The primary issue presented by this appeal is a legal one: Does Education Code section 17406 exempt school districts from obtaining competitive bids when entering into what are known as "lease-leaseback" agreements to improve school property? We conclude the answer is yes. More than 40 years ago, the California Attorney General concluded the language of the statute is plain, unambiguous, and explicit, and does not impose bid requirements on school districts. We agree, and nothing has occurred in the interim that would change our conclusion.
Los Alamitos Unified School District (the District) filed an action to validate its lease-leaseback agreement with a contractor performing improvements on the track and athletic field of the District's high school. Another contractor, Howard Contracting, Inc. (Howard), filed an answer, claiming the lease-leaseback agreement was unconstitutional, illegal, and invalid because the District did not obtain competitive bids for the project. The trial court did not err in granting the District's motion for summary judgment, as the District was not required to obtain competitive bids under Education Code section 17406. We affirm the judgment in favor of the District.
We also conclude the trial court did not err by denying Howard's motion to tax the costs of service of process. Howard has failed to provide any serious
STATEMENT OF FACTS AND PROCEDURAL HISTORY
The District entered into a lease-leaseback agreement with third party contractor Byrom-Davey, Inc., for a construction project involving upgrades and improvements to the District's high school track and athletic field (the Project). The agreement was authorized by the District's governing board of education.
In June 2012, the District filed a complaint, pursuant to Code of Civil Procedure section 860, to validate the lease-leaseback agreement. Pursuant to a court order, a copy of the summons was published in the Orange County Register, and posted in public places within the District's boundaries. Howard filed an answer. The District demurred to Howard's answer; the demurrer was sustained without leave to amend as to the first affirmative defense that the summons was not properly served, but overruled as to all other affirmative defenses.
The District filed a motion for summary judgment or, in the alternative, summary adjudication. Following briefing and a hearing, the trial court granted the motion for summary judgment. Judgment was entered. Howard filed a motion for a new trial, which the court denied.
The trial court granted in part and denied in part Howard's motion to tax costs. Howard filed a timely notice of appeal from the judgment and the postjudgment order regarding costs.
MOTION FOR SUMMARY JUDGMENT
"A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is, entitled to judgment as a matter of law. [Citation.]" (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476 [110 Cal.Rptr.2d 370, 28 P.3d 116].) A plaintiff moving for summary judgment must prove each element of each cause of action. (Code Civ. Proc., § 437c, subd. (p)(1).) If the moving plaintiff satisfies this initial burden, the burden shifts to the defendant to set forth "specific facts" showing that a triable issue of material fact exists as to a cause of action or a defense. (Ibid.) "We review
The lease-leaseback agreement between the District and Byrom-Davey was entered into pursuant to Education Code 17406, subdivision (a), which provides: "Notwithstanding Section 17417,[
Howard did not challenge that the District had met its initial burden in the trial court, and does not do so on appeal. Rather, Howard argues that the use of the lease-leaseback process was unconstitutional, unconscionable, illegal, and a theft of public funds. Howard argues that despite the language of Education Code section 17406, subdivision (a), specifying lease-leaseback arrangements may be entered into "without advertising for bids," California's public contract law requiring competitive bidding applied here, making the agreement between the District and Byrom-Davey illegal.
The District contends the language of Education Code section 17406 exempts lease-leaseback agreements from the competitive bidding that would otherwise apply to a public works contract. The great weight of authority supports this interpretation of section 17406.
The Attorney General interpreted an earlier version of Education Code section 17406 and concluded it exempted school district lease-leaseback arrangements from the competitive bidding process. The predecessor of section 17406 provided: "The governing board of a school district may let, at a minimum rental of one dollar ($1) a year, to any person, firm, or corporation any real property which belongs to the district if the instrument by which such property is let requires the lessee therein to construct on the demised premises, or provide for the construction thereon of, a building or buildings for the use of the school district during the term thereof, and provides that title to such building shall vest in the school district at the expiration of such term. Such instrument may provide for the means or methods by which such title shall vest in the school district prior to the expiration of such term, and shall contain such other terms and conditions as the governing board may deem to be in the best interest of the school district." (Ed. Code, former § 15705; Stats. 1959, ch. 2, § 1, pp. 595, 1086-1087.)
In 2004, the California Legislature sought to amend Education Code section 17406 to require that school districts solicit competitive bids for lease-leaseback arrangements.
Howard contends the language of Education Code section 17406 applies only to one of the agreements necessary to enter into a lease-leaseback agreement. The lease-leaseback agreement required both a site lease agreement, by which the District leased its property to Byrom-Davey for $1 per year to gain title and access to the property during the construction, and a sublease agreement, by which the District leased back the property from Byrom-Davey for an agreed-upon amount which covered the costs of construction and financing. According to Howard, section 17406 is intended only to apply to the site lease agreement, not the sublease agreement. Howard claims the purpose of the statute is to avoid a situation in which both agreements were competitively bid, and two different contractors made the winning bids on the two different agreements. The terms of the statute, however, appear to prevent the potential problem Howard identifies. Section 17406 sets the minimum annual rental fee to be paid by the contractor to the school district at $1. No one who actually wanted to win the Project could ever be underbid in the site lease agreement.
Howard contends that if Education Code section 17406 applies to the entire series of agreements that form a lease-leaseback arrangement between a school district and a contractor, Education Code section 17417 would be rendered a nullity "as there is no scenario under which Section 17417 would then apply." Section 17417 applies generally to "a lease or agreement pursuant to this article." Title 1, division 1, part 10.5, chapter 4, article 2 of the Education Code applies even more generally to leasing property. There would appear to be many ways in which section 17417 would be used, even if lease-leaseback arrangements are excluded from it.
Howard next argues the summons was defective. Service of process in this case was governed by Code of Civil Procedure section 860 et seq. and Government Code section 6063. Code of Civil Procedure section 861 provides: "Jurisdiction of all interested parties may be had by publication of summons pursuant to Section 6063 of the Government Code in a newspaper of general circulation designated by the court, published in the county where the action is pending and whenever possible within the boundaries of the public agency...." Government Code section 6063 provides: "Publication of notice pursuant to this section shall be once a week for three successive weeks. Three publications in a newspaper regularly published once a week or oftener, with at least five days intervening between the respective publication dates not counting such publication dates, are sufficient. The period of notice commences upon the first day of publication and terminates at the end of the twenty-first day, including therein the first day." Code of Civil Procedure section 861.1 provides: "The summons shall be directed to `all persons interested in the matter of [specifying the matter],' and shall contain a notice to all persons interested in the matter that they may contest the legality or validity of the matter by appearing and filing a written answer to the
Here, the first day that notice was published was June 28, 2012. The notice period terminated 21 days later, on July 19. Service was completed 10 days later, on July 29. Exhibit A to the summons correctly identified July 29, 2012, as the date on which a response to the validation action was due. Howard correctly notes that the required summons form used in this case (which was prepared by the Judicial Council of California, and the use of which complies with the relevant statutes (see Code Civ. Proc., § 412.20, subd. (c))), advised interested persons that they must respond in 30 days, rather than providing a date certain for a response. Exhibit A to the summons provided the date certain. We conclude this notice was sufficient.
Katz v. Campbell Union High School Dist. (2006) 144 Cal.App.4th 1024 [50 Cal.Rptr.3d 839] does not compel a different conclusion. In Katz, the summons in a validation action contained two defects: (1) the summons did not specify a concrete response date, and (2) the summons did not provide the full amount of time to respond. (Id. at p. 1029.) As noted ante, in this case, the summons including its exhibit did contain a date certain for a response, and that date was proper in light of the relevant statutes.
MOTION TO TAX COSTS
The judgment is affirmed. The postjudgment order is affirmed. Respondent to recover costs on appeal.
Moore, Acting P. J., and Ikola, J., concurred.