WOODS v. SEIBERT (1980)

May applicants for public social services who have been denied benefits on the basis of an unlawful regulation issued by the director of the State Department of Social Services challenge the validity of the regulation in a “fair hearing” proceeding? If so, may they appeal an adverse decision by way of a writ of administrative mandamus? As we explain below, we answer both questions in the affirmative.

Petitioner, Marion J. Woods, Director of the California State Department of Social Services, seeks a writ of mandate and/or prohibition, preventing respondent Superior Court of Butte County from considering the validity of a department regulation upon a petition for writ of administrative mandate under Code of Civil Procedure section 1094.5. The writ further seeks an order that respondent Superior Court sustain petitioner's demurrer to the complaint. Petitioner alleges that real parties in interest (the applicants) Seibert, Cox, Luper, Kruse, and Pero, are seeking a determination of the validity of a regulation and that they may not petition for writ of administrative mandate; rather, that they must bring an action for traditional mandate and/or declaratory relief.

We hold that the applicants may properly contest the validity of a regulation affecting their entitlement to public social services in a fair hearing proceeding (Welf. & Inst.Code, ss 10950 et seq.) and may seek review of an adverse determination by way of a writ of administrative mandamus. It is apparent, contrary to petitioner's assertion, that the legislative scheme pertaining to fair hearings places no limitation upon the consideration of any legal issue affecting entitlement to public social services. Indeed, the legislative scheme requires review of a fair hearing determination by petition for writ of administrative mandamus pursuant to Code of Civil Procedure section 1094.5.

I

The facts are not in dispute. By demurring to the petition for writ of administrative mandate petitioner admitted all of the factual allegations for purposes of consideration of the demurrer. In the petition real parties in interest alleged that in December 1976, they were notified that the building inspector of the City of Oroville had declared their rental housing dangerous and unfit for human habitation, and they were ordered to vacate their apartments. They requested assistance from the Butte County Department of Social Welfare for their relocation, but such assistance was denied. They then filed a timely request for a group fair hearing. The result of the fair hearing in the matter was the denial of the claims by the State Department of Social Services. The Department found that housing needs are not allowed under its regulation providing for nonrecurring special needs. Real parties alleged that under both state and federal law they are entitled to payment for their special housing needs and sought a peremptory writ of mandate ordering the Department to set aside its decision and to grant them special needs benefits.

Petitioner filed a demurrer to the petition for a writ of administrative mandate arguing that a trial court may not consider the validity of an administrative regulation in a proceeding for a writ of administrative mandate. Such review, petitioner asserted, must be by petition for traditional mandate or declaratory relief. The trial court overruled the demurrer.

Petitioner then filed this petition for writ of mandate and/or prohibition. We issued an order to show cause and stayed further proceedings in the trial court pending the filing of the return and further order of this court.

II

Petitioner attacks the right of applicants for public social services to challenge a departmental regulation which deprives them of benefits. Applicants assert that the regulation is violative of state law.¹ (Welf. & Inst. Code, s 11450, subd. (d)(2).) As a corollary, petitioner attacks the applicants' right to review an adverse determination by writ of administrative mandate. (Code Civ.Proc., s 1094.5.) A review of the statutory scheme for resolution of those issues convinces us that petitioner's arguments cannot stand. Those arguments are based, we explain below, on two unsupportable premises.

A

The statutory scheme for asserting entitlement to public social service benefits is set forth in Welfare and Institutions Code sections 10950 through 10965. Generally, any applicant or recipient who is dissatisfied with any action of the county department relating to receipt of public social services may request and must be accorded a fair hearing. (Welf. & Inst.Code, s 10950.) The hearing must be conducted by a referee employed by the department, the director, the administrative adviser of the department, or by a representative of the Office of Administrative Hearings. (Welf. & Inst.Code, s 10953.) The proceedings at the hearing must be recorded or reported, the hearing must be conducted in an impartial and informal manner, and all testimony must be taken under oath or affirmation. (Welf. & Inst.Code, ss 10955, 10956.)

The proceedings for a fair hearing are statutorily described. If the fair hearing is conducted by a referee, a written proposed decision must be prepared in such form as may be adopted as the decision in the matter. (Welf. & Inst.Code, s 10958.) After approval by the chief referee the proposed decision is submitted to the director. (Ibid.) Within 30 days of receipt of the proposed decision the director either must adopt the decision, decide the matter on the record, or order a rehearing. (Welf. & Inst.Code, s 10959.) Failure to act on the proposed decision within 30 days results in its adoption by operation of law. (Ibid.) After issuance of a decision the director may, upon application, grant a rehearing. (Welf. & Inst.Code, s 10960.)

Welfare and Institutions Code section 10950 establishes the scope of the fair hearing proceeding as encompassing any action of the county department relating to any applicant or recipient's application for receipt of public social services. The proceeding may involve “complicated issues of fact or law, . . .” (Welf. & Inst.Code, s 10953.) The statutory scheme, we note, places no limitation on the issues, factual or legal, which may be raised at the fair hearing.

Judicial review of the fair hearing decision is provided for in Welfare and Institutions Code section 10962. That section provides in full: “The applicant or recipient or the affected county, within one year after receiving notice of the director's final decision, may file a petition with the superior court, under the provisions of Section 1094.5 of the Code of Civil Procedure, praying for a review of the entire proceedings in the matter, upon questions of law involved in the case. Such review, if granted, shall be the exclusive remedy available to the applicant or recipient or county for review of the director's decision. The director shall be the sole respondent in such proceedings. Immediately upon being served the director shall serve a copy of the petition on the other party entitled to judicial review and such party shall have the right to intervene in the proceedings. (P) No filing fee shall be required for the filing of a petition pursuant to this section. Any such petition to the superior court shall be entitled to a preference in setting a date for hearing on the petition. No bond shall be required in the case of any petition for review, nor in any appeal therefrom. The applicant or recipient shall be entitled to reasonable attorney's fees and costs, if he obtains a decision in his favor.”

The applicants have complied with the statutory scheme for the assertion of their claim for benefits. They applied to the county, were denied, requested and participated in a fair hearing, were again denied, and finally filed a petition for a writ of administrative mandate under Welfare and Institutions Code section 10962 and Code of Civil Procedure section 1094.5. This procedure is the statutorily prescribed remedy for the assertion of their claim to benefits. Petitioner argues, however, that a departmental regulation prohibits the payment of special needs for housing costs, and that in order to prevail on the merits real parties must attack the validity of the regulation in question. This, it is asserted, is properly done by petition for writ of traditional mandate or declaratory relief and not in a proceeding for writ of administrative mandate.

B

A fair hearing, the parties agree, is a quasi-adjudicatory hearing. That is “a proceeding in which by law a hearing is required to be given, evidence is required to be taken and discretion in the determination of facts is vested in the inferior tribunal, . . .” (Code Civ.Proc., s 1094.5, subd. (a).) The proceeding is adjudicatory in nature because “there must be a determination by the agency of what the facts are in relation to specific private rights or interests.” (Cal. Administrative Mandamus (Cont.Ed.Bar 1966) Origin and Nature of Writ, s 2.2, p. 10.) The claim in the case at bench is predicated on facts which are particular to the applicants; that is, the notice to vacate their rental housing as dangerous and unfit, their request for relocation assistance, the denial of such assistance by the Butte County Department of Social Welfare. That their claim for relief puts in issue the validity of the regulation upon which benefits were denied does not serve to alter the adjudicatory character of the fair hearing proceeding.

Because of the quasi-adjudicatory nature of the fair hearing proceeding administrative mandamus under Code of Civil Procedure section 1094.5 is the statutory method for review of an adverse decision. (Welf. & Inst. Code, s 10960.) That review may proceed whether or not the agency refused to consider a legal issue necessary to the determination of the individual rights at stake. (Bekiaris v. Board of Education (1972) 6 Cal.3d 575, 592-593, 100 Cal.Rptr. 16, 493 P.2d 480.)

C

Petitioner seeks from us a ruling that applicants cannot challenge a quasi-legislative act, the regulation, in an administrative mandamus action. He argues that agencies should have to follow their own regulation. It follows that it is the scope of the fair hearing itself which petitioner seeks to limit by the technique of limiting the scope of review. Thus, we meet the first unsupportable premise: petitioner implicitly claims that because administrative mandamus may not reach the disputed issue (unlawfulness of the regulation), the disputed issue may not be raised in the administrative proceeding, the fair hearing. There is no warrant in the law for such reasoning.

The long list of cases relied upon by petitioner² in his broadside attack on review by administrative mandamus, do Not involve review of a quasi-adjudicatory proceeding; rather they deal with a Direct review of quasi-legislative proceedings involving the ascertainment of facts incident to the promulgation of a regulation.³ The paradigm case is Brock v. Superior Court (1952) 109 Cal.App.2d 594, 241 P.2d 283, in which an administrative writ of mandate was sought “for a review of the marketing order (of the director of agriculture) on the ground that the findings of the Director of Agriculture are not supported by the weight of, or substantial, evidence.” (Id. at p. 597, 241 P.2d, at p. 286.) The order was promulgated pursuant to statute which provided for the promulgation of orders after a public hearing at which certain facts were to be considered and findings made. The court held that the action of the director in issuing the marketing order under the procedure was quasi-legislative and thus not subject to review under Code of Civil Procedure section 1094.5.⁴ What was at issue in Brock, unlike the case at bench, was the integrity of the legislative fact finding process when under direct review.

We agree, as we must, that a direct review of quasi-legislative proceedings in which a challenge is made to the legislative fact finding process is not properly heard pursuant to Code of Civil Procedure section 1094.5. But such a limitation upon the use of section 1094.5 must be confined, as in Brock, to the circumstances giving rise to it. We have noted that the cases cited by petitioner do not deal with a quasi-judicial proceeding (such as a fair hearing); in such a proceeding no limitation is imposed. Code of Civil Procedure section 1094.5, subdivision (b), expressly provides that, in review of a quasi-adjudicatory proceeding, as here, “(t)he inquiry . . . shall extend to the questions whether the respondent has proceeded without, or in excess of jurisdiction; . . .” The validity of the regulation as in conflict with superior law necessarily goes to the jurisdiction of the agency.⁵ Accordingly, the unlawfulness of the regulation may be challenged in the administrative hearing. Thus, the petitioner's first premise fails.

We turn to the second premise. Petitioner impliedly asserts that every challenge to the validity of an administrative regulation involves challenge to a quasi-legislative action within the meaning of Brock. We do not agree.

Not every challenge to the validity of legislative action involves a challenge to the rule making process and the legislative fact finding process at issue in Brock. The distinction is set forth in Morris v. Williams (1967) 67 Cal.2d 733, 748-749, 63 Cal.Rptr. 689, 433 P.2d 697.) In Morris there was a challenge to the validity of a welfare regulation, as here, on the basis that it was in conflict with the statute. The court distinguished such challenge. “To put it another way, it is unnecessary for us to review administrative action for abuse of discretion, where we find no discretion was in fact conferred.” (Id., at p. 749, 63 Cal.Rptr., at p. 700, 433 P.2d at p. 708.) The cases involving a challenge to the validity of a regulation as in conflict with a superior law have uniformly upheld a 1094.5 review of such a challenge when it arises, as in Morris or the case at bench, in a quasi-judicial proceeding. (Rosas v. Montgomery (1970) 10 Cal.App.3d 77, 88 Cal.Rptr. 907; Ross Gen. Hosp., Inc. v. Lackner (1978) 83 Cal.App.3d 346, 147 Cal.Rptr. 801; Gabric v. City of Rancho Palos Verdes (1977) 73 Cal.App.3d 183, 140 Cal.Rptr. 619.)

We conclude that applicants may challenge the unlawfulness of a regulation at the fair hearing and by writ of administrative mandamus. Our conclusion does not lead to administrative mischief as feared by petitioner. The challenge to unlawful regulations at administrative hearings by the affected parties is not only permitted by statute but is compelled by our notion of basic fairness.⁶ Applicants should not be deprived of benefits to which they are statutorily entitled on the basis of an unlawful regulation. Moreover, since Welfare and Institutions Code section 10962 provides that Code of Civil Procedure section 1094.5 shall be the “exclusive remedy” for review of real parties entitlement to benefits, the logic of petitioner's argument is to preclude recovery of benefits wrongly denied on the basis of an invalid regulation. Such a position flaunts the very notion of a “fair hearing.”

The rights of the applicants necessarily turn upon the validity of the regulation applied to them. They prevail if the regulation is invalid on its face or as applied to them. Since either legal challenge necessarily affects their rights they may be raised within the confines of the fair hearing procedure and be reviewed on appeal through a writ of administrative mandamus.

The petition for a peremptory writ of mandate and/or prohibition is denied. The order to show cause heretofore issued is discharged.

FOOTNOTES

1.  Welfare and Institutions Code section 11450, subdivision (d)(2), provides, “A family shall also be entitled to receive an allowance, at county expense after first deducting therefrom any funds received from the federal government, for nonrecurring special needs caused by sudden and unusual circumstances beyond the control of the needy family; provided, however, that such needs shall not be taken into consideration in determining the eligibility of the family for aid.”

2.  Respondent lists and discusses the following cases, all of which deal with direct review of a quasi-legislative proceeding: Pitts v. Perluss (1962) 58 Cal.2d 824, 27 Cal.Rptr. 19, 377 P.2d 83; Davies v. Contractors' License Bd. (1978) 79 Cal.App.3d 940, 145 Cal.Rptr. 284; Concerned Citizens Com., Etc. v. Bd. of Sup'rs (1978) 78 Cal.App.3d 603, 144 Cal.Rptr. 300 hg. granted; Mountain Defense League v. Board of Supervisors (1977) 65 Cal.App.3d 723, 135 Cal.Rptr. 588; Malibu West Swimming Club v. Flournoy (1976) 60 Cal.App.3d 161, 131 Cal.Rptr. 279; Board of Supervisors v. California Highway Commission (1976) 57 Cal.App.3d 952, 129 Cal.Rptr. 504; Swanson v. Marin Mun. Water Dist. (1976) 56 Cal.App.3d 512, 128 Cal.Rptr. 485; Winkelman v. City of Tiburon (1973) 32 Cal.App.3d 834, 108 Cal.Rptr. 415; Wilson v. Hidden Valley Mun. Water Dist. (1967) 256 Cal.App.2d 271, 63 Cal.Rptr. 889; City Council v. Superior Court (1960) 179 Cal.App.2d 389, 3 Cal.Rptr. 796; Wine v. Council of City of Los Angeles (1960) 177 Cal.App.2d 157, 2 Cal.Rptr. 94; and Brock v. Superior Court (1952) 109 Cal.App.2d 594, 241 P.2d 283.

3.  Petitioner trades on the term “quasi-legislative” which includes all rule making. However, the cases relied upon by him seek review only of that particular rule making which involves legislative Fact finding.

4.  The reasons for this are set forth in Pitts v. Perluss, supra, 58 Cal.2d 824, 27 Cal.Rptr. 19, 377 P.2d 83: “We conclude in determining whether the director has acted arbitrarily or capriciously, this court does not inquire whether, If it had power to draft the regulation, it would have adopted some method or formula other than that promulgated by the director. The court does not substitute its judgment for that of the administrative body. (Fn. omitted.) The rendition of this regulation involved ‘highly technical matters requiring the assistance of skilled and trained experts and economists and the gathering and study of large amounts of statistical data and information.’ (Citation.) Under such circumstances, ‘courts should let administrative boards and officers work out their problems with as little judicial interference as possible.’ (Citation.)” Accordingly, the court held that the special standard of review set forth in Code of Civil Procedure section 1094.5 was not appropriate and that only the limited standard pursuant to ordinary mandamus was available. As in Brock, the issue turns upon the direct review of the fact finding proceedings of an administrative agency.

5.  Where an agency action necessarily involves both quasi-legislative functions and quasi-adjudicatory functions, there has been no hesitancy in providing simultaneous review by administrative mandamus. (Mountain Defense League v. Board of Supervisors (1977) 65 Cal.App.3d 723, 135 Cal.Rptr. 588.) Analogously, where a parties rights In a quasi-adjudicatory proceeding necessarily turn on the validity of a quasi-legislative action, administrative mandamus is the appropriate means of review.

6.  We note that the term “fair hearing” as used by Welfare and Institutions Code section 10950 is not a mere label, but a substantive requirement of law.

REYNOSO, Acting Presiding Justice.

BLEASE and JANES (Assigned by the Chief Justice), JJ., concur.