LENTZ v. McMAHON (1986)

In this case we must determine whether the state constitutional doctrine of separation of powers is violated by the application of equitable estoppel by a state agency which has not been conferred judicial powers by the state Constitution.   We have concluded that it is.

Cynthia Lentz (Lentz), Laura Sheen (Sheen), Darnetta Wise (Wise), and the California Coalition of Welfare Rights Organizations (CCWRO) (collectively referred to as plaintiffs) filed a petition for writ of mandate and complaint for declaratory and injunctive relief against Linda McMahon, Director of the State Department of Social Services (Director), and Michael Franchetti, Director of the State Department of Finance.   The complaint sought an alternative writ of mandate which would require the Director to set aside her separate decisions as to Lentz, Sheen and Wise that overpayments had been made to them which had to be repaid, or, in the alternative, to show cause why she has not done so.   In addition, the complaint prayed for a declaratory judgment that the Department of Social Services' (DSS) policy of “refusing to apply the doctrine of equitable estoppel in fair hearings is contrary to law.”   The complaint also sought a preliminary injunction or writ of mandate and/or permanent injunction which would compel the DSS to apply the doctrine of equitable estoppel.   The defendants answered the complaint.

At the hearing on the preliminary injunction, plaintiffs' counsel attempted to have a motion for partial summary judgment heard by the court.   However, the trial court declined to do so on the basis that the defendants had not received notice of such motion.

The trial court denied the preliminary injunction and instead set a schedule for the filing of additional briefs concerning the petition for writ of mandate, pursuant to Code of Civil Procedure section 1094.5.   In addition, the trial court suggested to plaintiffs' counsel that she file a written motion for partial summary judgment.

At the subsequent hearing, the trial court granted the plaintiffs' motion for summary judgment pertaining to their cause of action for permanent injunction and declaratory judgment.   The trial court's order declared that:  “Department of Social Services' policy of refusing to consider or decide claims of equitable estoppel raised in administrative ‘fair hearings' conducted pursuant to Welf. & Inst. Code § 10950, and their policy of refusing to grant such claims as warranted by the law and the facts, violate the provisions of Welf. & Inst. Code §§ 10500, 11004(a), 11000, and 10950 et seq.”   The court ordered that the Director as well as her agents, employees and successors in interest “are permanently enjoined and restrained from failing and refusing to consider and decide claims of equitable estoppel, and to apply the doctrine of equitable estoppel, as warranted by the law and the facts, in administrative proceedings within their jurisdiction․”

The trial court also granted plaintiffs' petition for writ of mandate, commanding the Director and DSS to set aside the individual decisions in the matters of Lentz, Sheen and Wise and to reconsider the decisions taking into consideration the doctrine of equitable estoppel.   The Director and the other state defendants appeal from the permanent injunction and declaratory judgment.

I

The “fair hearing” process employed by DSS allows an applicant or recipient of social services to be accorded a hearing whenever he or she is dissatisfied with any action of the county welfare department.  (Welf. & Inst. Code, § 10950.) ¹  The hearings are conducted in an informal manner and without regard to procedural or evidentiary rules.   The referees are all employees of DSS and are not required to be lawyers or have any legal background or training.   The applicant or recipient may appear with or without counsel.  (§ 10955.)

The referees prepare proposed decisions which they file with the director of the department.   The director is not bound to accept the proposed decision and may, instead, order a rehearing, or decide the matter on the record.  (See § 10959.)   After DSS renders its decision, the applicant or recipient may request judicial review thereof.  (§ 10962.)

In February 1982, section 11004 was amended to provide that “[c]urrent and future grants payable to an assistance unit may be reduced because of prior overpayments to the extent permitted by federal law.”  (Emphasis added.)   This change in law was brought about by the implementation of 42 United States Code section 602(a)(22), a part of the federal Omnibus Reconciliation Act, which required the state agency in charge of administering the grants in aid to “take all necessary steps to correct any overpayment․”  Prior to February 1982, section 11004 provided that grants could have been reduced by the amount of overpayment only if the recipient had income from which to recoup the amount.  (Former § 11004, Stats. 1979, ch. 1170, § 9, p. 4564.)

In a declaration presented to the trial court, Jerold Prod, the deputy director of DSS' legal affairs division, explained how the question of the application of equitable estoppel came about.   After the February 1982 effective date of the amended section 11004, the then director of DSS began to receive proposed decisions in cases wherein recipients set forth the claim of equitable estoppel to challenge the county's attempts to recoup past overpayments.   The typical claim asked that DSS be estopped from collecting overpayments where such overpayments were made as a result of DSS error.   Prod agreed to adopt some of these proposed decisions.   It soon became apparent, however, that increasing difficulties were presented by the application of equitable estoppel in the fair hearing process.   The equitable estoppel claims increased and were also being raised as challenges to the necessity of meeting eligibility requirements and to the need for adherence to statutory provisions and administrative regulations.   County welfare departments presented questions as to DSS' authority to apply equitable estoppel.   Prod also recognized that DSS' application of equitable estoppel called into question the force of those statutes requiring it to recoup overpayments.

As acting director of DSS in early 1983, Prod discussed the question of the DSS' power to apply equitable estoppel with his legal staff and other supervisory staff.   As a result, he decided to issue the following memorandum to all DSS hearing officers:  “In recent months, the doctrine of equitable estoppel has been applied in fair hearing decisions, citing the case of Canfield v. Prod, 67 Cal.App.3d 722, 137 Cal.Rptr. 27 (1977).   In most cases, it has been used to waive a regulatory requirement where a recipient has received erroneous advice from the county.  [¶ ] The purpose of this memo is to inform you that the Director has considered this issue and has determined that equitable remedies are not appropriate in administrative hearing decisions.   Therefore, the doctrine of equitable estoppel will no longer be applied in the Director's decisions.”

Each of the individual plaintiffs in this case asserted, at their respective fair hearings, that the doctrine of equitable estoppel should preclude the county from recovering overpayment from them.   In Lentz's case, the equitable claim was that the county should be estopped from recovering aid payments to her because the county should have realized it did not have the proper documentation for the amount of aid she was receiving.

Sheen claimed that the county should be estopped from recovering overpayment because the county made the aid payments to her with the knowledge that she owned more property than the regulations allowed in order to be eligible for aid payments.   Sheen, who was already separated from her husband, argued that if the county had informed her of her ineligibility for aid, she would have filed for divorce, thereby placing the family home in litigation.   She, thus, would have remained eligible for aid.

Wise, a recipient of aid to families with dependent children (AFDC) benefits, was determined to be a mandatory WIN registrant and she registered with WIN, the work incentive program, as required by law.   Subsequently the county proposed to discontinue her AFDC benefits because she failed to file the required monthly income report and she was decertified from the WIN program.   Wise was informed that she was being discontinued from the AFDC program because she had failed to file a monthly income report.   When she belatedly filed this report, Wise was reinstated to AFDC, but she did not reregister with WIN, which is an eligibility requirement for AFDC.   Despite the fact that Wise was ineligible for AFDC, she received aid payments.   Wise claimed that the county should be estopped from recovering overpayment in her case because it failed to inform her of the necessity to reregister with WIN.

In all three cases, the proposed decisions submitted by the referees suggested that equitable estoppel should be applied to prevent the county from recovering the overpayments.   However, in each case, the Director's decision was that equitable estoppel did not apply and that the county properly demanded overpayment.   Each of the final decisions in these cases occurred after the February 10, 1983, directive which informed the referees that the Director would no longer apply equitable estoppel.

II

 The Director's principal argument on appeal is that DSS is precluded from applying the doctrine of equitable estoppel because to do so would violate the separation of powers clause in our state Constitution.   Plaintiffs contend that our state Constitution does not impede the DSS' application of equitable estoppel.   Plaintiffs assert that any limitation upon a state agency's exercise of a judicial power was removed by the opinion in Tex-Cal Land Management, Inc. v. Agricultural Labor Relations Bd. (1979) 24 Cal.3d 335, 156 Cal.Rptr. 1, 595 P.2d 579.   It is our determination that DSS' application of equitable estoppel in its fair hearing process violates our state constitutional provision concerning separation of powers, as well as other constitutional and statutory provisions and case precedent.

 The doctrine of equitable estoppel states that one who, by words or conduct, has induced another to believe a particular thing to be true and to act upon such belief, shall not be permitted to contradict it.  (City of Long Beach v. Mansell (1970) 3 Cal.3d 462, 488–490, 91 Cal.Rptr. 23, 476 P.2d 423.)   It is without question that the application of equitable estoppel is the exercise of a judicial power.   The original California Constitution, former article VI, section 6, granted our superior courts original jurisdiction in cases in equity and in law.  (See Historical Note, 2 West's Ann.Code, Constitution (1954 ed.) foll. art. VI, § 5, pp. 308–309.)   As equitable estoppel is among those remedies applied by the English courts of chancery prior to July 4, 1776 (3 Pomeroy, Equity Jurisprudence (5th ed. 1941) § 802, p. 179), the jurisdiction to apply this remedy was vested in our superior courts upon the adoption of our Constitution.²  (Tulare Irr. Dist. v. Superior Court (1925) 197 Cal. 649, 660, 242 P. 725.)

Our analysis calls into question the effect of two constitutional provisions upon an administrative agency's authority to apply the judicial doctrine of equitable estoppel.  Article III, section 3 of the California Constitution sets forth that:  “The powers of state government are legislative, executive and judicial.   Persons charged with the exercise of one power may not exercise either of the others except as permitted by this Constitution.”  (Emphasis added.)  Article VI, section 1 of our Constitution provides:  “The judicial power of this State is vested in the Supreme Court, courts of appeal, superior courts, municipal courts, and justice courts.   All except justice courts are courts of record.”

 The Supreme Court opinion in Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 112 Cal.Rptr. 805, 520 P.2d 29, explains how the separation of powers principle set forth in our Constitution affects the authority of a legislatively created administrative agency to exercise judicial powers.   California law distinguishes between agencies of constitutional origin, which have been granted limited judicial powers, and legislatively created agencies of statewide jurisdiction.  (Id., at pp. 35, 37, 112 Cal.Rptr. 805, 520 P.2d 29.)   Potential violation of the separation of powers provision is not posed by agencies of constitutional origin, i.e., those agencies which the Constitution has created and vested with judicial powers ³ or those agencies which have been legislatively created with judicial powers pursuant to a specific constitutional authorization.⁴  (Id., at p. 36, 112 Cal.Rptr. 805, 520 P.2d 29.)   This is so because constitutional agencies fall within the exception to the separation of powers doctrine, “ ‘except as permitted by this Constitution.’ ”  (Id., at pp. 35–36, fn. omitted, 112 Cal.Rptr. 805, 520 P.2d 29.)   Constitutional agencies can thus “perform judicial functions to the extent of the [constitutional] grant without offending the doctrine of separation of powers.”  (Id., at p. 36, 112 Cal.Rptr. 805, 520 P. 29.)   Their judicial powers are derived directly from the Constitution.

 In contrast, the separation of powers clause does prevent the Legislature from vesting judicial powers in legislatively created administrative agencies.  (Strumsky v. San Diego County Employees Retirement Assn., supra, 11 Cal.3d at p. 37, 112 Cal.Rptr. 805, 520 P.2d 29;  Laisne v. Cal. St. Bd. of Optometry (1942) 19 Cal.2d 831, 834–835, 123 P.2d 457;  Standard Oil Co. v. State Board of Equal.  (1936) 6 Cal.2d 557, 561, 59 P.2d 119;  Perry Farms, Inc. v. Agricultural Labor Relations Bd. (1978) 86 Cal.App.3d 448, 460, 150 Cal.Rptr. 495.)   The entire judicial power of California is “concentrated in the state court system and some ‘constitutional agencies.’ ”  (Strumsky v. San Diego County Employees Retirement Assn., supra, 11 Cal.3d at p. 43, fn. omitted, 112 Cal.Rptr. 805, 520 P.2d 29.)   Any attempt to exercise judicial power by a nonconstitutional agency is manifestly in violation of our Constitution.  (Laisne v. Cal. St. Bd. of Optometry, supra, 19 Cal.2d at pp. 834–835, 123 P.2d 457.)   A separation of powers problem is presented by this case in that the DSS, as a department of the Health and Welfare Agency (Gov.Code, § 12803), is a part of the executive branch of our state government (see generally Gov.Code, §§ 12850–12852) and thus may not constitutionally exercise judicial powers “except as permitted by this Constitution.”  (Cal.Const., art. III, § 3, emphasis added.)

Unlike some administrative agencies in this state, the DSS has not been explicitly authorized by the California Constitution to exercise judicial powers;  nor has it been authorized to exercise judicial powers by the Legislature pursuant to constitutional authorization.   The constitutional provision authorizing the creation of DSS states:  “The Legislature has plenary power to provide for the administration of any constitutional provisions or laws heretofore or hereafter enacted concerning the administration of relief, and to that end may modify, transfer, or enlarge the powers vested in any state agency or officer concerned with the administration of relief or laws appertaining thereto.”  (Cal.Const., art. XVI, § 11.)   We do not construe this provision as conferring judicial powers upon DSS or as authorizing the Legislature to confer such powers upon DSS.

 First, the fact that the Constitution has not vested, or authorized the Legislature to vest judicial powers in DSS is demonstrated by the statutes which set forth DSS' duties.   In its supervisory role over the administration of public social services, DSS is charged with the responsibility to manage the department, administer the laws pertaining to the administration of public social services, report to the Governor on the conditions of public social services, and formulate, adopt, amend or repeal regulations and general policies concerning the administration of public social services.  (§§ 10553, 10600, 10603.)   It is a basic rule of constitutional construction that the Legislature's interpretation of a constitutional provision, where there may be either of two meanings, is controlling.  (Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685, 692, 97 Cal.Rptr. 1, 488 P.2d 161.)   It is therefore significant that the Legislature has not explicitly or implicitly conferred judicial powers upon the DSS.   Thus, the complete delegation of all the Director's powers to referees in their conduct of the fair hearing (see § 10954) does not serve to authorize a referee to use judicial powers.

Our interpretation that DSS lacks judicial powers is further supported by the fundamental rule of statutory interpretation that legislative enactments are presumed to be constitutional.  (Lundberg v. County of Alameda (1956) 46 Cal.2d 644, 652, 298 P.2d 1.)   Any interpretation of the aforementioned statutes in a manner which would confer judicial powers upon the DSS would clearly contravene article III, section 3, and article VI, section 1 of our Constitution and would thus be in violation of this basic rule of statutory interpretation.

 On the other hand, the legislative authorization of DSS' use of adjudicatory powers is not in violation of our state Constitution.   Judicial power is the power to hear and determine controversies between adverse parties and questions in litigation.  “ ‘The judicial function is to “declare the law and define the rights of parties under it”.  [Citation.] ․’ ” (People v. Bird (1931) 212 Cal. 632, 640, 300 P. 23, quoting Marin Water etc. Co. v. Railroad Com. (1916) 171 Cal. 706, 711–712, 154 P. 864.)   An adjudicatory power, in contrast, is the power to apply a rule to a specific set of existing facts.  (Strumsky v. San Diego County Employees Retirement Assn., supra, 11 Cal.3d at p. 35, fn. 2, 112 Cal.Rptr. 805, 520 P.2d 29.)   While administrative agencies have been delegated substantial adjudicative powers in order to perform the decision-making necessary to their respective areas (Bixby v. Pierno (1971) 4 Cal.3d 130, 142, 93 Cal.Rptr. 234, 481 P.2d 242), judicial powers may not be delegated to administrative agencies unless pursuant to constitutional grant.  (Cal.Const., art. III, § 3.)

The fair hearing process established by section 10950 et seq. has been described by our Supreme Court as a “judicial-like adversary proceeding.”  (People v. Sims (1982) 32 Cal.3d 468, 479, fn. omitted, 186 Cal.Rptr. 77, 651 P.2d 321.)   The hearing officer's decision is adjudicatory in nature as it involves the “application of ‘a rule ․ to a specific set of existing facts․' ” (Id., at p. 480, 186 Cal.Rptr. 77, 651 P.2d 321.)   “The fact that statewide and local administrative agencies are prohibited from exercising ‘judicial power’ by the California Constitution does not mean that agency proceedings and determinations may never be judicial in nature.”   (Id., at p. 479, fn. 8, 186 Cal.Rptr. 77, 651 P.2d 321, citing Strumsky v. San Diego County Employees Retirement Assn., supra, 11 Cal.3d at p. 28, 112 Cal.Rptr. 805, 520 P.2d 29, and Standard Oil Co. v. State Board of Equal., supra, 6 Cal.3d at p. 557, 59 P.2d 119.)   In the context of the separation of powers clause, the term “judicial power” has represented those adjudicatory activities properly conducted solely by courts.  (See Note, Tex-Cal Land Management, Inc. v. Agricultural Labor Relations Board:   Administrative Adjudications and the Substantial Evidence Standard of Judicial Review (1980) 68 Cal.L.Rev. 618, 631–632, fn. 73.)

Plaintiffs place significant reliance on our Supreme Court's opinion in Tex-Cal Land Management, Inc. v. Agricultural Labor Relations Bd., supra, 24 Cal.3d 335, 156 Cal.Rptr. 1, 595 P.2d 579.   In that case, the court considered the constitutionality of Labor Code section 1160.8 which provided that the factual findings of the ALRB be directly reviewed by the Court of Appeal and upheld if the court should determine that substantial evidence supports the ALRB's findings.   The court analyzed that the case law up to that point required independent judgment review of the factual findings of administrative agencies where a fundamental vested right was at stake.  (Tex-Cal, supra, 24 Cal.3d at pp. 342–344, 156 Cal.Rptr. 1, 595 P.2d 579, citing Bixby v. Pierno, supra, 4 Cal.3d at p. 130, 93 Cal.Rptr. 234, 481 P.2d 242.)   In part, the cases required this more stringent standard of review because of the constitutional limitation on the legislative delegation of judicial power.   (Id., at pp. 343–344, 156 Cal.Rptr. 1, 595 P.2d 579.)

The Tex-Cal court concluded that whether or not the Constitution has conferred judicial powers on an agency, the Legislature may constitutionally authorize a state-level agency to make final factual findings pertaining to a fundamental vested right if they are supported by substantial evidence as a whole on the record.  (Id., at p. 346, 156 Cal.Rptr. 1, 595 P.2d 579.)   The court analyzed that under the type of administrative due process safeguards as are provided by the Agricultural Labor Relations Act, a stricter standard than substantial evidence review is not required.  (Id., at pp. 344, 346, 156 Cal.Rptr. 1, 595 P.2d 579.)

The Tex-Cal court also observed that language in Standard Oil Co. v. State Board of Equal., supra, 6 Cal.2d 557, 59 P.2d 119, and later cases that described the constitutional limitations on legislative power, was unnecessary to the holdings in those cases as the holdings “could as well have been grounded in judicially fashioned rules of procedure or in interpretation of [Code Civ.Proc.] section 1094.5.”  (Id., at p. 345, 156 Cal.Rptr. 1, 595 P.2d 579.)

Plaintiffs cite Tex-Cal for the proposition that constitutional agencies are no longer the only administrative agencies which may exercise judicial powers.   Plaintiffs argue that the Tex-Cal holding means that the Legislature may confer judicial powers on a statewide administrative agency whether or not the agency is constitutional in origin.   We disagree with this interpretation of Tex-Cal.

There is no language in Tex-Cal which implies that the Legislature may constitutionally confer judicial powers on all statewide agencies, regardless of their origin.   The Tex-Cal court certainly could not have intended to allow the Legislature to give agencies judicial power where the Constitution prohibits such vesting.   In our view, Tex-Cal was concerned mainly with the degree of due process safeguards built into the system of review created by Labor Code section 1160.8.   Whether or not the agency could exercise judicial power was not determinative of the decision in Tex-Cal.

Furthermore, although the Tex-Cal court noted that it was unnecessary to invoke the statements of constitutional doctrine set forth in Standard Oil and Bixby and other cases, the vitality and correctness of such statements was not questioned.   In fact, Standard Oil's interpretation of the separation of powers doctrine as prohibiting the exercise of judicial powers by a nonconstitutional agency has recently been cited by the Supreme Court in People v. Sims, supra, 32 Cal.3d at page 479, footnote 8, 186 Cal.Rptr. 77, 651 P.2d 321.

Reliance is also placed upon Goldberg v. Kelly (1970) 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287, for the plaintiffs' argument that DSS' policy of refusing to apply equitable estoppel would violate principles of due process.   Plaintiffs contend that DSS' procedure would deprive applicants and recipients of a pretermination hearing in that assistance could be discontinued or reduced at the fair hearing step of the process and before a superior court had the opportunity to apply the doctrine of equitable estoppel.   Plaintiffs' contention does not withstand analysis.

In Goldberg, the United States Supreme Court held that recipients of the federal program of AFDC have a federal due process right to an evidentiary hearing before their benefits may be terminated.   The court ruled that the evidentiary hearing need not take the form of a judicial trial.   However, it must provide the recipient with a meaningful opportunity to be heard, by the confrontation of adverse witnesses and the presentation of arguments and evidence orally.   Further, the recipient must be provided with timely and adequate notice of the reasons for termination.  (Goldberg v. Kelly, supra, 397 U.S. at pp. 268–269, 90 S.Ct. at 1020–1021.)   The recipient's representation by counsel is not necessary to satisfy constitutional due process requirements;  but, the recipient must be allowed to retain counsel if he or she so desires.  (Id., at p. 270, 90 S.Ct. at 1021.)   Finally, the court held that the decision-maker need not file a full opinion or formal findings of fact or conclusions of law.   The decision-maker need only state the reasons for his or her determination and indicate the evidence relied upon.  (Id., at p. 271, 90 S.Ct. at 1022.)   The purpose of a pretermination hearing is “to produce an initial determination of the validity of the welfare department's grounds for discontinuance of payments in order to protect a recipient against an erroneous termination of his benefits.”  (Id., at p. 267, 90 S.Ct. at 1020.)

 The Goldberg case did not hold that due process principles require the decision-maker at a pretermination hearing to apply equitable doctrines.   The decision-maker's sole responsibility is to explain the reasons and the evidence relied upon for his or her determination.   The fair hearing process implemented by DSS complies with the due process requirements set forth in Goldberg.

A further impediment to DSS' application of equitable estoppel is the case of City of Long Beach v. Mansell, supra, 3 Cal.3d 462, 91 Cal.Rptr. 23, 476 P.2d 423.   In that case, our Supreme Court, relying on Driscoll v. City of Los Angeles (1967) 67 Cal.2d 297, 61 Cal.Rptr. 661, 431 P.2d 245, applied the doctrine of equitable estoppel to a governmental entity to permit consummation of the remaining portions of an agreement settling certain boundary questions.   The issue in Long Beach was whether city officials would be ordered by the court to transfer title in certain tidelands to residents who had lived there for several decades.   The city officials asserted that such transfers were in violation of constitutional and common law prohibitions against the alienation of state-owned tidelands.   The City of Long Beach claimed that it was equitably estopped from asserting a claim of paramount title to the land in question.  (City of Long Beach v. Mansell, supra, 3 Cal.3d at pp. 489–490, 91 Cal.Rptr. 23, 476 P.2d 423.)

Our Supreme Court held that “the proper rule governing equitable estoppel against the government is the following:  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 and, in the considered view of a court of equity, the injustice which would result from a failure to uphold an estoppel is of sufficient dimension to justify any effect upon public interest or policy which would result from the raising of an estoppel.”  (City of Long Beach v. Mansell, supra, 3 Cal.3d at pp. 496–497, 91 Cal.Rptr. 23, 476 P.2d 423.)   The court balanced the policy interests at issue and estopped the city officials as “manifest injustice would result if the very governmental entities whose conduct has induced this reliance were permitted at this late date to assert a successful claim of paramount title and thereby wrest the subject property from the homeowners who have settled upon it.”  (Id., at p. 499, 91 Cal.Rptr. 23, 476 P.2d 423.)

In a later decision, our Supreme Court added that principles of estoppel have never been applied against the government if the result would be to contravene directly any statutory or constitutional limitations.  (Longshore v. County of Ventura (1979) 25 Cal.3d 14, 28, 157 Cal.Rptr. 706, 598 P.2d 866.)

 Applying the principles of Long Beach to the case at bench we find that even if DSS possessed judicial powers, the injustice resulting from the failure to uphold an estoppel does not justify the detrimental effect upon public policy or public interest.   To apply equitable estoppel against DSS in the recovery of overpayments would force the agency to violate section 11004, the statute which requires recoupment of any overpayment.   The legislative intent in enacting the recoupment provisions of section 11004 is that “state law regarding the provisions of aid to families with dependent children comply with the provisions of the federal Omnibus Budget Reconciliation Act of 1981.   The State Department of Social Services shall implement the provisions regarding the Aid to Families with Dependent Children program in the federal Omnibus Budget Reconciliation Act of 1981 that are optional with the state only as authorized in this act or in existing law.”   (Stats. 1982, First Ex. Sess. 1981–1982, ch. 3, § 1, p. 6888, emphasis added.)   Furthermore, administrative agency heads are under a constitutional duty to comply with and enforce legislation unless and until an appellate court declares those provisions unconstitutional.  (Valdes v. Cory (1983) 139 Cal.App.3d 773, 780, 189 Cal.Rptr. 212, citing Cal.Const., art. III, § 3.5.)

It is plain that the public's interest in recoupment of monies improperly paid to individuals would not be served by application of equitable estoppel against DSS.   To allow the DSS to apply equitable estoppel “would operate to frustrate the strong rule of public policy which the statutory requirements represented.”  (City of Long Beach v. Mansell, supra, 3 Cal.3d at p. 497, 91 Cal.Rptr. 23, 476 P.2d 423, citing County of San Diego v. Cal. Water etc. Co. (1947) 30 Cal.2d 817, 826–827, 186 P.2d 124.)   Application of equitable estoppel would afford an opportunity by which persons dealing with the DSS could evade the law.  (Ibid.)  Moreover, it would contravene article III, section 3.5 of our Constitution which requires agency enforcement of statutes in the absence of an appellate court's declaration that the statute is unconstitutional.   Additionally, application of equitable estoppel would contravene the constitutional limitation upon the DSS' powers as represented by the separation of powers provision.

The plaintiffs also advance the argument that the applicants and recipients will be denied an adequate resolution of their equitable estoppel claims if the agency itself cannot decide the matters.   The contention is that only those few individuals with sufficient resources to gain access to the courts will have the opportunity to present their estoppel claims.   The plaintiffs state that, in this manner, courts will become forums of “first resort,” defeating the purpose behind the administrative fair hearing process.   These assertions are not meritorious.

The statutory scheme relating to judicial review of the DSS fair hearing process is designed to ensure that aggrieved parties have access to the judicial system to establish their statutory rights.  (Woods v. Superior Court (1981) 28 Cal.3d 668, 681, 170 Cal.Rptr. 484, 620 P.2d 1032.)   Section 10962 provides that no filing fee or bond will be required for the filing of a petition for superior court review of the fair hearing decision;  that such petitions shall have preference in setting hearing dates;  and that the applicant or recipient who obtains a decision in his favor shall be entitled to reasonable attorney's fees and costs.   These statutory provisions encourage access to the courts.  (Ibid.)  It is plain that the Legislature has made every attempt to provide an opportunity for judicial review of the fair hearing decision to the aggrieved applicant or recipient.

Thus, we conclude that the trial court abused its discretion in granting the plaintiffs' partial summary judgment as to their cause of action for declaratory and injunctive relief.

The permanent injunction and declaratory judgment are reversed.   Appellants and respondents shall bear their own costs on appeal.

FOOTNOTES

1.   Unless otherwise indicated, all further statutory references are to the Welfare and Institutions Code.

2.   Subsequent amendments to the Constitution deleted the separate references to courts of law and equity but did not change the rule that superior courts were vested with original jurisdiction in all civil cases except as otherwise permitted by the Constitution.  (Former art. VI, § 5, Cal.Const. of 1928, repealed in 1966;  Historical Note, 2 West's Ann.Code, Const. (1954 ed.) foll. former art. VI, § 5, p. 309.)   Our Constitution now provides:  “Superior courts have original jurisdiction in all causes except those given by statute to other trial courts.”  (Cal.Const., art. VI, § 10.)

3.   An example of an agency which has been granted judicial powers directly by the Constitution is the Public Utilities Commission (PUC).  (See Cal.Const., art. XII, § 6.)

4.   In the case of the Agricultural Labor Relations Board (ALRB), the Constitution created an administrative program, authorizing the Legislature to establish an administrative agency with judicial powers to effectuate the system.  California Constitution, article XIV, section 1, provides:  “The Legislature may provide for minimum wages and for the general welfare of employees and for those purposes may confer on a commission legislative, executive, and judicial powers.”

MERRILL, Associate Justice.

WHITE, P.J., and BARRY–DEAL, J., concur.