LIBRENJAK v. PALOMAR MEMORIAL HOSPITAL (1981)

Tony Librenjak appeals from the judgment of dismissal entered after Palomar Memorial Hospital's demurrer to the first amended complaint (complaint) was sustained without leave to amend.

As we shall explain, we have concluded Librenjak's complaint alleges sufficient facts pertaining to the circumstances surrounding his failure to comply with the provisions of the California Tort Claims Act (Gov.Code § 810 et seq.¹ ) to warrant further trial proceedings.   We reverse the judgment with instructions to the trial court to overrule the demurrer.

Procedural and Factual Background

We accept as true the material factual allegations of Librenjak's complaint.

On April 14, 1978, Librenjak entered Palomar for replacement surgery of his right hip.   As a result of Palomar's negligence he sustained a pinched nerve causing him to suffer from a condition he describes as “dropped foot.”   About eight months later, November 6, Librenjak retained counsel who filed suit on December 18 against Palomar and James Brown, M.D. alleging breach of medical and professional obligations.

A copy of the summons and complaint was mailed to the administrator of Palomar on December 29 pursuant to Code of Civil Procedure section 415.30 and was received by him on January 3, 1979.   Palomar declined to acknowledge service of the complaint and filed no responsive pleadings until after it was personally served on July 31, 1979.   On August 29, when Palomar filed its demurrer on the grounds Librenjak failed to comply with sections 911.2 and 945.4, Librenjak learned for the first time that Palomar was a public entity.

On November 27 Librenjak filed points and authorities in opposition to Palomar's demurrer and petitioned under section 946.6 to be relieved of the requirements of the claim statute.   Accompanying his petition, Librenjak and his counsel filed supporting declarations.

His counsel declared that shortly after he was retained he obtained copies of his client's records at Palomar for review, but nowhere in those records was mention made that the hospital was a county facility.   It was not until August 29, 1979, when Palomar's demurrer was filed that he became aware he was dealing with a public entity.   He states if he had known of this fact he would have promptly filed a petition to have his client relieved of filing a claim.

Librenjak declared he was hospitalized at Palomar in 1978 and 1977.   At no time was he informed nor did he know Palomar was a governmental entity until he was told by his lawyer in September 1979 that this issue was being raised in the pending case.   No opposing declarations were filed.   The court denied Librenjak's petition and sustained Palomar's demurrer with leave to amend.

Librenjak's amended complaint alleged that under the doctrine of equitable estoppel, Palomar's conduct furnished a basis for relieving him of the claim-filing requirements.   The facts of the amended complaint alleging equitable estoppel were in substance the same as those contained in the declarations accompanying his section 946.6 petition.   The court sustained Palomar's demurrer to the amended complaint without leave to amend on the grounds Librenjak failed to comply with sections 911.2 and 945.4 and the allegations of estoppel were insufficient, based upon findings of fact, to sustain a cause of action.   This appeal followed.

Discussion

A claim for personal injury against a public entity must be presented within 100 days after the accrual of a cause of action.  (§ 911.2.)   Presentation of the claim is a condition precedent to filing suit against the entity.  (§ 945.4.)   The claim requirements, however, are not absolute.   Section 946.6, subdivision (c)(1) permits relief from section 945.4 where the court finds the failure to present the claim was through mistake, inadvertence, surprise or excusable neglect.  (Boas v. County of San Diego (1980) 113 Cal.App.3d 355, 357–358, 169 Cal.Rptr. 828.)   Section 946.6 requires a liberal interpretation because of the policy of deciding cases on their merits with doubts to be resolved in favor of the application for relief.  (County of Santa Clara v. Superior Court (1971) 4 Cal.3d 545, 552, 94 Cal.Rptr. 158, 483 P.2d 774.)   This policy, expressed and enforced by the courts, emanates from the legislative recognition that the claim statutes were indeed a trap for the unwary and should not be judicially rebuilt after the legislative attempt to remove the snares.  (See Viles v. State of California (1967) 66 Cal.2d 24, 28–29, 56 Cal.Rptr. 666, 423 P.2d 818.)

 Here, the issue is not whether Librenjak complied with section 911.2, but whether the allegations of his complaint, if true, are sufficient to estop Palomar from asserting the bar of that provision.²

Under proper circumstances, estoppel will prevent a governmental agency from urging compliance with the statute and the failure to file the required claim will be excused.  (Fredrichsen v. City of Lakewood (1971) 6 Cal.3d 353, 357, 99 Cal.Rptr. 13, 491 P.2d 805.)   Equitable estoppel requires the following elements to be present:  “(1) the party to be estopped must be apprised of the facts;  (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended;  (3) the other party must be ignorant of the true state of facts;  and (4) he must rely upon the conduct to his injury.”  (Driscoll v. City of Los Angeles (1967) 67 Cal.2d 297, 305, 61 Cal.Rptr. 661, 431 P.2d 245.)

Palomar focuses upon the absence of the required second element saying its conduct is not the type of conduct that can or should give rise to an estoppel.   It claims that since it did nothing wrong in refusing to acknowledge service of the summons and complaint or in remaining silent afterwards, there is no reason to excuse Librenjak from the claim filing requirements of the statute.

Palomar correctly asserts the cases holding an estoppel generally involve some affirmative conduct or misrepresentation by the public entity or its agents (see, e.g., Farrell v. County of Placer (1944) 23 Cal.2d 624, 145 P.2d 570;  Cruise v. City and County of San Francisco (1951) 101 Cal.App.2d 558, 225 P.2d 988) and in the absence of that type of conduct, a plaintiff must timely file his claim (see, e.g., Toscano v. County of Los Angeles, supra, 92 Cal.App.3d 775, 155 Cal.Rptr. 146;  Tyus v. City of Los Angeles (1977) 74 Cal.App.3d 667, 672, 141 Cal.Rptr. 630).   Unlike the present case, however, in every case drawn to our attention in which the conduct of the public entity was examined, the status of that entity was clearly described.   Here, the crux of Librenjak's argument is that he was deprived of that basic knowledge because Palomar failed to give any indication it was a governmental entity.   He does not claim he is entitled to anything more than being apprised of Palomar's correct identity, stating that if he had been armed with that minimal information, he would have complied with the provisions of the Tort Claims Act.

 When we examine an estoppel argument, we must do so in a manner consistent with the purpose and nature of that doctrine which was founded on concepts of equity and fair dealing.   It is properly applied against the government in those cases when justice and right require it except only where its application would result in the nullification of a strong policy adopted for the benefit of the public.  (City of Long Beach v. Mansell (1970) 3 Cal.3d 462, 493, 91 Cal.Rptr. 23, 476 P.2d 423.)   Relevant circumstances which must be considered include both the facts relating to the culpability or negligence of the public agency or its agents in reference to their conduct or advice and the seriousness of the impact or effect of such conduct or advice on the claimant.  (Driscoll v. City of Los Angeles, supra, 67 Cal.2d 297, 306, 61 Cal.Rptr. 661, 431 P.2d 245.)

 The conduct here which must be scrutinized is Palomar's unwillingness to publish the fact that it was a public entity.  “The policy underlying the claims statutes is to afford prompt notice of claims to governmental entities.”  (Minsky v. City of Los Angeles (1974) 11 Cal.3d 113, 123, 113 Cal.Rptr. 102, 520 P.2d 726.)   Prompt notice is important to allow for early investigation of the facts, informed fiscal planning in light of prospective liabilities, and settlement of claims before initiation of costly civil litigation.  (Id., at p. 123, 113 Cal.Rptr. 102, 520 P.2d 726.)   Obviously, these purposes can only be satisfied when the public entity for whose benefit the statute was enacted discloses its status.   If, however, a public entity for whatever reason, prefers to hold itself out as a private entity it in effect indicates its willingness to waive the benefits of the statute.   In our view mere disclosure is not the type of affirmative conduct which places too heavy a burden upon the public entity in light of the consequences of its action in failing to do so.

Our impression of the situation presented by the facts in the case before us is buttressed by the Legislature's action in 1979 when it passed section 7530.   The first paragraph of that provision now provides that all public agencies or public entities shall be identified as a public agency or public entity which may be satisfied if the words “public agency” or “public entity” appear on all letterhead stationery of the agency and on all identification cards used to identify a representative of the entity.   Our conclusion is only consistent with the solution devised by the Legislature to assure disclosure by a public entity of its governmental status is properly made.

 Librenjak also argues that Palomar's failure to comply with section 53051 precludes it from asserting sections 911.2 and 945.4 as a defense.   Section 53051 requires a public agency file with the California secretary of state and the county clerk, a statement of facts about the agency.   An “agency's failure to comply with section 53051 entitles the claimant to ignore the claim-filing requirement entirely.”  (Wilson v. San Francisco Redevelopment Agency (1977) 19 Cal.3d 555, 560, 138 Cal.Rptr. 720, 564 P.2d 872.)   Palomar claims because there was nothing in Librenjak's first amended complaint to suggest Palomar's noncompliance with section 53051, we are precluded from considering what it says is a new theory for the first time on appeal.

Palomar's statement, although technically correct, overlooks the expansive rubric of Librenjak's estoppel argument.   In effect, section 53051 is the legislative equivalent to judicial estoppel.   When appellate courts are called upon to review a judgment following a successful demurrer, California's liberal rule of amendment requires the element of fairness to the trial judge to be subordinated to the interest of the client of the inept pleader.  (Greenberg v. Equitable Life Assur. Society (1973) 34 Cal.App.3d 994, 1000, 110 Cal.Rptr. 470.)  “Liberality in permitting amendment is the rule, not only where a complaint is defective as to form but also where it is deficient in substance, if a fair prior opportunity to correct the substantive defect has not been given.  ․ ‘[T]he denial of ․ permission [to amend] is now usually found to be an abuse of discretion, except where the impossibility of amendment to state a cause of action is clear.’ ”  (Id., at p. 998, 110 Cal.Rptr. 470.)   Librenjak's statements pertaining to Palomar's failure to comply with section 53051 raise additional factual questions on this issue which in light of our holding should be resolved at the trial court.

Our discussion of the doctrine of estoppel recognizes there is nothing inherently sacrosanct about the time provisions of the Tort Claims Act which requires a compulsive obeisance.   There are cases where fairness to all parties prevents a sensible application of the statute.   For example, in People ex rel. Department of Transportation v. Superior Court (1980) 26 Cal.3d 744, 761–762, 163 Cal.Rptr. 585, 608 P.2d 673, our Supreme Court in discussing the policy considerations underlying both the Tort Claims Act and equitable indemnity has held that a defendant seeking equitable indemnity may bring a governmental entity into the lawsuit for the first time as a cross-defendant without filing a claim under the Government Code.  (Id., at p. 763, 163 Cal.Rptr. 585, 608 P.2d 673.)   One of the principal reasons for the court's holding was simply that to do otherwise might possibly eliminate an entire class of responsible persons from liability through a plaintiff's decision thereby depriving defendants of their right to indemnity and equitable apportionment.  (Id., at pp. 760–762, 163 Cal.Rptr. 585, 608 P.2d 673)

 Similar considerations are applicable here as well.   Palomar is not the only defendant.   It is not only fair to the plaintiff but also to defendant Brown for purposes of both settlement and trial to have all potentially responsible parties before the court in one proceeding.  (See Hemmelgarn v. Boeing Company (1980) 106 Cal.App.3d 576, 588–589, 165 Cal.Rptr. 190.)

Disposition

The judgment is reversed with instructions to the trial court to overrule Palomar's demurrer ³ granting leave to plaintiff to file a second amended complaint.

I respectfully dissent.

This case expands the doctrine of estoppel, without citation of authority, and indeed contrary to it, in the case of a public entity which has made no affirmative representations or acts inducing reliance by a claimant against it.   Moreover, the case indirectly makes a retroactive application of a statute contrary to fairness and public policy.

The majority, under the facade of equity and fair dealing, and in violation of Auto Equity Sales, Inc. v. Superior Court, 57 Cal.2d 450, 20 Cal.Rptr. 321, 369 P.2d 937 (invoking stare decisis), tacks on a requirement that a public entity hold itself out as such or waive the benefits of the California Tort Claims Act (Gov.Code, § 810 et seq.).¹  No case so holds, and until 1980, after the events in this case, no statute so required.

The case of Tammen v. County of San Diego (1967) 66 Cal.2d 468, held, at page 480, 58 Cal.Rptr. 249, 426 P.2d 753, “estoppel requires some affirmative representation or acts by the public agency or its representatives inducing reliance by the claimant.”   The court in Fredrichsen v. City of Lakewood (1971) 6 Cal.3d 353, 99 Cal.Rptr. 13, 491 P.2d 805, sets forth the rule estoppel is available where the government had acted in an unconscionable manner as well as where a promise had been made or erroneous advice as to procedure was given.   As stated in Cruise v. City & County of San Francisco (1951) 101 Cal.App.2d 558, at page 565, 225 P.2d 988:  “The vital principle of equitable estoppel, it has been said, is that he who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.”

Investigation of whether a defendant is a public entity is the obligation of plaintiff or his legal representative.   The failure to file a timely claim or make application for a late claim was not occasioned by any misconduct or concealment by Palomar Memorial Hospital.

The majority cites Driscoll v. City of Los Angeles (1967) 67 Cal.2d 297, 61 Cal.Rptr. 661, 431 P.2d 235, for the proposition relevant circumstances must be considered, but it also holds there must be intentional conduct (id. at pp. 305–306, 61 Cal.Rptr. 661, 431 P.2d 235).   They also rely upon City of Long Beach v. Mansell (1970) 3 Cal.3d 462, 91 Cal.Rptr. 23, 476 P.2d 423, for the rule the doctrine of estoppel is properly applied in those cases when justice and right require it.   In doing so, they are overlooking the consistent requirement that there must be a factual basis for its application.  (Bib'le v. Committee of Bar Examiners (1980) 26 Cal.3d 548, 552, 162 Cal.Rptr. 426, 606 P.2d 733.)

The rule governing equitable estoppel against a governmental entity has been stated as follows:

“The government may be bound by an equitable estoppel in the same manner as a private party when the elements requisite to such an estoppel against a private party are present ․”  (City of Long Beach v. Mansell, supra, 3 Cal.3d at pp. 496–497, 91 Cal.Rptr. 23, 476 P.2d 423.)

While purportedly using a buttressing argument, the majority are in essence making a retroactive application of section 7530, which did not purport to take effect until January 1, 1980, and which was after the trial court sustained Palomar's demurrer in this case.   Even judicial interpretations are not retrospective when considerations of reliance are involved (Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 193, 98 Cal.Rptr. 837, 491 P.2d 421).   Obviously, many public entities had relied upon not identifying themselves as such, otherwise there would have been no need for the statute.   Moreover, the section itself provides:

“Notwithstanding any other provision of law, a written application for leave to present a claim pursuant to section 911.4 shall be granted when it can be shown that the claimant acted with reasonable diligence in pursuing the claim and reasonably believed that the responsible entity was not a public agency by reason of its representations.”  (Emphasis added.)

Hence, the Legislature also recognized and included the long existing requirement of affirmative action as a basis for avoidance of the requirements of the claims statutes and not the mere failure to identify as a public entity.

Librenjak, by the medium of judicial notice, calls to our attention that the hospital's statements, filed pursuant to section 53051 with the Secretary of State and County Clerk of San Diego County, identifies different names of members of its governing body and different names of its president and secretary.

When a demurrer is sustained without leave to amend, a reviewing court is only compelled to find an abuse of discretion in denying leave where the plaintiff presents a tenable basis of amendment, even though the theory was not presented to the trial court (Powers v. Ashton, 45 Cal.App.3d 783, 790, 119 Cal.Rptr. 729;  Greenberg v. Equitable Life Assurance Society, 34 Cal.App.3d 994, 998, 110 Cal.Rptr. 470).

However, although great liberality will ordinarily be allowed in the amendment of a complaint after the sustaining of a demurrer, it is settled law that a party may not file an amended complaint which states an entirely new and different cause of action (Warden v. Kahn (1979) 99 Cal.App.3d 805, 810, 160 Cal.Rptr. 471).   Hence, the power to permit amendments is not unlimited and “the test is whether an attempt is made to state facts which give rise to a wholly distinct and different legal obligation against the defendant.”   (Klopstock v. Superior Court (1941) 17 Cal.2d 13, 20, 108 P.2d 906.)   Librenjak's first amended complaint alleged equitable estoppel in paragraph XIII.   It contained no allegations concerning section 946.4 or noncompliance with section 53051.

The majority suggests Librenjak's statements pertaining to Palomar's failure to comply with section 53051 raise additional factual questions.   True, however, these are new factual questions not before presented in their earlier pleadings.   Thus, the Powers and Greenberg rationale is inapposite to the validity of the trial court's order denying amendment of the first amended complaint and I would find no abuse of discretion in the denial.

A final observation is in order.   The majority analogizes to the cases of People ex rel. Department of Transportation v. Superior Court (1980) 26 Cal.3d 744, 163 Cal.Rptr. 585, 608 P.2d 673 (involving equitable indemnity), and Hemmelgarn v. Boeing Company (1980) 106 Cal.App.3d 576, 165 Cal.Rptr. 190 (an inconvenient forum case), neither of which are factually related to our case.   To conclude, without foundation therefor, that it is “not only fair to the plaintiff but also to defendant Brown for purposes of both settlement and trial to have all potentially responsible parties before the court in one proceeding,” is but to say the end justifies the means, even though the means are contrary to authority and precedent.

I would affirm the judgment.

FOOTNOTES

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

2.   This appeal came to us by way of demurrer.   Apparently Librenjak preferred to amend his complaint rather than to appeal the denial of his petition to file a late claim.  (See, e.g., Boas v. County of San Diego, supra, 113 Cal.App.3d 355, 169 Cal.Rptr. 828;  Toscano v. County of Los Angeles (1979) 92 Cal.App.3d 775, 155 Cal.Rptr. 146.)   The reason for this decision may be that a public agency's ability to accept a late claim, and consequently the court's ability to grant relief from the claim filing requirement, is dependent on the claim being filed within one year of the accrual of the cause of action.  (See §§ 911.4 and 946.6 subd. (c).)  Because Librenjak failed to discover Palomar's status as a public entity until one year had passed, he reasonably concluded the most efficient way to successfully present his argument was to apply to the trial court's general equitable powers in arguing Palomar should be estopped from relying on the claim filing statute.We acknowledge that the effect of our holding is that the 100-day period specified in section 911.2 does not commence to run until the plaintiff knew or reasonably should have known of the potential defendant's status as a public entity.   Since the plaintiff must plead estoppel in opposition to the public agency's demurrer, we are bound by the familiar rule that the allegations in the complaint must be accepted as true and construed with a view to achieve substantial justice.  (See Alcorn v. Anbro Engineering Inc. (1970) 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216;  King v. Central Bank (1977) 18 Cal.3d 840, 843, 135 Cal.Rptr. 771, 558 P.2d 857.)   In this case, Librenjak's ability to prove reasonable reliance, among other things, must be left to the trial court.

3.   The record gives some indication plaintiff may want to file a second amended complaint.   Our disposition does not preclude the filing of that complaint.

1.   All references are to the Government Code unless otherwise specified.

WIENER, Acting Presiding Justice.

WORK, J., concurs.