing an administrative

remedy must provide clearly defined procedures for the submission, evaluation, and

resolution of disputes. (City of Oakland v. Oakland Police & Fire Retirement System

(2014) 224 Cal.App.4th 210, 236–237 (City of Oakland); Unfair Fire Tax Com. v. City of

Oakland (2006) 136 Cal.App.4th 1424, 1429–1430 (Unfair Fire Tax Com.). A policy

that only provides for the submission of disputes to a decision maker without stating

whether the aggrieved party is entitled to an evidentiary hearing or the standard for

reviewing the prior decision is generally deemed inadequate. (City of Oakland, at p. 237;

Unfair Fire Tax Com., at p. 1430.) An administrative remedy that fails to satisfy these

and other requirements need not be exhausted. (City of Oakland, at pp. 236–237; Unfair

Fire Tax Com., at p. 1430.)

       B. Section 6

       To determine whether plaintiffs were required to exhaust their administrative

remedies in connection with their challenge to the method used by District to determine

wastewater service fees for the years from about 2012 through 2014, we turn to the

language of section 6 (and not section 4). (See Sheridan v. Touchstone Television

Productions, LLC (2015) 241 Cal.App.4th 508, 512 [noting a court "begin[s] with the

language of the statutes" in determining whether a plaintiff was required to exhaust his or

her administrative remedies before filing suit].)

       As summarized ante, section 6 includes mandatory procedures an agency such as

District must follow when it seeks to impose or increase any "fee or charge." A "fee or

charge" is defined in section 2, subdivision (e) to mean "any levy other than an ad

valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon

                                             13
a person as an incident of property ownership, including a user fee or charge for a

property related service."8 (Italics added.)

       Subdivision (a)(1) of section 6 provides: "The parcels upon which a fee or charge

is proposed for imposition shall be identified. The amount of the fee or charge proposed

to be imposed upon each parcel shall be calculated. The agency shall provide written

notice by mail of the proposed fee or charge to the record owner of each identified parcel

upon which the fee or charge is proposed for imposition, the amount of the fee or charge

proposed to be imposed upon each, the basis upon which the amount of the proposed fee

or charge was calculated, the reason for the fee or charge, together with the date, time,

and location of a public hearing on the proposed fee or charge."

       At the heart of the instant dispute is subdivision (a)(2) of section 6. It provides:

"The agency shall conduct a public hearing upon the proposed fee or charge not less than

45 days after mailing the notice of the proposed fee or charge to the record owners of

each identified parcel upon which the fee or charge is proposed for imposition. At the

public hearing, the agency shall consider all protests against the proposed fee or charge.

If written protests against the proposed fee or charge are presented by a majority of

owners of the identified parcels, the agency shall not impose the fee or charge."9 (Italics

added.)

8      An "assessment," in contrast to a "fee or charge," is defined to mean "any levy or
charge upon real property by an agency for a special benefit conferred upon the real
property. 'Assessment' includes, but is not limited to, 'special assessment,' 'benefit
assessment,' 'maintenance assessment' and 'special assessment tax.' " (§ 2, subd. (b).)

9     Subdivision (b) of section 6 sets out various substantive requirements that an
agency must follow when seeking to "extend[]," "impose[]" or "increase[]" a "fee or
charge." As noted, plaintiffs contend District failed to comply with subdivision (b)(3) of
                                               14
       C. Analysis

       Here, we independently conclude under the facts of this case that plaintiffs were

not required to exhaust the administrative remedies in subdivision (a)(2) of section 6

before seeking judicial relief. (See Defend our Waterfront, supra, 240 Cal.App.4th at

p. 580.)

       First, it is not even clear that the present controversy falls within the purview of

subdivision (a)(2) of section 6, inasmuch as the subject of the instant case involves

whether District complied with one (or more) of the substantive requirements of section

6, which, as noted ante, are set forth in subdivision (b) of this section, in calculating

wastewater usage based on its EDU system, as opposed to the imposition of, or increase

in, any proposed "fee or charge" that is the subject of subdivision (a) of this section.

       Indeed, the language of subdivision (a)(2) of section 6 supports such an

interpretation, inasmuch as the primary administrative remedy set forth therein—rejection

of the proposed fee or charge—requires a "majority of owners" to submit "written" (as

opposed to oral) "protests" to the proposed "fee or charge." (Italics added.)

       District's own notices of public hearing for the years 2012, 2013 and 2014 support

this interpretation. The 2012 public hearing notice states: "Any property owner or any

tenant directly responsible for the payment of water or wastewater service fees may



section 6, which provides: "The amount of a fee or charge imposed upon any parcel or
person as an incident of property ownership shall not exceed the proportional cost of the
service attributable to the parcel." As also noted, the court never reached this issue,
however, as it went to the merits or "phase 2" of the dispute that was rendered moot by
the court's finding in "phase 1" that plaintiffs failed to exhaust their administrative
remedies either by not objecting in writing before, or by appearing at, the annual budget
hearings when District increased the wastewater system rates per EDU.
                                              15
submit a written protest to the proposed increases to the rates and fees; provided,

however, only one protest will be counted per identified parcel. Any written protest must

. . . state that the identified property owner or tenant is opposed to the proposed water rate

and/or wastewater service fee increases" among other requirements. (Italics added.)

       The notice goes on to state that, when submitting a protest, an owner or tenant

must identify on the envelope that the "enclosed protest is for the Public Hearing on the

Proposed Increases to Rates for Water and Wastewater Service Fees" (italics added); that

District at the hearing "will hear and consider all written and oral protests to the proposed

rate increases"; and that, at the conclusion of the public hearing, the District board "will

consider adoption of the proposed rate and fee increases" unless a majority of "property

owners or customers" submitted written protests against such increases. (Italics added.)

This language is also included in the public hearing notices for 2013 and 2014.

       Thus, District's own public notices support the conclusion that the administrative

remedy in subdivision (a)(2) of section 6 is limited to a protest over the imposition of, or

increase in, rates for water and wastewater service fees, as opposed to protests over

whether District complied with the substantive requirements of subdivision (b) of this

section.

       Second, assuming for the sake of argument a challenge to the substantive

requirements of subdivision (b) of section 6 falls within the scope of the administrative

remedies set forth in subdivision (a)(2) of that section, we nonetheless conclude under the

facts of this case that these administrative remedies are inadequate. (See Glendale City

Employees' Ass'n v. Glendale (1975) 15 Cal.3d 328, 343 (Glendale).)



                                             16
       Here, the record shows that District provides wastewater services to about 40,000

people in Ramona, or to about 6,900 parcel owners. The record also shows that only four

"people" (as opposed to "parcel owners") protested the sewer service fees or charges in

2012; eight people protested in 2013; and 12 people protested such fees or charges in

2014. The record further shows that, with the exception of two protests in 2014, none of

these protests went to the proportionality requirement that is the subject of this lawsuit.

(§ 6, subd. (b)(3).)10

       The record therefore shows it would have been nearly impossible during these

years for plaintiffs to obtain "written protests" from a "majority" of parcel owners in

order to trigger the primary administrative remedy set forth in subdivision (a)(2) of

section 6—rejection of the imposed or increased fee or charge.

       In contrast to the majority requirement in section 6, subdivision (a)(2), section 4—

which the trial court incorrectly relied on in its statement of decision when imposing a

mandatory exhaustion requirement on plaintiffs—includes a balloting procedure for any

"assessment" sought to be imposed by an agency. Subdivision (c) of section 4 provides

that, in addition to notice of the date, time, and location of the public hearing concerning

any proposed assessment, each notice "shall also include, in a conspicuous place thereon,

a summary of the procedures applicable to the completion, return, and tabulation of the

ballots required pursuant to subdivision (d), including a disclosure statement that the




10      District in its respondent's brief claims there were actually six written protests in
2012 and nine in 2013. In reviewing the record, we counted five written protests in 2012
and eight in 2012. In any event, the point is there were very few written protests during
the relevant time period.
                                             17
existence of a majority protest, as defined in subdivision (e), will result in the assessment

not being imposed." (Italics added.)

       Subdivision (d) of section 4 further provides that the notice sent to each identified

parcel "shall contain a ballot which includes the agency's address for receipt of the ballot

once completed by any owner receiving the notice whereby the owner may indicate his or

her name, reasonable identification of the parcel, and his or her support or opposition to

the proposed assessment." (Italics added.) Subdivision (e) of this section provides in

part that, at the public hearing, the "agency shall consider all protests against the

proposed assessment and tabulate the ballots. The agency shall not impose an

assessment if there is a majority protest. A majority protest exists if, upon the conclusion

of the hearing, ballots submitted in opposition to the assessment exceed the ballots

submitted in favor of the assessment. In tabulating the ballots, the ballots shall be

weighted according to the proportional financial obligation of the affected property."

(Italics added.)

       Clearly, section 4 has procedures—including a balloting requirement—that are

nonexistent in subdivision (a)(2) of section 6. For this reason, we conclude the court

erred in relying on section 4 when it imposed on plaintiffs a mandatory exhaustion

requirement.11

11     We note subdivision (c) of section 6 requires approval "by a majority vote" before
a "property related fee or charge" may be imposed when that fee or charge does not
involve "sewer, water, and refuse collection services." (Italics added.) Under
subdivision (c) of section 6, the agency is required to "adopt procedures similar to those
for increases in assessments [in section 4] in the conduct of elections under this
subdivision." Because the instant case involves "sewer . . . collection services,"
subdivision (c) of section 6 is inapplicable.

                                              18
       What's more, the record shows that, at all times relevant, each of the named

plaintiffs were "commercial business owners" in the Santa Maria sewer area. The record

further shows that within this area, commercial properties account for only about 15

percent (or 257 of 1,750) of the parcels, with the remaining 85 percent primarily being

residential properties (i.e., assigned an EDU of 1.5 or less).

       As such, if commercial property owners "successfully argued that they were

overcharged for sewer service charges, the source of the funds for any potential refunds

would be higher assessments on other property owners, who are predominately property

owners." Because the relief plaintiffs are seeking in the instant case will potentially

require other parcel owners to pay higher fees or charges for wastewater services—what

District describes as a "zero-sum game"12—it seems implausible plaintiffs would ever

have been able to secure written opposition by a "majority" of parcel owners in order to

trigger the primary administrative remedy in subdivision (a)(2) of section 6.

       Without the administrative remedy that requires a "majority" of parcel owners to

protest in writing to the proposed "fee or charge," a parcel owner is left solely with the

right to "protest" the proposed "fee or charge." Although subdivision (a)(2) requires the

agency to "consider all protests" at the public meeting, we conclude merely having an

agency consider a protest—without more—is insufficient to create a mandatory

exhaustion requirement. (See Glendale, supra, 15 Cal.3d at pp. 342-343 [noting a



12     Merriam-Webster defines the term "zero-sum game" to mean a "situation in which
one person or group can win something only by causing another person or group to lose it
<Dividing up the budget is a zero-sum game.>" (See Merriam-Webster's Online
Dictionary (2017) <http://www.merriam-webster.com/dictionary/zero-sum game> [as of
June 1, 2017].
                                             19
"procedure which provides merely for the submission of a grievance form, without the

taking of testimony, the submission of legal briefs, or resolution by an impartial finder of

fact is manifestly inadequate to handle disputes of the crucial and complex nature of the

instant case" involving a memorandum of understanding adopted under the Meyers-

Milias-Brown Act (Stats. 1968, ch. 1390)]; see also City of Oakland, supra, 224

Cal.App.4th at pp. 236-237 [noting even if a city's charter language requiring a public

hearing before a police and retirement board " 'in all proceedings pertaining to retirement

and to the granting of retirement allowances, pensions, and death benefits' " was broadly

construed to include disputes with the city, the court would still conclude that the process

articulated in the charter was insufficient to create a mandatory exhaustion requirement

because the "public hearing requirement contained in [the c]harter [did] not require the

[b]oard to do anything in response to the submissions or testimony received by it at the

hearing" and, thus, "the procedure does not provide for the acceptance, evaluation and

resolution of disputes"]; Payne v. Anaheim Memorial Medical Center, Inc. (2005) 130

Cal.App.4th 729, 741-742 [concluding the physician plaintiff's allegations "against his

coworkers present[ed] complex issues -- a pattern of racist conduct intended to provide

his minority patients with a lesser standard of care, and to interfere with his own ability to

care of them," and, thus, further concluding that, unless the court presumed such

allegations were unfounded, "which [it was] not permitted to do," the court could not

"agree that the procedure outlined in [the hospital's bylaws], which, as in Glendale . . . ,

'provides merely for the submission of the grievance form, without the taking of

testimony, the submission of legal briefs, or resolution by an impartial finder of fact'

[was] adequate to resolve them"]; City of Coachella v. Riverside County Airport Land

                                             20
Use Com. (1989) 210 Cal.App.3d 1277, 1287 [concluding the public hearing process of

the airport land use commission with respect to the adoption of the commission's land use

plan did not constitute an adequate administrative remedy because the "public hearings

held by the [c]ommission with regard to the adoption of [that plan] did not require that

the [c]ommission do anything in response to submissions or testimony received by it

incident to those hearings"]; Jacobs v. State Bd. of Optometry (1978) 81 Cal.App.3d

1022, 1029, quoting Rosenfield v. Malcom (1967) 65 Cal.2d 559, 566 [noting the "mere

possession by some official body, such as the board, of a 'continuing supervisory or

investigatory power' does not itself suffice to afford an administrative remedy" and

further noting "[t]here must be 'clearly defined machinery' for the submission, evaluation

and resolution of complaints by aggrieved parties"]; Sunnyvale Public Safety Officers

Assn. v. City of Sunnyvale (1976) 55 Cal.App.3d 732, 736 [noting the administrative

procedures enacted by the city for the settlement of employee grievances and disputes

involving the city and public safety officers were inadequate as such procedures neither

provided for a hearing before the city council nor the "taking of testimony [n]or the

submission of legal briefs"]; Martino v. Concord Community Hosp. Dist. (1965) 233

Cal.App.2d 51, 57 [rejecting hospital's contention that physician had no right to judicial

relief after seeking appointment to the medical staff because he had failed to appeal to the

executive committee of the hospital staff as authorized in the hospital's bylaws, after

concluding the hospital's procedures were "nebulous" because they did "not set forth any

procedure for the hearing or determination of the appeal and state[] only that it shall be

'considered' " under the bylaws]; and Henry George School of Social Science v. San

Diego Unified School Dist. (1960) 183 Cal.App.2d 82, 85 [rejecting a school board's

                                             21
claim that plaintiff had failed to exhaust its administrative remedies in connection with

plaintiff's efforts to enjoin the board from enforcing rental charges in excess of those

authorized by state law because "no authority has been cited, and we have found none,

that applies the doctrine of exhaustion of administrative remedy to any case where no

specific remedy is provided, permitted or authorized by statute or by rule of the

administrative agency involved"].)

       Like the trial court in its statement of decision, District relies extensively on

Wallich's to support its contention plaintiffs were required to exhaust their administrative

remedies either by objecting beforehand in writing to the proposed increase in wastewater

services fees or by appearing at the public hearing(s) when this issue was taken up by

District in connection with its annual budget. In Wallich's, the court ruled the plaintiff

failed to exhaust its administrative remedy when it challenged various assessments

imposed under the Citrus Pest District Control Law (Food & Agr. Code, § 8401 et seq.;

hereinafter pest control law) by the Kern County Citrus Pest Control District in

connection with its efforts to eradicate the citrus tristeza virus. (Wallich's, supra, 87

Cal.App.4th at p. 880.)

       In reaching its decision, the Wallich's court noted that the pest control law

provided "a specific mechanism for levying and assessing taxes for district purposes."

(Wallich's, supra, 87 Cal.App.4th at p. 880.) The court further noted that, " '[g]iven the

public health and safety issues inherent in the [p]est [c]ontrol [l]aw, in addition to the

policy of resolving disputes expeditiously,' " a "general exhaustion rule" was warranted

(id. at p. 884); and, therefore, that the appropriate procedure for challenging the

assessments was for the plaintiff to first exhaust its remedy by challenging the budget

                                              22
before the district, which could only be adopted after a noticed hearing and which the

plaintiff had failed to do. (Id. at pp. 884-885.)

       We conclude Wallach's is inapposite in the instant case. First, although the

plaintiff in Wallach's contended the imposition of assessments violated Proposition 218

among other constitutional provisions, as noted the Wallach court found there was a

"general exhaustion" requirement under the pest control law, and, thus, unlike the trial

court in the instant case, the court in Wallach's did not impose an exhaustion requirement

under Proposition 218. (See Wallich's, supra, 87 Cal.App.4th at p. 884.) In fact, the trial

court in Wallich's found the district in that case was exempt from article XIII D (as a

result of section 5, subdivision (a), which subdivision is not at issue in the instant case).

(Wallich's, at p. 882.)

       Second, in contrast to section 6, which generally applies to the imposition or

increase in any "fee or charge" by any agency, the pest control law is a "comprehensive

legislative scheme" (see City of Oakland, supra, 224 Cal.App.4th at p. 237) providing for

the formation (Food & Agr. Code, § 8451 et seq.) and organization of districts (id.,

§ 8501 et seq.); setting forth the powers and duties of districts (id., § 8551 et seq.),

including the levying and assessing of taxes for district purposes (id., § 8601 et seq.); and

providing for the consolidation and, ultimately, dissolution of districts (id., §§ 8701 et

seq. & 8751 et seq., respectively).

       For this separate reason, we conclude Wallich's—and its requirement that a party

challenging an assessment exhaust its administrative remedy under a "comprehensive

legislative scheme" (i.e., the pest control law)—is distinguishable from the instant case.

(See also Woodard v. Broadway Federal Sav. & Loan Asso. (1952) 111 Cal.App.2d 218,

                                              23
223-225 [concluding a challenge to validity of an election must first be brought to what

was then known as the "Home Loan Bank Board" (12 U.S.C. former § 1462), which

promulgated under federal law "comprehensive" and "explicit" rules and regulations

governing the operation of federal savings and loan associations from their inception to

their dissolution].)

       Third, the pest control law requires a district board, after adopting a plan to control

and eradiate citrus pests within the district (Food & Agr. Code, § 8557), to "make or

cause to be made an estimate of the cost of operating the plan for the next fiscal year

beginning not sooner than 90 days thereafter" (id., § 8558, italics added). The pest

control law expressly requires a district board to hold an annual "budget hearing" to

institute that plan. (See id., §§ 8560 [budget hearing, time, and place]; 8561 [publication

of notice]; 8562 [notice, duration of publication]; 8563 [contents of notice]; 8564

[protests against budget or items]; 8565 [hearing protests against budget or items]; &

8566 [adoption of the budget for the forthcoming fiscal year].)

       Unlike the pest control law, section 6 does not require an agency such as District

to hold an annual meeting. As such, if an agency such as District decided not to impose a

new or increased fee or charge year over year, parcel owners like plaintiffs herein

challenging the method used by an agency to determine such fees or charges would have

no remedy, adequate or otherwise, under section 6 during such period. For this separate

reason, we conclude Wallich's is inapposite in the instant case.

       Fourth, in contrast to the instant case in which plaintiffs' action presented a

substantive challenge to the method used by District to determine its wastewater service

fees via an EDU system, in Wallich's the plaintiff merely challenged the amount it was

                                             24
assessed on various parcels over a three-year period. The court in Wallich's noted that,

after the budget was fixed by the agency in that case, the " 'computation of the

assessments [was] a simple matter of division and amount[ed] to no more than the

performance of a ministerial act.' " (Wallich's, supra, 87 Cal.App.4th at p. 885, quoting

Irvine v. Citrus Pest Dist. (1944) 62 Cal.App.2d 378, 383.) Thus, the nature of the

challenge by the plaintiff in Wallich's further distinguishes it from the instant case.

       Finally, the trial court in its statement of decision found plaintiffs had in fact

exhausted their administrative remedy under the RMWD legislative code as a result of

plaintiffs' November 21, 2013 submission of a written administrative claim to District.

Included with the administrative claim was a draft complaint, which the trial court noted

was "similar to the one [they] later filed with the [c]ourt." As such, the draft complaint

included a detailed explanation of plaintiffs' challenge to the EDU system. District

ultimately rejected that claim.

       The trial court further noted in its statement of decision that District conceded both

in its reply brief in support of its bifurcation motion and at the hearing that plaintiffs'

administrative claim satisfied the general exhaustion requirement under the RMWD

legislative code.13 For this separate reason, we conclude the facts in the instant case are

13      Also in support of the general exhaustion requirement, plaintiffs contend they
made numerous other attempts in addition to filing their administrative claim to apprise
District of the nature of their claims short of objecting in writing before and/or appearing
at the public meetings in 2012, 2013, and 2014. Such efforts included a letter sent by
Plantier's then legal counsel to District in July 2012 in which his counsel alleged the EDU
system was "arbitrary and discriminatory" as it pertained to Plantier's commercial
property; an August 2012 letter sent directly by Plantier to District memorializing a
meeting between him and District earlier that month; and a letter sent in December 2012
by a consumer advocacy group on behalf of Plantier stating the EDU-based wastewater
rate structure was unconstitutional because of the alleged lack of a rational relationship
                                               25
distinguishable from those in Wallich's, where the plaintiff did not attempt whatsoever to

exhaust its administrative remedy under the "general exhaustion" rule set forth in the pest

control law. (See Wallich's, supra, 87 Cal.App.4th at p. 884.)

       In sum, we conclude under the facts of the instant case that plaintiffs were not

required to exhaust the administrative remedies in subdivision (a)(2) of section 6 either

by objecting in writing beforehand to the annual increase in wastewater service fees

District sought to impose in 2012, 2013, and 2014 and/or by appearing at the hearings in

those years to challenge publicly such increases.14




between the EDU system and the actual wastewater used by a customer. However, in
light of the concession by District that plaintiffs' administrative claim satisfied the
general exhaustion requirement in the RMWD legislative code, we find it unnecessary to
determine whether this additional evidence separately satisfied this requirement.

14      In light of our decision, we conclude it is unnecessary to decide whether it was
"futile" for plaintiffs to have objected in writing before and/or at the budget hearings in
2012, 2013, and 2014 in order to challenge the method in which District calculated
wastewater service fees it imposed under its EDU system. (See San Diego Municipal
Employees Assn. v. Superior Court (2012) 206 Cal.App.4th 1447, 1459, quoting
Jonathan Neil & Assoc., Inc. v. Jones (2004) 33 Cal.4th 917, 936 [noting the " '[f]ailure
to exhaust administrative remedies is excused if it is clear that exhaustion would be futile'
" and further noting the " 'futility exception requires that the party invoking the exception
"can positively state that the [agency] has declared what its ruling will be on a particular
case" ' "].)
                                             26
                                       DISPOSITION

       The judgment in favor of District is reversed and the matter is remanded to the

trial court. On remand, the trial court is directed to vacate its order finding plaintiffs

failed to exhaust their administrative remedies under section 6 of article XIII D and to

enter a new order finding section 6 does not include a mandatory exhaustion requirement

in this case. Plaintiffs to recover their costs of appeal.



                                                                         BENKE, Acting P. J.

WE CONCUR:



O'ROURKE, J.



DATO, J.




                                              27
