CITY OF MOORPARK v. MOORPARK UNIFIED SCHOOL DISTRICT

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Court of Appeal, Second District, Division 6, California.

CITY OF MOORPARK, etc., Respondent, v. MOORPARK UNIFIED SCHOOL DISTRICT, et al., Appellants.

Civ. B046659.

Decided: January 09, 1991

Bergman & Wedner, Inc., and Gregory M. Bergman, Richard V. Godino, Robert M. Mason, III, for appellants. Bowie, Arneson, Kadi & Dixon, and Carol J. Graham, Wendy H. Wiles as amici curiae, on behalf of appellants. Cheryl J. Kane, City Atty., Burke, Williams & Sorensen, and Lisa E. Kranitz, for respondent.

Here we hold that appellant, the Moorpark Unified School District (the District), entered into a binding contract with respondent, the City of Moorpark (the City), to sell a certain portion of its surplus school property, pursuant to the provisions of the Naylor Act.  (See Ed.Code, §§ 39390–39404, described infra.) 1  The District's subsequent adoption of a resolution to exempt this land from the surplus sale, after the City filed this action, is invalid.

The trial court issued a peremptory writ to compel the District to vacate the exemption resolution.   The trial court also ordered the District to complete the transfer of the property to the City.   We affirm.

The Naylor Act

The purpose of the Naylor Act is to keep surplus school property available to other public entities for use as playground or for other outdoor recreational and open-space purposes.  (§ 39390.)   The Act applies to school sites used by a school for these purposes for the immediately preceding eight years in communities which have no other available publicly owned land in the vicinity which is adequate to meet the existing and foreseeable community needs for such sites.  (§ 39391.)   To ensure that communities may acquire such property for these uses, the Act allows school districts to recover their investment in such property.  (§ 39390.)

If a school district decides to sell or lease any school site containing surplus land, it must do so in accordance with the Act.  (§ 39393;  also see § 39399.)   Before offering a surplus site for sale, a school district may retain any part of the site containing structures or buildings, along with the land adjacent thereto.  (§ 39395.)   Section 39394 states the order of priority of entities which first have the right to accept an offer to sell or lease a site.   Acceptance is valid if it is given within 60 days of receipt of written notification of the offer.  (§ 39394.)

In its acceptance, the purchasing entity must designate the part of the surplus land it desires to purchase.  (§ 39397.5.)   It may purchase up to 30 percent of total surplus school acreage at the price established by the Act.  (§§ 39397.5, 39396.)

If the school district has an immediate need for an additional school site and is actively seeking to acquire such a site, it may exempt no more than two surplus sites from these statutory provisions.  (§ 39401.)

FACTS

On November 24, 1987, the Board of Education of the District (the Board) adopted Resolution No. 1987–88–30 which declared, among other things, that disposition of the Casey Road school site (the site) is in the best interests of the students of the District.   That resolution stated that the site was not a surplus site.   The resolution asserted that “the law provides that under such circumstances the value received by a growing school district for property may not be less than fair market value․”

On May 17, 1988, the District adopted Resolution No. 1987–88–68 which expressly revised Resolution No. 1987–88–30.   It deleted the clause stating that the site was not surplus.  (See §§ 39391, 39393, describing surplus school land and requiring that the sale of such land be made in accordance with the Act.)   The resolution still stated that the District was entitled to fair market value for the property under state law.

On May 24, 1988, the District sent out a notice of its intent to sell, lease or exchange all or a portion of the site to certain public agencies, pursuant to section 39394.   That notice states:  “Notice is hereby given that the Moorpark Unified School District, by RESOLUTION # 1987–88–68, adopted on May 17, 1988, proposes to offer for sale, lease or exchange all or a portion of the following property at fair market value:  [¶] [describing generally the Casey Road site.]  [¶] Any agency interested in said property (land and structures) should notify ․ on or before July 25, 1988.”

On February 3, 1988, the City Council, which is the governing body of the City, passed Resolution No. 88–445 to make the findings necessary to acquire such land under section 39397.   The City's resolution stated, in pertinent part:  “that the public lands in the vicinity of [the school site] are inadequate to meet the existing and foreseeable needs of the community for playground, playing field, or other outdoor recreational and open-space purposes.”   The resolution also stated that the site meets the various criteria for surplus purchase specified in section 39391.

On July 25, 1988, the City accepted the District's offer to sell by timely notifying it in writing of its intention to purchase 30 percent of the site, pursuant to section 39394.

In this acceptance letter, the City enclosed a copy of the plan it had adopted which designated the general location of the portion of the site it desired to purchase, pursuant to section 39397.5.   The City also requested the District to provide its appraisal of the site to determine the value, and thereby the sales price, pursuant to section 39396.

Section 39396 provides that the sales price of such surplus sites may be 25 percent of the fair market value of the land described.  (See also § 39397.5, which provides for adoption of a plan for the purchase of the portion of the surplus property the public agency desires to purchase “at the price established pursuant to this article․”)

In this letter, the City also asked the District to provide its appraisal of the fair market value of the Casey site.   The District provided the City with a preliminary summary valuation.

On November 2, 1988, the City informed the District in writing that it was opening an escrow account for 25 percent of the District's valuation figure and fees.   The City also stated that it was preparing a legal description of the portion of the parcel it desired to purchase, which it had designated in its July 25, 1988 letter.

On June 5, 1989, the City filed its petition for a writ of mandate and a complaint for declaratory relief because the District had not proceeded to convey the property to the City.   The City prayed for an order to compel the District to sell the parcel for $319,750, which is 25 percent of the value determined by a formal appraisal the City obtained in March 1989.   The District never submitted a formal appraisal of the property.

On June 13, 1989, the District's board adopted Resolution No. 1988–89–60.   By this resolution, the District attempted to exempt the site from the surplus sale pursuant to section 39401.   Section 39401 provides, in pertinent part:  “Notwithstanding the other provisions of this article, any school district governing board may designate not more than two surplus school sites as exempt from the provisions of this article for each planned school site acquisition if the school district has an immediate need for an additional school site and is actively seeking to acquire such an additional site․”

The City filed a first amended petition which additionally prayed for a writ of mandate to have Resolution No. 1988–89–60 vacated.

The hearing on the matter was originally set for August 7, 1989.   The court continued the matter until September 1, 1989, and it ordered that no additional briefs be filed to the already exhaustive, voluminous file.

Nonetheless, various additional briefs and materials were proffered without leave of court.   They included a supplemental brief which sought to introduce an internal City memorandum written by the City manager.   The trial court used its sound discretion to refuse to consider any of these materials.

On October 11, 1989, the trial court granted judgment on the writ petition and issued its peremptory writ of mandate.   The trial court compelled the District:  1. to set aside and to vacate Resolution No. 1988–89–60, 2. to follow Resolution No. 1987–88–68, and to sell the 30 percent of the gross acreage of the Casey site designated by the City in its plan for 25 percent of its fair market value.

The court ordered the District either to accept the City's appraisal of $1,279,000 as the fair market value of the subject parcel or to timely prepare its own formal appraisal for reconciliation with the City's appraisal to determine the price to be paid, in accordance with the Act.   The court chose September 1, 1989, as the date of valuation.

On October 31, 1989, the trial court denied the District's motion to reconsider.   The District appeals from the order for entry of the writ of mandate and from the peremptory writ of mandate.

DISCUSSION

 This case appears to be one of first impression.   Because it is one of statutory interpretation, we review it de novo.  (Terminal Plaza Corp. v. City and County of San Francisco (1986) 186 Cal.App.3d 814, 828, 230 Cal.Rptr. 875.)

 The trial court did not abuse its discretion in determining that the City has no adequate remedy at law.  (Sutco Construction Co. v. Modesto High School Dist. (1989) 208 Cal.App.3d 1220, 1227, 256 Cal.Rptr. 671.)   If the City could not compel the District to complete this sale, it would be forced to pay fair market value for the property rather than 25 percent of that value.   The City would also lose its guaranteed first priority status to purchase the site, as expressly provided under the Naylor Act.  (Cf. the specific provisions of § 39394 which concern the sale of surplus school property with Gov.Code, § 54220 et seq., which are general provisions requiring that surplus public land be offered first to other public entities.)

 The District does not argue that the Naylor Act is inapplicable to the subject property.   Instead, it opines that it never entered into a binding contract with the City for the sale of the property.   The District asserts that its May 24, 1988 notice of resolution of intent to lease, sell or exchange the property, pursuant to Resolution No. 1987–88–68, was only an invitation to submit offers and was not an offer to sell or lease the subject property.

It argues that until it attempted to exempt the property from the surplus sale, the District and the City were still engaged in negotiations regarding disposition of the site.   It contends, inter alia, that the failure of the parties to agree on the price for the site is evidence that the parties have no binding contract.

The District also asserts that it properly adopted the exemption resolution, after the City commenced this suit, and therefore the property is no longer subject to the surplus price provisions of the Act.   The terms of the Act, and the evidence in the record, belie these assertions.

On August 18, 1987, long before the Board adopted its first resolution regarding the property, the superintendent submitted a report to the Board which described in detail the Board's options to dispose of the land under the Act.

The Board knew that such sales were entirely governed by the Act and not by the common law of contracts.  (See esp. § 39399, which sets forth the sections of the Code which govern Naylor Act transactions.)   It knew that it could declare either all or part of a site to be surplus for sale or lease pursuant to the Act.  (§§ 39393, 39394.)   It knew it could dispose of the site, without declaring it to be surplus, if the site did not meet the criteria set forth in section 39391.   It knew it could retain portions of a surplus site containing structures or buildings, pursuant to section 39395, before it attempted to dispose of the site, to avoid a sale of such land at less than 50 percent of fair market value.   And it knew it could exempt sites from surplus sale if it met the criteria set forth in section 39401.

The District adopted its resolutions for disposition of the site beginning on November 17, 1987.   Although its first resolution stated that the land was not surplus, its second resolution expressly superseded the first resolution and specifically deleted the language declaring the land not to be surplus.

On May 24, 1988, about one week after it adopted this second resolution, the District notified the appropriate public agencies of its offer to sell, lease or exchange all or part of the site pursuant to the revised resolution, and provided the requisite 60 days in which to respond.  (§ 39394.)   The subject of that offer reads:  “NOTICE OF RESOLUTION OF INTENTION TO LEASE, SELL, OR EXCHANGE REAL PROPERTY.”

Such sales are authorized only “in accordance with the provisions” of the Act.  (§ 39393.)   The use of the word “proposes” in the notice does not mean that it is a mere invitation to treat, as it might under common law.   The notice substantially complies with section 39394.   As section 39400 states, “Failure by the school district to comply with the provisions of this article shall not invalidate the transfer or conveyance of real property to a purchaser ․ for value.”

The Act permits the District to recover only its investment in such surplus property which the Board determines to sell.  (§§ 39390, 39391, 39396.)   Section 39396, subdivision (a) establishes the bases to determine price.   The assertion in Resolution No. 1987–88–68 that state law provides that the value received “by a growing school district for property may not be less than fair market value,” is unsupported by the Act.

Unless a District properly makes findings to appropriately exempt the site under section 39401, or retains portions thereof under section 39395, it may not sell surplus school property for more than the District's cost of acquisition.  (§ 39390, and esp. § 39396, subd. (a).)  The section 39394 notice contained no such findings, nor did the District retain any land pursuant to section 39395.

The City accepted the District's offer by written notice in compliance with the Act on July 25, 1988, the last date to respond.   In the intervening two months before the City's acceptance, the Board neither rescinded its offer nor did it invoke section 39401.

Only after the City filed this action, did the District adopt Resolution No. 1988–89–60 to declare the property non-surplus under section 39401.   That resolution states, in pertinent part, that the Board, “recognizes and notes it [sic ] prerogative to rescind this action in the future if it would assist in an effort to resolve issues relating to the Casey Road site.”

An excerpt from the Board's meeting at which this resolution was passed demonstrates that it was adopted solely as an effort to halt the City's lawsuit and to thwart the City's acceptance of its offer to sell the property at a surplus price.   This constitutes capricious action.  (Langsam v. City of Sausalito (1987) 190 Cal.App.3d 871, 878–879, 235 Cal.Rptr. 672;  Lewin v. St. Joseph Hospital of Orange (1978) 82 Cal.App.3d 368, 387, 146 Cal.Rptr. 892.)

Said one member:  “The Board ․ have taken this action to resolve the lawsuit and notes its perogative [sic ] to rescind this action in the future if it would assist in an effort to resolve issues relating to the Casey Road site․   The School District would like to work with the City to provide a park on the ․ site.   The lawsuit has prevented us from doing this.   Hopefully, we can resolve the lawsuit and the School District can get back into negotiations with the City of Moorpark.”

Another member stated:  “I also had difficulty with this, but I also have to remember that I am a member of the Board ․ and that my top priority has to be for the interest of the ․ District.   I would love to see everything resolved also, but I'm going to support this with any reservations that I may have ․ to protect the interest of the ․ District.”

Section 39401 allows school districts to meet legitimate emergency needs for an additional school site.   A school board may not use it as a means to extricate itself from a binding contract to sell a surplus site at less than fair market value.   The Board has the ministerial duty to sell this site to the City in accordance with the Naylor Act.  (§§ 39393, 39400.)

The judgment is affirmed.   Costs to the City.

FOOTNOTES

1.   All further statutory references are to the Education Code unless otherwise specified.

GILBERT, Associate Justice.

STONE, P.J., and ABBE, J.*, concur.