GREGG v. CITY OF LAGUNA BEACH

Reset A A Font size: Print

Court of Appeal, Fourth District, Division 3, California.

Steven M. GREGG, Plaintiff and Respondent, v. CITY OF LAGUNA BEACH et al., Defendants and Appellants.

No. G009468.

Decided: June 19, 1991

Rutan & Tucker, Philip D. Kohn and Daniel L. Branstine, Costa Mesa, for defendants and appellants. Seth J. Kelsey, Huntington Beach, for plaintiff and respondent.

OPINION

The City of Laguna Beach (the City) and City Manager Kenneth Frank appeal a judgment granting a petition for writ of mandate filed by Steven Gregg, a city police officer, ordering the City to hold an administrative hearing on Gregg's application for disability retirement.   The City contends the claim is barred by Code of Civil Procedure section 338, subdivision (a).   It maintains the three-year statute of limitations commenced when it denied Gregg's disability claim, or at the latest, when he requested a hearing.   Alternatively, it argues the petition is barred by laches.

I.

In the fall of 1984, Gregg applied for worker's compensation benefits and for disability retirement under the Public Employees Retirement System (PERS).   On March 13, 1985, despite an agreed medical examiner's report indicating Gregg was permanently incapacitated from performing his duties, the City denied the claim for a disability retirement pension.   It notified Gregg and PERS that Gregg was not disabled for purposes of disability retirement and was capable of performing light work assignments.

On March 18, Gregg wrote to the City requesting a hearing on the denial of his claim.   No response having been received, Gregg's counsel sent a similar letter on March 30.   Again, the City ignored the request.   In November, Gregg wrote to PERS requesting a hearing.   He heard nothing.   Meantime, the City continued to negotiate with Gregg concerning his worker's compensation claim.

On August 25, 1987, Gregg's new counsel wrote to the City, demanding it “retroactively certify Mr. Gregg for disability retirement” or explain why he had never been given a hearing.   After several rounds of correspondence, the City, on October 1, indicated it “declined to determine the merits ․ believing such to be unnecessary at this time in light of the passage of time which appears to bar [the] threatened action.”   All hope was not lost, however.   The letter concluded with an acknowledgment that “should a final judgment be entered by a court of competent jurisdiction requiring the City to conduct a hearing, [it] would of course comply with such an order.”

In October 1988, after finally reaching a settlement with the City on his worker's compensation claim, Gregg filed a petition for peremptory writ of mandate with the superior court, asking it to compel the City to provide a hearing regarding his disability retirement pension.   The superior court granted the petition, and the City has appealed.1

II.

 In Watkins v. City of Santa Ana (1987) 189 Cal.App.3d 393, 234 Cal.Rptr. 406, this court held that Santa Ana, as a statutory delegate of PERS, was required to conduct an evidentiary hearing under the Administrative Procedure Act (Gov.Code, § 11500 et seq.) when a police officer requested a disability retirement pension.   The City concedes that, under Watkins, Gregg was entitled to an evidentiary hearing to determine whether he was capable of performing his duties.   The City argues, however, that the statute of limitations (Code Civ.Proc., § 338, subd. (a)) has run because Gregg waited over three years after his initial request for hearing to file a petition for writ of mandate.2

The City's argument ignores both the facts and the law.   First, the trial court found as a factual matter that the City did not formally deny Gregg's request for a hearing until October 1, 1987, and substantial evidence supports this conclusion.   The City ignored Gregg's two timely requests for a hearing in March 1985.   The City must have known after this time that Gregg's claim was still pending, since Gregg was continuing to litigate his worker's compensation claim.   Finally, in its letter of October 1, 1987, the City essentially told Gregg it would not hold a hearing unless ordered to do so “by a court of competent jurisdiction.”   Where substantial evidence supports a trial court's findings in an administrative mandamus proceeding, we will not disturb those findings.  (County of Alameda v. Board of Retirement (1988) 46 Cal.3d 902, 910, 251 Cal.Rptr. 267, 760 P.2d 464.)

 The trial court's factual finding becomes meaningful in light of the applicable law, which provides that a cause of action to compel an administrative hearing does not accrue until the agency denies a request to hold one.   In Pearson v. County of Los Angeles (1957) 49 Cal.2d 523, 319 P.2d 624, a deputy sheriff requested a hearing in December 1950 before the Civil Service Commission regarding his discharge.   The deputy then requested the commission to postpone his hearing pending the determination of criminal charges against him.   The commission agreed, stating it had ordered the hearing off calendar “until notified by you of the disposition of the criminal case now pending in the Superior Court.”  (Id. at p. 528, 319 P.2d 624.)   The deputy was convicted, but the charges against him were dismissed in May 1953.   He then wrote to the commission, asking it to place the hearing on calendar since the matters “before the Superior Court have now been disposed of.”  (Id. at p. 530, 319 P.2d 624.)   Like the City in the present appeal, the commission denied the deputy a hearing “because of the unreasonable lapse of time since the original request for hearing was made.”  (Ibid.)  On appeal the commission claimed (as does the City here) that the deputy's request for a hearing was barred by Code of Civil Procedure section 338, subdivision (a).

 The Pearson court rejected the commission's argument, stating, “even assuming that the three year statute is applicable to a proceeding of this nature, it does not appear that plaintiff's action is barred.   Plaintiff could not properly commence an action against the commission to compel them [sic ] to hold a hearing until the commission had refused his demand to hold one.”   (Pearson, supra, 49 Cal.2d at p. 540, 319 P.2d 624.) 3  Under Pearson, Gregg could not have filed his petition to compel the hearing until the City denied his request for one;  thus, the statute of limitations did not start to run until that time.   Since the trial court found as a factual matter that the denial did not occur until October 1, 1987, Gregg's petition (filed in October 1988) was timely under Code of Civil Procedure section 338, subdivision (a).

The fact that Gregg's writ petition is timely, however, does not completely resolve the statute of limitations issue.   An evidentiary hearing to determine Gregg's disability may well be meaningless if the statute of limitations has run on Gregg's ability to seek judicial review of an adverse determination on the pension itself.  (See, e.g., Code Civ.Proc., § 1094.6;  Tielsch v. City of Anaheim (1984) 160 Cal.App.3d 576, 206 Cal.Rptr. 740.)   In other words, if Gregg's right to seek review on the merits is deemed to have accrued on March 13, 1985, when the city manager denied his request for a disability pension without a hearing, Gregg's “victory” in this appeal would indeed be pyrrhic.

 We can avoid such an absurd result by explicitly holding that the City's initial rejection of Gregg's request for a disability pension without a hearing was not a proper disposition, and thus no “statute clock” began ticking at that time.   This conclusion follows logically from our Watkins decision as well as from Ragan v. City of Haworne, supra, 212 Cal.App.3d 1361, 261 Cal.Rptr. 219.   In Ragan the court rejected defendant's contention that plaintiff had only 30 days to seek judicial review of the “denial” of her disability retirement application under Government Code section 11523.   The court held that section 11523 could only apply if there had actually been a hearing.  (Id. at pp. 1366–1367, 261 Cal.Rptr. 219.) 4  As in Ragan, there has yet to be a hearing in this case, and the City's initial rejection of Gregg's claim cannot serve to trigger any statute of limitations.5

The City may complain of the administrative burden in requiring it to conduct a hearing every time an employee seeks a disability retirement pension.   However, the City can probably reduce the number of hearings it must actually conduct if it simply complies with other provisions of the Administrative Procedure Act.   Under Government Code section 11505, subdivision (a), the City has an obligation to inform applicants of their right to a hearing.   The statute clearly contemplates that this notice be sent before the agency makes its determination, because the form letter suggested by subdivision (b) of the statute provides:  “Unless a written request for a hearing signed by or on behalf of the person named as respondent in the accompanying accusation is delivered ․ within 15 days ․, [the agency] may proceed upon the accusation without a hearing.”   In this case, there is no evidence the City informed Gregg of his right to a hearing before the “decision” was made concerning his disability retirement pension.   Had the City informed Gregg of his right to a hearing, however, and had Gregg failed to request one within 15 days, the statute provides that the right to a hearing is waived.   If the City is concerned about holding hearings for “frivolous” requests for disability retirement pensions, we believe this procedure will be sufficient to alleviate the problem.6

III.

 There remains the question of whether Gregg's 43–month delay between his initial request for a hearing and the filing of his petition for writ of mandate was so unreasonable that his action is barred by laches.   The equitable defense of laches may bar a writ petition even though it is filed within the statutory period.  (Ragan v. City of Hawthorne, supra, 212 Cal. App.3d at p. 1368, 261 Cal.Rptr. 219.)   However, we agree with the trial court that any delay which occurred here was caused by the City.

 Gregg requested a hearing three times in 1985.   The City never responded.   Thereafter, in the years during which the related worker's compensation claim was litigated, Gregg attempted to settle the retirement disability claim.   Indeed, the settlement offer of August 10, 1987, submitted by Gregg's counsel, included a retroactive certification for disability retirement.   Even after this proposal was rejected, Gregg continued to assert his disability retirement claim during the worker's compensation negotiations.   When the latter claim was settled in October 1988, Gregg immediately used the proceeds to finance this writ petition.   Further, from the time the petition was filed until its hearing, the City twice demurred and once moved for a judgment on the pleadings.   Memoranda were filed and hearings were held on the City's motions, and this consumed a considerable period of time.7

 Moreover, the City has failed to establish any prejudice as a result of the delay.   It is well settled that prejudice must be demonstrated;  it will not be presumed.  (Conti v. Board of Civil Service Commissioners, 1 Cal.3d 351 at pp. 359–362, 82 Cal.Rptr. 337, 461 P.2d 617 (1969).)   In Ragan v. City of Hawthorne, supra, 212 Cal.App.3d at p. 1368, 261 Cal.Rptr. 219, the court found there was no prejudice to the City because of the written medical reports and other evidence from a worker's compensation claim.   As in Ragan, the medical records and reports obtained in Gregg's worker's compensation proceedings and his 1984 medical examination are available.

 “Whether laches has occurred in a particular case presents a question primarily for the trial court, and an appellate court will not interfere with a trial court's discretion in this respect unless it is obvious that manifest injustice has been done or unless its conclusions do not find substantial support in the evidence.”  (Chang v. City of Palos Verdes Estates (1979) 98 Cal.App.3d 557, 563, 159 Cal.Rptr. 630.)   There is sufficient evidence to support a conclusion that the delay was not unreasonable.

The judgment granting the petition for writ of mandate is affirmed.   Respondent to receive costs on appeal.

I

I dissent because I believe the parties should have an opportunity to respond to a holding of the majority, an issue not previously proposed or briefed by the parties, i.e., the hearing must precede a denial of disability.  (Gov.Code, § 68081.)   And, as I explain, the significance of this premise is great—indeed, it colors everything which was argued by the parties.

II

I concur in the result but write separately because I disagree with the majority's conclusion of what triggers the three-year statute of limitations.   Gregg was entitled to a hearing before the City denied his disability request.  (Watkins v. City of Santa Ana (1987) 189 Cal.App.3d 393, 396–397, 234 Cal.Rptr. 406.)   Therefore, Gregg's right to complain about the lack of a hearing arose when the disability request was rejected.   Because he was then entitled to enforce his right to a hearing by petition for writ of mandate to the superior court, the three-year statute of limitations commenced at that time.

In Ragan v. City of Hawthorne (1989) 212 Cal.App.3d 1361, 261 Cal.Rptr. 219, a former police officer was denied an industrial disability pension without a hearing.   Despite repeated requests, by petitioner's attorney, for a hearing, the city refused.   Petitioner sought a writ of mandate to compel the hearing.   The reviewing court found her petition for relief was timely:  “Since appellant filed her petition within three years of denial of her pension, she satisfied the applicable statute of limitations.”   (Id. at p. 1367, 261 Cal.Rptr. 219, emphasis added.)

I disagree with the majority's analysis of Pearson v. County of Los Angeles (1957) 49 Cal.2d 523, 319 P.2d 624 to support their position that the three-year time limitation ran from the date the city denied Gregg's formal request for a hearing (after the denial of his disability).   In Pearson, the officer was notified of his discharge and informed “he had a right to file a written reply to the charges and to request a hearing before the civil service commission.”  (Id. at p. 528, 319 P.2d 624.)   The charter specified “that upon request of ‘the person to be discharged ․ the Commission shall hold a hearing.’ ”  (Id. at p. 537, 319 P.2d 624.)   He timely replied and requested a hearing.   Then the petitioner requested a postponement of the hearing;  the commission acquiesced, taking the hearing off calendar “ ‘until notified by you of the disposition of the criminal case now pending in the Superior Court.’ ”  (Ibid.)  When he later asked that the hearing date be set, the commission refused, claiming unreasonable delay.   The only issue was whether he had waived his rights by this purported delay.   Not so, said the court.   Petitioner had been informed by county counsel “that a hearing on his discharge could be held ‘at any time,’ and that the hearing in this case would not be set until the matter was brought to the commissioner's attention by either plaintiff or the sheriff.”  (Id. at p. 538, 319 P.2d 624.)   His request for restoration occurred one month after dismissal of the criminal charges against him.   Because he had not waived his right to a hearing, “his discharge has never been effectuated.”  (Ibid.)  The petitioner in Pearson “could not properly commence an action against the commission to compel them [sic ] to hold a hearing until the commission had refused his demand to hold one.”  (Id. at p. 540, 319 P.2d 624.)   Gregg, on the other hand, could file a petition to enforce his already-denied right to a hearing as soon as his disability was denied.1

Although I would find that the three-year statute commenced in March 1985, Gregg's petition was nonetheless timely under the circumstances of this case.   The denial of his benefits without a hearing occurred before the Watkins decision, at a time when such practices were the rule rather than the exception.   Thus, Gregg, in making a formal request for a hearing was attempting to exhaust his administrative remedies.   He believed his right to a hearing arose after his disability was denied.   He acted accordingly, not only in his request for a hearing but in the attempt to enforce that right.   Consequently, the period of time during which the City pondered upon, and/or failed to respond to, his formal request should be excluded from the three-year calculation.  (Dillon v. Board of Pension Commrs. (1941) 18 Cal.2d 427, 430–431, 116 P.2d 37.)

FOOTNOTES

1.   This appeal also encompasses the denial of the City's demurrer to the first amended petition for writ of mandate and its motion for judgment on the pleadings.   The City demurred to Gregg's petition for writ of mandate, claiming it was not filed within the applicable three-year statute of limitations and was time barred.  (Code Civ.Proc., § 338, subd. (a).)  The demurrer was sustained with leave to amend.   The first amended petition, the one we consider, is almost identical.   Some contract-related allegations were added and the allegation that the “City failed and refused [following Gregg's March 18, 1985 demand for a hearing] to provide Gregg with an appeal hearing” was deleted.The City claims the court erred in refusing to sustain its demurrer to the first amended petition.   It maintains “this omission was improper” and the “deletion of a material allegation ․ was apparently intended to circumvent the first ruling.”   However, the same judge heard both demurrers.   At the conclusion of the first hearing, the trial judge told counsel for the City, “I am going to give [Gregg] leave to amend and then you can fully brief” other issues.   There was no circumvention.   Gregg did exactly as he was told to do after the demurrer was sustained:  He amended his complaint.   Moreover, as Gregg points out, the deletion concerned only commonly-pleaded Code of Civil Procedure section 1085 “talked and refused” language.   The petition read as a whole clearly indicates Gregg alleged the City's only denial of his right to a hearing came in October 1987.

2.   Code of Civil Procedure section 338, subdivision (a) prescribes a three-year statute of limitations for “[a]n action upon a liability created by statute, other than a penalty or forfeiture.”   It is undisputed that this statute applies to a request for a hearing on a disability pension.  (Ragan v. City of Hawthorne (1989) 212 Cal.App.3d 1361, 1367, 261 Cal.Rptr. 219.)

3.   Although it involves a different statutory scheme, a recent Ninth Circuit case supports our analysis.   In Parker v. United States (9th Cir., June 4, 1991) 935 F.2d 176 [Dock. No. 89–16269], the court held that the statute of limitations on plaintiff's Federal Tort Claims Act suit never began to run because the federal agency failed to issue a formal denial of plaintiff's claim.

4.   Similarly, we note that in an administrative mandamus proceeding not covered by section 11523, a denial without a hearing would not be “final” under Code of Civil Procedure section 1094.6, subdivision (b).  Under that statute, a person who is aggrieved by the final decision of an administrative agency must seek administrative mandamus under section 1094.5 within 90 days of the decision.   By its terms, section 1094.5 applies to “any final administrative order or decision made as the result of a proceeding in which by law a hearing is required to be given ․”  (Emphasis added.)   Once again, a denial without a hearing would not trigger the statute of limitations.

5.   It is the apparent practice of certain agencies to deny applications for disability retirement pensions without a hearing;  it happened in Watkins and Ragan, and has happened here.   Such a practice forces applicants to request a hearing after the “denial” of their applications.   Since Watkins, Ragan, and this opinion are based upon the Administrative Procedure Act, however, it is clear the evidentiary hearing should occur before the agency determines the merits of the application.  (See Gov.Code, § 11505.)   As an incentive to conduct statutorily required hearings we note that, had the City conducted a hearing prior to denying Gregg's application, this case would have long since been resolved, saving considerable time and expense.

6.   Our concurring and dissenting colleague believes we have violated Government Code section 68081, which provides that we must order a rehearing (if requested) in the event we render a decision “which was not proposed or briefed by any party․”   As we file this opinion, of course, the City has not yet requested a rehearing.   Nonetheless, at least two observations are in order.   First, we have resolved the issues presented by the parties:  statute of limitations and laches.   While the briefs do not specifically focus on the clarification of Watkins and Ragan appearing in the last portion of section II of our opinion, we feel our discussion is well within the penumbra of issues presented by the parties.   We are sensitive to the frustration experienced by counsel when a reviewing court decides a case based upon an issue that was not briefed.   This, however, is not such a case.Second, it should be noted that the City waived oral argument in this appeal.   Courts often focus on issues differently than the parties, and oral argument provides a forum to discuss these differences.   While we do not wish to discourage counsel to waive argument in an appropriate case, such a waiver carries with it the risk that counsel will be precluded from responding to the court's particular viewpoint on an issue.After we filed our opinion in this case, the City petitioned for rehearing.   The contents of that petition convince us we have done no violence to section 68081.   In its petition, the City seeks to make much of the fact that PERS, not the City, makes the final determination as to whether an applicant receives a disability retirement pension, and that PERS denied Gregg's application shortly after the city manager denied Gregg's claim without a hearing.   When PERS delegated the factfinding function to the City in this case, it no doubt assumed that the City would comply with the Administrative Procedure Act.   Since there was no such compliance, however, the “denial” by PERS was of no more effect than the City's original denial.

7.   The hearing on the City's first demurrer was held on December 28.   The demurrer was sustained and Gregg was given leave to amend.   The hearing on the second demurrer was held on April 14, 1989;  it was overruled.   The hearing on the City's motion for judgment on the pleadings was held on November 17;  it was denied.   In January 1990, Gregg petitioned for a peremptory writ of mandate.   The trial court granted the petition on March 1, and judgment was entered on April 5.

1.   I agree no statute of limitations issue arises because Gregg failed to seek review of the adverse disability determination.   There was no hearing, leaving a reviewing court with no administrative record to review.   And, in any event, “[Gregg] has not waived his right to a hearing [nor been offered one], and his [denial of disability] has never been effectuated.”  (Id. at p. 538, 319 P.2d 624.)

SILLS, Presiding Justice.

CROSBY, J., concurs.

Copied to clipboard