WRIGHT v. WOODS (1981)

Plaintiff, as representative of a class of recipients receiving Aid to Families of Dependent Children (AFDC), appeals from the denial of her request for injunctive relief commanding respondent to recompute supplemental benefits and pay such benefits retroactively to the class members. For the reasons hereafter discussed, we conclude that such relief was properly denied, but remand for an order compelling respondent to notify the class members of their right to file a claim for recovery of underpayment of supplemental benefits.

Plaintiff, Sheila Wright, has been a recipient of AFDC welfare benefits for an extended period of time. In May, June and July 1977, her monthly grants were reduced to reflect unemployment benefits she had received in prior months. However, she was denied any offsetting supplemental benefits.

Thereafter, an administrative hearing was held resulting in a decision to uphold the benefit computation of the San Mateo County Welfare Department. That decision was accepted with minor modifications by the director of the Department of Benefit Payments (hereafter the “Department”). Plaintiff challenged the decision of the Department in an action for administrative mandamus (Code Civ.Proc., § 1094.5), seeking to compel the Department to pay her supplemental benefits for May, June and July 1977. In addition, plaintiff filed a complaint for injunctive relief on her own behalf and on behalf of all others similarly situated, seeking to enjoin the Department from enforcing or implementing its regulation concerning supplemental payments, and to compel the Department to recompute supplemental benefits for members of the class and grant retroactive adjustments. The action was duly certified as a class action. The trial court found in favor of plaintiff's individual claim and mandated the Department to pay supplemental benefits for May, June and July 1977. With respect to the class action, the trial court denied the requested injunctive relief (on the grounds that the issue had been resolved by prior litigation) as well as the request for class retroactive supplemental payments. The appeal is taken from that latter order of denial.

Background

Under the federally sponsored AFDC public assistance program (Welf. & Inst. Code, §§ 11200-11489; see 42 U.S.C. §§ 601 et seq.), each family unit is entitled to a monthly maximum aid payment (“MAP”). (Welf. & Inst.Code, § 11450.) The amount of the cash grant actually received is computed by deducting from the MAP the amount of nonexempt income received by the household. (Ibid.)

Until 1972 the Department used a “concurrent month budgeting” (“CMB”) system. Under that system, the eligibility worker's estimate in the first month of the amount of nonexempt income the family would receive in the second month would be deducted from the MAP in computing the second month's grant.

In November 1972 the Department switched to a “prior month budgeting” (“PMB”) system. Under the PMB system, nonexempt income received in the first month is reported to the Department in the second month and deducted from the MAP in the third month. Thus, the monthly grant reflects nonexempt income received by the family two months earlier.¹

Until recently, the rules of the Department provided for supplemental payments in hardship cases (protection of the children's welfare) to compensate for reductions in monthly grants. Under the rules a ceiling was imposed on the total supplemental payments which could be received: “… limited in any month to the extent that the total grant, together with concurrently available income, does not exceed the allowable Maximum Aid. [¶] When a recipient receives a supplemental payment in more than one month, the total of such payments may not exceed the recipient's total net nonexempt income during the first and second months preceding a change in budgeting method used by the county; or during the first and second months for which aid payments are made.” (Regulation § 44-315.8 of the Manual of Policies and Procedures.)²

In Garcia v. Swoap (1976) 63 Cal.App.3d 903, 134 Cal.Rptr. 137, cert. den., 436 U.S. 930, 98 S.Ct. 2829, 56 L.Ed.2d 775 the PMB system was declared invalid inasmuch as it failed to take account of the recipient's present needs: “Such a system not only ignores the currency requirements for the consideration of income, but also the practical economic realities facing AFDC families, who, living at bare subsistence levels, cannot be expected to budget sporadic income for a payment period two months in the future.” (Id., at p. 913, 134 Cal.Rptr. 137.)

In so holding, the court emphasized that the provision for supplemental payments does not cure the defects in the PMB system: “Subdivision (e) of section 11004 is clearly worded to protect the children in these situations, while regulation EAS 44.315.8 is designed to alleviate the problem and is not mandatory. We emphasize this point because it is believed that Prior Month Budgeting is a helpful and, if properly applied, reasonable method for computing welfare grants. The regulation should be amended so as to provide payments to protect the children. If this were accomplished, the PMB system would then comply with federal regulations. [Fn. omitted.]” (Garcia v. Swoap, supra, at p. 912, 134 Cal.Rptr. 137.) “The vagaries in the existing PMB system … cannot be alleviated simply by the application of an emergency payment or supplemental payment provision. [Fn. omitted.]” (Id., at p. 914, 134 Cal.Rptr. 137.)

Following Garcia, this court (Div. Two) in Burnham v. Woods (1977) 70 Cal.App.3d 667, 139 Cal.Rptr. 4, held that the provision for supplemental payments contained in rule 44.315.8 was also invalid: “The court in Garcia mentioned that the supplemental payment regulation did not alleviate the evils of prior month budgeting in that said regulation is not mandatory. But more importantly the supplemental payment regulation does not correct the inherent problems of prior month budgeting in that a family may only receive supplemental payments in an ascertainable amount and not according to its current needs. [¶] Since it has been determined that prior month budgeting is invalid, likewise supplemental payments under this scheme must also be determined to be invalid, especially in light of the fact that the supplemental payment regulation does not alleviate the evils found in prior month budgeting.” (Id., at p. 674, 139 Cal.Rptr. 4.)

Although plaintiff's hearing before the Department of Benefit Payments was held after the Garcia and Burnham decisions, the Department took the unusual position that it was under no obligation to follow Garcia until actually served with a court order. Nor did the Department consider itself bound by the Burnham decision. As a consequence, the hearing officer was prompted to suggest to plaintiff that she “insist that the Superior Court issue an order in the Garcia case, if she is to receive redress.”

Instead, plaintiff brought the present action. During pendency of this lawsuit, the Garcia case came before the Los Angeles County Superior Court on remand. Before proceeding to judgment, the Garcia plaintiffs moved to certify the action as a class action without necessity of notice to the class. The plaintiffs then mentioned, apparently for the first time, that they were seeking retroactive payments for the class.

In its judgment on remand, the court certified the action as a class action, enjoined the Department from using the discredited PMB system and ordered the Department to publish new regulations for a new budgeting system. The judgment also provided that: “No retroactive benefits are to be paid to the class as they were not prayed for in the complaint and therefore not considered by the Court of Appeal.”

In compliance with the trial court's order on remand in Garcia, the Department proposed revised regulations concerning supplemental payments in choosing to retain its PMB system. (See Garcia v. Swoap, supra, 63 Cal.App.3d at p. 912, 134 Cal.Rptr. 137.) Those regulations would make supplemental payments mandatory rather than discretionary but would provide only 80% of the MAP. In December 1978 the trial court declared the regulations invalid insofar as they failed to provide for the full MAP.³

As earlier noted, plaintiff prevailed in her first cause of action for supplemental benefits covering May, June and July 1977; pursuant to the authority of Garcia and Burnham, the trial court issued a writ ordering the Department to pay plaintiff those benefits. The sole issue raised in this appeal is whether the trial court properly denied the relief sought in the second cause of action: viz., retroactive recomputations of supplemental benefits for the class members.

I

At the outset, we consider the director's contention that since the class action portion of the present lawsuit was adjudicated on remand in Garcia, further review is foreclosed under principles of res judicata. We do not agree.

Ordinarily, where the plaintiff prevails in an action, all other claims for relief are merged into the judgment and a second lawsuit on the same cause of action cannot be maintained.⁴ Plaintiff's only remaining right of action is on the judgment itself. (4 Witkin, Cal. Procedure (2d ed. 1971) Judgment, § 189, p. 3329.) This rule does not apply, however, where the judgment is an equitable decree calling for performance of an act, rather than payment of money. In such a case, no action at law can be brought on the judgment itself; hence there is no merger of the cause of action in the judgment. (Witkin, op. cit., supra, § 189, p. 3330; 46 Am.Jur.2d, Judgments §§ 386, 387, p. 554.)

In Garcia, the plaintiffs sought equitable remedies—injunctive and declaratory relief. The Garcia plaintiffs prevailed in that action and obtained the requested injunction restraining the Department from employing the PMB system. Since the plaintiffs in Garcia have no action at law to enforce that equitable decree, there is no merger of the cause of action in the judgment.

II

Where an administrative regulation governing computation of benefits is invalid, the welfare recipient is entitled to re-computation of benefits under statutory criteria without considering the invalid regulations. (Hypolite v. Carleson (1975) 52 Cal.App.3d 566, 125 Cal.Rptr. 221 [AFDC regulation]; Smock v. Carleson (1975) 47 Cal.App.3d 960, 121 Cal.Rptr. 432 [AFDC]; Leach v. Swoap (1973) 35 Cal.App.3d 685, 110 Cal.Rptr. 62; Rosas v. Montgomery (1970) 10 Cal.App.3d 77, 88 Cal.Rptr. 907 [Aid to Totally Disabled regulations].)

Consequently, any AFDC recipients whose monthly grants were reduced by operation of the PMB system were entitled to supplemental payments where necessary to meet the current needs of the children. (Garcia v. Swoap, supra, 63 Cal.App.3d 903, 134 Cal.Rptr. 137; Burnham v. Woods, supra, 70 Cal.App.3d 667, 139 Cal.Rptr. 4.)⁵

Nor is there any question that a welfare recipient is entitled to receive full and correct payments retroactive to the date of first entitlement. (Bd. of Soc. Welfare v. County of Los Angeles (1945) 27 Cal.2d 81, 85-86, 162 Cal.Rptr. 630; accord, Tripp v. Swoap (1976) 17 Cal.3d 671, 131 Cal.Rptr. 789, 552 P.2d 749 [ATD]; Burch v. Prod (1979) 90 Cal.App.3d 987, 153 Cal.Rptr. 751 [[[[AFDC]; Canfield v. Prod. (1977) 67 Cal.App.3d 722, 137 Cal.Rptr. 27; Hypolite v. Carleson, supra, 52 Cal.App.3d 566, 125 Cal.Rptr. 221 [AFDC]; Smock v. Carleson, supra, 47 Cal.App.3d 960, 964, 121 Cal.Rptr. 432 [AFDC]; Leach v. Swoap, supra, 35 Cal.App.3d 685, 110 Cal.Rptr. 62 [attendant care grant under Aid to Totally Disabled]; Mooney v. Pickett (1972) 26 Cal.App.3d 431, 102 Cal.Rptr. 708 [General Assistance].)

Accordingly, we conclude that the class members here—AFDC recipients who were denied supplemental benefits—are entitled to retroactive payments.

III

But our conclusion concerning entitlement to such benefits is not dispositive. The class action here sought an injunction effectively ordering that retroactive supplemental benefits be paid to the class. Injunctive relief is an inappropriate vehicle for payment of welfare benefits. (See Oliva v. Swoap (1976) 59 Cal.App.3d 130, 135-136, 130 Cal.Rptr. 411.) Injunctive relief is an equitable remedy properly employed only where there is no adequate legal remedy. (Moore v. Superior Court (1936) 6 Cal.2d 421, 57 P.2d 1314; see generally Witkin, op. cit., supra, Provisional Remedies, § 68, pp. 1508-1509.) The available and appropriate legal mechanism to procure class retroactive benefits is through mandamus proceedings. (Lowry v. Obledo (1980) 111 Cal.App.3d 14, 25, 169 Cal.Rptr. 732; see Green v. Obledo (1981) 29 Cal.3d 126, 131, 144, 172 Cal.Rptr. 206.)⁶ We therefore conclude that the requested injunctive relief compelling retroactive recalculation and payment of supplemental benefits was properly denied.

IV

Yet, we must conclude that the trial court's denial of all relief was error. Plaintiff's alternative request that the Department be required to give notice to members of the class of their right to apply for such retroactive benefits, unopposed by the Department,⁷ was eminently reasonable. (Cf. Hypolite v. Carleson, supra, 52 Cal.App.3d 566, 125 Cal.Rptr. 221.) Thus, while injunctive relief is unavailable, the Department may be compelled to notify the class members of their individual statutory right to file a claim for retroactive supplemental benefits resulting from underpayment. (Welf. & Inst.Code, § 11004, subd. (i).)⁸

In the petition for rehearing, plaintiff has expressed concern that the necessity to pursue individual claims will only create a multiplicity of litigation in view of predictable statute of limitations questions. Having granted rehearing to consider these issues, we conclude that the form of relief discussed above is entirely appropriate. The statutory provision for recovery of underpayments occurring within one year of discovery of the error is not a limitation on the period within which a claim of underpayment must be asserted; rather, it merely limits the amount of recovery following discovery of the underpayment error. (Canfield v. Prod., supra, 67 Cal.App.3d 722, 729, 137 Cal.Rptr. 27.) Since the record supports a finding that the administrative error limiting supplemental benefits of AFDC recipients whose MAP's were reduced under the PMB system was effectively discovered (by the Department) on July 18, 1977, the date the decision in Burnham v. Woods, supra, 70 Cal.App.3d 667, 139 Cal.Rptr. 4, became final, we may reasonably assume that the Department will promptly process individual claims for underpayment of supplemental benefits in accordance with the authorities discussed and determinations reached herein. The trial court is directed to retain jurisdiction herein in order to consider any requests for remedial enforcement as may become necessary and appropriate.

The judgment is reversed and the matter remanded for further proceedings consistent with the views expressed herein. Reasonable attorney fees as permitted by statute (see Welf. & Inst. Code, § 10962) shall be fixed in favor of appellant.

FOOTNOTES

1.  The operation of the PMB system in plaintiff's case is illustrated as follows: The MAP established for plaintiff's household was $616. In March 1977 plaintiff had income of $275 consisting of unemployment benefits. Similar income-benefits were received in April ($165) and in May ($55). Her monthly cash grants were computed as follows:

2.  Plaintiff's receipt of nonexempt income in September 1972 ($135) and October 1972 ($90), the two months immediately “preceding a change in budgeting method,” resulted in available maximum supplemental payments of $225 ($135 plus $90). In December 1975 plaintiff received a supplemental payment of $160; in April 1977 she received the remaining amount available to her—$65. Consequently, under rule 44-315.8, plaintiff was denied any further supplemental payments despite the fact that her MAP was reduced in May, June and July 1977 and she was in dire need of funds to meet living expenses.

3.  That decision has now been reviewed on appeal. In Garcia v. Woods (1980) 103 Cal.App.3d 702, 163 Cal.Rptr. 272, the Court of Appeal upheld the trial court's ruling on this point, but disagreed with certain other modifications ordered by the trial court. The matter was remanded for still further proceedings.

4.  Garcia was a class action, and the class members here are a subclass of the Garcia class. The causes of action in Garcia and the present case are the same. “Cause of action” in this regard refers not to the remedy or relief involved, but to the right or obligation sought to be enforced. (40 Cal.Jur.3d, Judgments, § 232, p. 645.)In Garcia the plaintiffs sought to enjoin the Department from using the PMB system. The right or obligation sought to be enforced was the statutory obligation of the Department to compute the monthly grants on the basis of current needs of the children. The present case seeks to enforce the same right or obligation. If monthly benefits were computed on current needs rather than under the PMB system, there would be no need for supplemental payments. In restraining the Department from using the PMB system, the Garcia judgment disposed of the cause of action here, remedying the defects attacked in the present case. Only the relief sought—retroactive recomputation of benefits—differs here.

5.  However, the Department relentlessly argues that the amount of benefits received by an AFDC recipient is not affected by the budgeting system; all that is affected is the time to which outside income is allocated. For example, with respect to plaintiff, she received her full MAP of $616 in March 1977 at the same time she had income of $275 from her unemployment benefits. Under the PMB, she received a reduced grant in May 1977: $341 ($616 minus $275). If there had been a concurrent month budgeting system, her grant for March would have been reduced to reflect her $275 income. Thus, it is argued, the amount of money she would have received overall is not affected by the budgeting system and the trial court so reasoned.The flaw is this argument is that pursuant to Garcia and Burnham, AFDC recipients whose grants are reduced by the PMB system are entitled to supplemental payments to meet current needs. Such supplemental payments would increase the total amount of benefits received.

6.  Both parties agree that no administrative remedies exist for class action; thus the exhaustion doctrine would not apply to a class action challenging a departmental regulation. (Ramos v. County of Madera (1971) 4 Cal.3d 685, 94 Cal.Rptr. 421, 484 P.2d 93; Oliva v. Swoap, supra, 59 Cal.App.3d 130, 130 Cal.Rptr. 411.) Therefore, the class members herein were not required to “exhaust” any administrative remedies before challenging the supplemental benefits regulation. But the trial court properly denied any relief on the grounds of mootness since the requested injunction restraining compliance with the challenged regulation had been earlier adjudicated. (See Garcia v. Swoap, supra, 63 Cal.App.3d 903, 134 Cal.Rptr. 137.)However, different problems are presented when payment of benefits is sought. Although it has been held that class members need not exhaust their administrative remedies in order to obtain payment of retroactive benefits (Hypolite v. Carleson, supra, 52 Cal.App.3d 566, 584, 125 Cal.Rptr. 221), the cases in which payment of retroactive benefits was awarded to a class were legal actions, namely mandamus proceedings. (E. g., Mooney v. Pickett, supra, 26 Cal.App.3d 431, 102 Cal.Rptr. 708.) In contrast, the present case seeks injunctive relief through an equitable action, an inappropriate vehicle for obtaining payment of class benefits.

7.  The Department candidly conceded that this alternative “makes far more sense.”

8.  Welfare and Institutions Code section 11004, subdivision (i), now provides: “When an underpayment or denial of public social service occurs because of an administrative error or inadvertence on the part of a county, and as a result the applicant or recipient does not receive the amount to which he is entitled, the county shall provide public social services equal to the full amount of the underpayment which occurred during the period of one year immediately preceding the date the error or inadvertence is discovered.”

RACANELLI, Presiding Justice.

ELKINGTON and NEWSOM, JJ., concur.