CALIF. COMMERCE CASINO v. SCHWARZENEGGER
53 Cal.Rptr.3d 626 (2007)
146 Cal.App.4th 1406
CALIFORNIA COMMERCE CASINO, INC., et al., Plaintiffs and Appellants,
v.
Arnold SCHWARZENEGGER, as Governor, etc., et al., Defendants and Respondents.
No. B188220.
Court of Appeal of California, Second District, Division Three.
January 23, 2007.
Manatt, Phelps & Phillips, Ronald B. Turovsky and Joanna S. McCallum, Los Angeles, for Plaintiffs and Appellants.
Howard Rice Nemerovski Canady Falk & Rabkin, Steven L. Mayer, San Francisco, for Hollywood Park Land Co., LLC, et al. as Amici Curiae on behalf of Plaintiffs and Appellants.
Bill Lockyer, Attorney General, Robert L. Mukai, Assistant Attorney General, Sara J. Drake and Kenneth R. Williams, Deputy Attorneys General, for Defendants and Respondents.
Fred J. Hiestand, Sacramento, for the Pala Band of Mission Indians, the Pauma Band of Mission Indians, the Rumsey Band of Wintun Indians, the United Auburn Indian Community and the Viejas Band of Kumeyaay Indians as Amici Curiae on behalf of Defendants and Respondents.
Plaintiffs and appellants California Commerce Casino, Inc. and Michael Sana (collectively, plaintiffs) appeal a judgment of dismissal following the sustaining without leave to amend of a demurrer interposed by defendants and respondents Arnold Schwarzenegger in his official capacity as Governor of the State of California, Tom Campbell in his official capacity as Director, California Department of Finance, and California Infrastructure and Economic Development Bank (I-Bank) (defendants).
As a preliminary matter, this court has subject matter jurisdiction over the appeal. Government Code section 63048.8, subdivision (e), added by section 4 of Assembly Bill No. 687 (2003-2004 Reg. Sess.) (AB 687), insofar as it provides for direct review, by the California Supreme Court of certain matters, is unconstitutional because it abridges the Court of Appeal's appellate jurisdiction. (In re Perris City News (2002) 96 Cal.App.4th 1194, 1197, 118 Cal.Rptr.2d 38.) The essential issue presented on appeal is the statute of limitations applicable to this action in which plaintiffs are challenging the constitutionality of AB 687, a five section bill wherein the Legislature ratified amended gaming compacts among the State of California and five Indian tribes Although plaintiffs contend they are attacking solely the validity of AB 687 and not any matters authorized by AB 687, plaintiffs' action, if successful, would have the effect of invalidating the amended compacts which were ratified thereby. Therefore, the various theories raised in plaintiffs' complaint should have been tested in a validation action within 60 days of the enactment of AB 687. (Code Civ. Proc., § 860 et seq.; Gov.Code, § 17700., However, plaintiffs waited nearly 11 months to file suit, and therefore, the trial court properly ruled the action was time-barred.
In addition to being filed late in the trial court, the matter was not filed timely on appeal. The issue of the timeliness of the appeal is inextricably intertwined with the issue of whether this action was subject to the validation statutes. Because plaintiffs' lawsuit was subject to the time limits specified for validation actions, the time for filing notice of appeal is governed by Code of Civil Procedure section 870, within the statutory scheme pertaining to validating proceedings, not by California Rules of Court, former rule 2(a). Code of Civil Procedure section 870 requires notice of appeal in a validation action to be filed within 30 days of notice of entry of judgment. The notice of appeal herein was filed 47 days after notice of entry of judgment, Therefore, the appeal must be dismissed as untimely.
FACTUAL AND PROCEDURAL BACKGROUND
1. Banking games are those in which the house has a stake in the outcome of the game. Percentage games are those where the house collects a given share of the amount wagered. (1998 Indian Gaming Compacts Referendum Statute, analysis by the Legislative Analyst, p. 2.)
2. The five tribes are the Pala Band of Mission Indians, the Pauma Band of Mission Indians, the Rumsey Band of Wintun Indians, the United Auburn Indian Community, and the Viejas Band of Kumeyaay Indians (hereafter, the five tribes).
3. AB 687 is summarized in greater detail in section 5 of the Discussion, infra.
4. California Constitution, article IV, section 8(d), provides: "Urgency statutes are those necessary for immediate preservation of the public peace, health, or safety. A statement of facts constituting the necessity shall be set forth in one section of the bill. In each house the section and the bill shall be passed separately, each by rollcall vote entered in the journal, two thirds of the membership concurring. An urgency statute may not create or abolish any office or change the salary, term, or duties of any office, or grant any franchise or special privilege, or create any vested right or interest." (Italics added.)
5. Proposition 58, the California Balanced Budget Act, added article XVI, section 1.3 to the state Constitution. Said provision states in relevant part: "the State may not obtain moneys to fund a year-end state budget deficit, as may be defined by statute, pursuant to any of the following: ... (2) a debt obligation under which funds to repay that obligation are derived solely from a designated source of revenue[.]" (Cal. Const., art. XVI, § 1.3(c), operative Mar. 3, 2004.)
6. Hollywood Park Land Company, LLC, Terrence E. Fancher, MEC Land Holdings (California), Inc., Santa Anita Companies, Inc., Los Alamitos Race Course and Bay Meadows Main Track Investors, LLC have filed an amicus brief in support of plaintiffs.
7. The five tribes jointly have filed an amicus brief in support of defendants.
8. The Attorney General makes no attempt to uphold the constitutionality of Government Code section 63048.8, subdivision (e).
9. The time for appealing a judgment in a validation action is governed by Code of Civil Procedure section 870, not by California Rules of Court, former rule 2(a), or the current rule, rule 8.104 (eff. Jan. 1, 2007). Code of Civil Procedure section 870 provides in relevant part at subdivision (b): "Notwithstanding any other provision of law including, without limitation, Section 901 and any rule of court, no appeal shall be allowed from any judgment entered pursuant to this chapter unless a notice of appeal is filed within 30 days after the notice of entry of the judgment. ..."
10. In Kaatz, the City's conduct challenged by Kaatz was not subject to the validation statutes and therefore the 30-day appeal period under Code of Civil Procedure section 870, subdivision (b), was inapplicable. (143 Cal. App.4th at p. 27, 49 Cal.Rptr.3d 95.) 11. Although the appeal must be dismissed as untimely, this is the rare case in which, notwithstanding the dismissal of the appeal, the appellants have received a plenary review of the merits of their contentions.
12. The initiation of a validation proceeding by an interested person is referred to as a "`reverse validation action.'" (Kaatz, supra, 143 Cal.App.4th at p. 30, fn. 16, 49 Cal.Rptr.3d 95.) 13. Plaintiffs do not contend the 60-day statute of limitations for bringing a validation action (Code Civ. Proc., § 860) is unreasonable. Rather, they contend their action was not subject to the validation statutes.
14. "Compact assets" are defined as moneys required to be paid to the state under specified provisions of the designated tribal compacts, and the state's rights to receive those payments. (Gov.Code § 63048.6, subd. (a).)
15. Thus, the contracts in issue here, namely, the compacts, involve financing and financial obligations of the state. Public agency contracts involving financing and financial obligations are frequently the subject of validation actions. (Friedland, supra, 62 Cal. App.4th at p. 843, 73 Cal.Rptr.2d 427.)
16. We agree with Kaatz as to the significance of Ontario. "Although it questioned the applicability of the validation statutes as to each one of the plaintiffs' claims, [Ontario] did not conclude definitively that the public agency conduct about which the plaintiffs complained was (or was not) subject to validating proceedings. (City of Ontario, supra, 2 Cal.3d at p. 346[, 85 Cal.Rptr. 149, 466 P.2d 693].) [Ontario's] review of the validation statutes and Government Code section 53511 led it to conclude that whether [section 860 through 870] applied to the plaintiffs' case presented] a "complex and debatable" issue' (City of Ontario, supra, 1 Cal.3d at p. 345[, 85 Cal.Rptr. 149, 466 P.2d 693]), thereby supporting the plaintiffs' contention that there was good cause for their noncompliance with the summons requirements of the validation statutes. Thus, while City of Ontario's lengthy discussion concerning the scope of the validation statutes and the meaning of the term `contracts' in Government Code section 53511 may be considered dictum, we agree with the appellate court's statement in Smith v. Mt. Diablo Unified Sch. Dist. [(1976)] 56 Cal. App.3d [412,] 418[, 128 Cal.Rptr. 572]: `Although not controlling, the dicta [of our Supreme Court in City of Ontario] is entitled to substantial weight, particularly in view of its thoroughness.' [Citation.]" (Kaatz, supra, 143 Cal.App.4th at p. 34, fn. 25, 49 Cal.Rptr.3d 95.) 17. We note IGRA provides for approval of tribal-state compacts by the federal Secretary of Interior. (25 U.S.C. § 2710(d)(8).) Accordingly, the amended compacts provide they would not become effective until ratified by statute in accordance with state law and publication of notice of approval in the Federal Register as provided in IGRA. Notice of approval was published in the Federal Register on September 2, 2004. (69 Fed.Reg. 53733.) Even assuming the 60-day period for bringing a reverse validation action began to run on September 2, 2004, rather than on July 1, 2004, the complaint filed May 27, 2005 is untimely. (Code Civ. Proc., § 860 et seq.)