Van Horn v. Dept. Toxic Substances Control , 231 Cal. App. 4th 1287 ( 2014 )

Filed 11/26/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Amador)
----
MARILYN VAN HORN, C073173
Plaintiff and Appellant, (Super. Ct. No. 11-CV-7493)
v.
DEPARTMENT OF TOXIC SUBSTANCES
CONTROL,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Amador County, Susan B.
Harlan, Judge. Reversed in part and affirmed in part.
Law Offices of Kenneth M. Foley and Kenneth M. Foley for Plaintiff and
Appellant.
Kamala D. Harris, Attorney General, Susan S. Fiering, Jamie B. Jefferson and
Laura J. Zuckerman, Deputy Attorneys General, for Defendant and Respondent.
In this appeal from a demurrer sustained without leave to amend on the ground of
uncertainty, we reverse in part. We conclude that plaintiff Marilyn Van Horn has stated a
cause of action, by alleging that the procedure used by defendant Department of Toxic
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Substances Control (the Department)—for placing a lien on real property for hazardous
substance alleviation pursuant to California’s “Superfund” statute (Health & Saf. Code,
§§ 25300 et seq., 25365.6)—violates due process. That lien procedure fails to allow an
affected landowner to dispute the amount of the lien, the extent of the property burdened
by the lien, and the characterization of the landowner as a responsible party.
BACKGROUND
Overview of Hazardous Substance Lien Law Underlying This Litigation
We begin with an overview of the hazardous substance lien law underlying this
litigation.
The Carpenter-Presley-Tanner Hazardous Substance Account Act (Health & Saf.
Code, § 25300 et seq.; hereafter, the HSAA) is California’s Superfund statute, a
counterpart to the federal Superfund statute, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq., known by its
acronym CERCLA).1 (City of Lodi v. Randtron (2004) 118 Cal.App.4th 337, 351-352
(City of Lodi).) The HSAA sets forth a comprehensive regulatory scheme and authorizes
the Department, among other things, to investigate, remove and/or remediate hazardous
substances at contaminated sites. (City of Lodi, at p. 352.)
Section 25365.6 addresses real property liens under the HSAA. It provides as
pertinent:
“(a) Any costs or damages incurred by the [D]epartment or regional board
pursuant to this chapter [(i.e., pursuant to the HSAA)] constitutes a claim and lien upon
the real property owned by the responsible party that is subject to, or affected by, the
removal and remedial action. . . . A lien established by this section shall be subject to the
1 Undesignated statutory references are to the Health and Safety Code.
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notice and hearing procedures required by due process of the law and shall arise at the
time costs are first incurred by the [D]epartment or regional board with respect to a
response action at the site. [¶] . . . [¶]
“(c) The lien provided by this section shall continue until the liability for these
costs or damages, or a judgment against the responsible party, is satisfied. However, if it
is determined by the court that the judgment against the responsible party will not be
satisfied, the [D]epartment may exercise its rights under the lien.
“(d) The lien imposed by this section shall have the force and effect of, and the
priority of, a judgment lien upon its recordation in the county in which the property
subject to the lien is located. . . .” (Italics added.)
The Department has established a “Lien Placement Policy and Procedure”
(hereafter, the Lien Procedure or the Department’s Lien Procedure) for placing a lien
pursuant to section 25365.6.
The Lien Procedure sets forth neutral official meeting procedures, stating as
relevant, “The sole issue at the [lien hearing, termed a ‘meeting,’] is whether [the
Department] has a reasonable basis to believe that the statutory elements for placing a
lien are satisfied. The meeting will not be concerned with issues unrelated to the
proposed lien placement, such as, remedy selection, financial hardship, or allocation of
responsibility. [¶] The neutral official will make a decision, based on the information on
file and any new information presented at the meeting, whether [the Department] has a
reasonable basis to place a lien on the property.” (Lien Procedure, appen. C, § 3, pars. 3,
4, pp. C-2 through C-3, paragraph numbering omitted.)
The Lien Procedure further specifies, “The neutral official should consider all
facts relating to whether [the Department] has a reasonable basis to believe that the
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statutory elements have been satisfied for the placement of a lien. In particular, the
neutral official should consider five elements, whether:
“[1.] The property owner was sent notice of liability by mail.
“[2.] The property is owned by a person who is liable to [the Department] for costs
related to the property.
“[3.] The property was subject to or affected by a removal or remedial action.
“[4.] [The Department] has incurred costs with respect to a[n] action under [the
HSAA] or CERCLA.
“[5.] The record contains any other information which [is] sufficient to show that
the lien notice should not be filed.
“The property owner may present information or submit documents to establish
that [the Department] should not place the lien as proposed. . . .” (Lien Procedure, appen.
C, § 2, 2d par., p. C-2, paragraph numbering added; hereafter, the five identified
elements.)
Against the backdrop of this overview, we turn to the allegations in plaintiff’s
petition/complaint.
The Petition/Complaint
In reviewing a demurrer-based judgment of dismissal, we assume the truth of all
facts properly pleaded by the plaintiff, and those that may be inferred therefrom, as well
as relevant facts appearing in exhibits attached to the complaint; we may also consider
matters subject to judicial notice. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6;
Curcini v. County of Alameda (2008) 164 Cal.App.4th 629, 633, fn. 3; Dodd v. Citizens
Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627.)
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The operative pleading here, entitled “Second Amended Petition for Writ of
Mandate to Review Action Imposing Lien Without Due Process of Law,” alleges as
follows.
Plaintiff/Petitioner owns a 64-acre site in Jackson, California (comprised of five
assessor parcel numbers), which includes an 11-acre portion of (historical) arsenopyrite
mine tailings, known as “Tim’s Corner” (the property is also known as the Argonaut
Mine Tailings Site).
In 1998, the Department, after testing, constructed a fence around plaintiff’s
property and posted a lien for $245,306.64. (In her briefing on appeal, plaintiff reiterates
she is not contesting this lien.)
In November 2007, the Department made an imminent or substantial
endangerment determination concerning the property. Plaintiff requested an evidentiary
hearing to contest this determination; no hearing was provided, but the Department sent
plaintiff a letter explaining the basis of this determination.
Without notice to plaintiff, the Department secured two property inspection
warrants, one in 2008 and another in 2010.
In early February 2011, the Department advised plaintiff that it intended to update
and increase its lien from $245,306.64 to $833,368.19 (hereafter, for simplicity, the
$245,000 lien, the $833,000 lien, and the $588,000 lien increase). The Department also
advised plaintiff, for the first time, of a right to a hearing concerning the placement of the
lien on her property.
On February 17, 2011, plaintiff, in a letter to the Department (attached as an
exhibit to her petition/complaint) requested a hearing on the following four issues: “1.
The propriety of the [$588,000] lien increase; 2. The amount of the [$588,000] lien
increase; 3. The properties to be covered by the proposed lien; and 4. Information
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obtained by [the Department] justifying the work performed.” (Boldface added;
hereafter, sometimes referred to as plaintiff’s February 17, 2011 hearing request.)
On March 1, 2011, the Department’s designated neutral official to hear disputes
over placement of liens (a performance manager in the Department) wrote an e-mail to
plaintiff’s counsel (attached as an exhibit to the petition/complaint), explaining, “I
request that you read [the Department’s Lien Procedure] to determine if the Neutral
Official lien hearing is appropriate for the issues you want addressed. . . . The main focus
of the hearing is to determine if [the Department] has met the statutory elements for
placement of lien[,] which include[,] but [are] not limited to[,] [the five identified
elements]” (as noted in the preceding HSAA Overview of the Background of this
opinion—i.e., notice; property ownership; property subject to HSAA action; Department
costs; any other information).
In this e-mail the neutral official added, “Items 1, 2 and 4 of your letter leave[] me
with an impression that you are concerned about the amount of the lien and w[h]ether the
work performed by [the Department] justifies the increased amount. Please note that [the
Department] has a separate process for cost disputes and the lien hearing is not the proper
forum to determine if [the Department’s] charges are appropriate or not. If you are
disputing the amount of [the Department’s] charges, please contact Mr. Amador [(a
supervisor in the Department)] and he should be able to help you in that regard.”
(Boldface added.)
The neutral official’s decision concerning the lien, dated May 13, 2011 (attached
as an exhibit to the petition/complaint), stated as pertinent, “As specified in [the
Department’s Lien Procedure] and explained at the hearing, the sole issue under
consideration was whether [the Department] ha[d] a reasonable basis to believe that the
[section 25365.6] statutory elements for [the Department] [to] plac[e] the lien were
satisfied. . . . [¶] Information in the project file and presented by [the Department] at the
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hearing, establishes the [following] bas[e]s for [the Department] to place a lien against
the subject property[, which bases cover the five identified elements, but not in their
particular order, as follows]: [¶] 1) [The Department] performed response actions,
including oversight activities for remediation of the Argonaut property pursuant to
Imminent or Substantial Endangerment Determination . . . at the site; [¶] 2) [the
Department] incurred costs by performing response actions, including oversight of
remediation activities, at the site; [¶] 3) [plaintiff] is the owner of record for the property
and as such is the responsible party liable for the oversight costs; . . . [¶] 4) [plaintiff]
was provided with adequate notice of [the Department’s] intent to place a lien[; and] [¶]
5)] [t]he property owner has not presented any information or documentation to establish
any issue of fact or law to show that [the Department] has not met the statutory criteria to
file a lien. Although [plaintiff] raised several issues related to the lien, the Neutral
Official finds that those issues are outside the scope of the Neutral Official hearing.
[¶] . . . [¶] . . . Regarding issues raised about due process, ability to pay, billing amount
etc., the property owner should work with [the Department] program staff and utilize the
existing processes that are in place at [the Department].”
It can be readily inferred from the complaint that the Department did not provide a
hearing concerning the propriety of either the lien amount or the specific properties
covered by the lien.
Plaintiff “pray[ed] for judgment” that the trial court issue a writ of mandate
requiring the Department (a) to remove “the Lien recorded June 26, 2011” (i.e., the
$833,000 lien, but plaintiff challenges only the $588,000 lien increase, and does not
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challenge the $245,000 original lien), and (b) to hold a hearing essentially on the four
issues in plaintiff’s February 17, 2011 hearing request.2
The Trial Court’s Demurrer Ruling
In sustaining the demurrer without leave to amend, the trial court explained,
“There are two requirements for bringing a mandamus action: (1) there must be a clear
and present ministerial duty to act and (2) there must be a clear, present and beneficial
right in the petitioner to the performance of that duty. [Citation.] [¶] . . . The Court
notes the current action, seeking a writ of mandate, does not appear to be the appropriate
venue in which to address [plaintiff’s] concerns, as [plaintiff] received the hearing to
which she was entitled.”
DISCUSSION
I. Standard of Review
A defendant may demur to a complaint, as the Department did here, on the ground
that the “pleading is uncertain.” (Code Civ. Proc., § 430.10, subd. (f).) The term
“uncertain” includes “ambiguous” and “unintelligible.” (Ibid.)
An appellate court will reverse a trial court’s judgment sustaining a defendant’s
demurrer without leave to amend if the facts alleged in the complaint show entitlement to
relief under any possible legal theory, or if there is a reasonable possibility the pleading
can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Platt v.
Coldwell Banker Residential Real Estate Services (1990) 217 Cal.App.3d 1439, 1444.)
2 Plaintiff alleged a second cause of action for declaratory relief that asks the trial court
to determine these four issues. The due process at issue in this case involves the process
due at the administrative, rather than the judicial, level. Consequently, this declaratory
relief cause of action is inappropriate, and we affirm the trial court’s grant of demurrer
without leave to amend on the ground of uncertainty concerning this particular cause of
action.
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II. The Dispositive Issue and Analysis
In light of our review of the HSAA lien law and plaintiff’s petition/complaint, we
can now posit that if the procedure set forth in the Department’s Lien Procedure does not
satisfy due process, then plaintiff has sufficiently alleged a cause of action with the
requisite certainty in her writ of mandate cause of action entitled Imposing Lien Without
Due Process of Law. This is because plaintiff, in that cause of action, has alleged (with
relevant facts drawn from exhibits attached to the complaint):
(a) that she requested a hearing “concerning the proposed [$588,000] lien
increase” to consider the following four issues: “1. The propriety of the lien increase; 2.
[t]he amount of the lien increase; 3. [t]he properties to be covered by the proposed lien;
and 4. [i]nformation obtained by [the Department] justifying the work performed”
(boldface added);
(b) that the Lien Procedure states, “The sole issue at the [lien hearing] is whether
[the Department] has a reasonable basis to believe that the statutory elements for placing
a lien are satisfied. The [hearing] will not be concerned with issues unrelated to the
proposed lien placement, such as, remedy selection, financial hardship, or allocation of
responsibility. [¶] . . . The neutral official will make a decision . . . whether [the
Department] has a reasonable basis to place a lien on the property”;
(c) that the neutral official designated by the Department to hear the matter,
parroting verbatim the Department’s Lien Procedure, responded to plaintiff’s hearing
request, stating that items 1, 2 and 4 would not be heard under the Lien Procedure and
adding, “I request that you read [the Lien Procedure] to determine if the Neutral Official
lien hearing is appropriate for the issues you want addressed. . . . The main focus of the
hearing is to determine if [the Department] has met the statutory elements for placement
of lien[,] which include[,] but [are] not limited to[,] [the five identified elements]” (as
specified in the HSAA Overview of the Background of this opinion, ante, at pp. 3-4);
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(d) that the neutral official’s sole determination at the Lien Procedure hearing was
that the Department had a reasonable basis to place a lien, after considering the five
identified elements in pro forma fashion as stated explicitly in the neutral official’s
May 13, 2011 decision (i.e., the Department performed HSAA response actions; the
Department incurred costs; plaintiff was adequately notified; plaintiff is the owner of
record for the property “and as such is the responsible party liable for the [HSAA] costs”;
and no other relevant information was presented); and
(e) that she “pray[ed] for judgment” that the trial court issue a writ of mandate
requiring removal “of the Lien recorded June 26, 2011 [(i.e., the $588,000 lien
increase)]” and remanding the matter for a lien hearing to determine essentially the four
issues in her hearing request (see (a) above).
Accordingly, the dispositive issue in this appeal becomes: Does the Department’s
Lien Procedure—a procedure that plaintiff has alleged with the requisite certainty in her
complaint violates due process—actually satisfy due process (as the HSAA’s lien statute,
section 25365.6, requires) by providing a hearing limited only to the issues specified in
the Lien Procedure as considered by the Department’s neutral official (and without
additional hearing)? We answer this question, “No.”
The Department, in its briefing, has cited the seminal decision on due process
hearing requirements, Mathews v. Eldridge (1976) 424 U.S. 319 [47 L.Ed.2d 18].
Mathews set forth the “now familiar threefold inquiry” to determine what process
is constitutionally due when the government seeks to effect a deprivation. (Connecticut
v. Doehr (1991) 501 U.S. 1, 10 [115 L.Ed.2d 1, 13].) That inquiry requires a court to
balance (1) the private interest that will be affected by the official action; (2) the risk of
an erroneous deprivation of such interest through the procedures used, and the probable
value, if any, of additional or substitute procedural safeguards; and (3) the government’s
interest, including the function involved and the fiscal and administrative burdens that the
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additional or substitute procedural requirement would entail. (Mathews v. Eldridge,
supra, 424 U.S. at p. 335 [47 L.Ed.2d at p. 33]; Reardon v. United States (1st Cir. 1991)
947 F.2d 1509, 1518 (Reardon).) We apply the Mathews test to the facts alleged here.
A. The Private Interest Affected by Official Action
A real property lien imposed under the HSAA—which clouds title, impairs the
ability to alienate the property, taints credit ratings, and reduces the chance of
subsequently financing the property—significantly affects a private property interest.
(Reardon, supra, 947 F.2d at pp. 1518-1519.) In Reardon, the First Circuit Court of
Appeals concluded that the lien provisions of the federal Superfund statute, CERCLA,
“by not providing, at the very least, notice and a pre-deprivation hearing to a property
owner who claims that the property to be encumbered is not ‘subject to or affected by a
removal or remedial action,’ violate the fifth amendment due process clause.” (Reardon,
at pp. 1523-1524; see 42 U.S.C. § 9607(l); see also 1 Robie et al., Cal. Civil Practice—
Environmental Litigation (2d ed. 2002) § 3:94, Overview, pp. 115-116 (Robie) [noting
that the CERCLA lien provision (42 U.S.C.§ 9607(l)) is similar to the HSAA lien
provision (§ 25365.6, subd. (a))].)
Furthermore, the HSAA lien has the force, effect, and priority of a judgment lien,
upon its recordation in the pertinent county, and the lien continues until the liability for
HSAA costs and damages, or a judgment against the responsible party, is satisfied.
(§ 25365.6, subds. (d), (c).)
Consequently, the private property interest affected is significant.
B. The Risk of an Erroneous Deprivation of Such
Interest Through the Procedures Used
Under the facts alleged in plaintiff’s petition/complaint, the Lien Procedure
hearing is a limited, pro forma one that focuses on the lien’s placement and little on the
lien’s propriety. The Lien Procedure hearing does not encompass, or encompasses only
in a perfunctory way, the following issues:
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(1) the amount of the lien (which would include the necessity of the work
underlying the lien—we note that this issue comprises one inherent in a lien dispute);
(2) the real property “subject to, or affected by, the [HSAA] removal and remedial
action” (we note that this quoted phrase is in § 25365.6, subd. (a) and this issue may be a
“ ‘highly factual’ ” one if the determination is whether certain of the owner’s parcels of
land, as plaintiff alleges here, are not “subject to, or affected by” the Department’s
response action—the “overbroad lien” issue); and
(3) whether the “responsible party” is actually responsible or an innocent
landowner (we note that this quoted designation is also in § 25365.6 and this issue again
may be a fact-intensive one in the context of an innocent landowner defense, a defense
available under the HSAA and one which may involve questions of due care,
foreseeability, and objective and subjective knowledge [see § 25323.5, subd. (b) of the
HSAA, which incorporates the federal CERCLA’s “innocent landowner” defense set
forth in 42 U.S.C. §§ 9607(b) & 9601(35) (the innocent landowner issue)]). (See
Reardon, supra, 947 F.2d at p. 1519.)3
Under the Department’s Lien Procedure hearing alleged here, the risk is high of an
erroneous deprivation of the significant private interest through the current procedures
used; and the value of additional safeguards is high as well, along the three lines just
specified.
C. The Government’s Interest
The state’s principal interest under the HSAA is to timely and efficiently clean up
hazardous substance releases that pose a threat to the public health or the environment.
3 In her petition/complaint, plaintiff disputes the amount of the $588,000 lien increase
and she raises the overbroad lien issue. She does not raise the innocent landowner issue.
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(§ 25301 [legislative intent of the HSAA]; City of Lodi, supra, 118 Cal.App.4th at
pp. 351-352.) This interest is of vital importance.
A lien imposed under section 25365.6 is simply a tool to help pay the costs and
damages the state incurs in doing this cleanup. Accordingly, the hearing envisioned here
for imposing or increasing a lien is not meant to delay the cleanup process, or impede
investigative, removal or remedial activities (including determinations of imminent or
substantial endangerment, or work of an emergency nature). The HSAA cleanup process
and these response activities may proceed on one time-track; the HSAA lien hearing
process may proceed on another.
Providing the affected landowner, at some point, with a meaningful opportunity to
dispute the amount of the lien or the lien increase, the extent of the property burdened by
the lien or the lien increase (i.e., the overbroad lien issue), and the characterization of the
landowner as a responsible party (i.e., the innocent landowner defense), does not seem
unduly burdensome in fiscal or administrative terms. These issues are matters inherent in
a lien dispute, or are already contemplated in section 25365.6, or are already provided as
part of the Lien Procedure hearing process (albeit, apparently in a pro forma process
only). (See Reardon, supra, 947 F.2d at p. 1522 [providing a hearing to a property owner
claiming the lien was wrongfully imposed would seem to be a relatively simple matter].)
Applying Mathews’s three-part balancing test to determine the process
constitutionally due, then, we conclude that the Department’s Lien Procedure hearing, as
conducted by its designated neutral official (without additional hearing), violates due
process by failing to allow the affected landowner to dispute the amount of the lien or the
lien increase, the extent of the property burdened by the lien or the lien increase, and the
characterization of the landowner as a responsible party rather than an innocent
landowner. (See 1 Robie, supra, § 3:94, Overview, pp. 115-116 [“The constitutionality
of this provision [(i.e., the § 25365.6 lien provision)] is questionable . . . since a similar
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lien provision in CERCLA (42 U.S.C. § 9607(l)) has been held to be unconstitutional,”
citing Reardon, supra, 947 F.2d 1509].) In its current form, the Department’s Lien
Procedure hearing, as just characterized, resembles the following observation from a
contemporary satirist, “Due process just means that there is a process that you do.”4 A
satirist can indulge such bemusement; a court cannot.
As Reardon recognizes, though, “the Constitution certainly allows the process due
to be tailored to fit the realities of the situation.” (Reardon, supra, 947 F.2d at p. 1522.)
Given the technical complexity of the hazardous substance cleanup process and the
informal nature of the Lien Procedure administrative hearing, the Department, to prevail
under the additional Lien Procedure hearing requirements imposed here, must establish it
has “a reasonable basis to believe” that (1) the lien amount imposed or increased was
proper, and (2) the real property was “subject to, or affected by, the removal and remedial
action.” The landowner bears the burden of establishing an “innocent landowner”
defense. (Reardon, at p. 1522.; see Lien Procedure, appen. C, § 2, 1st par., p. C-1, & § 3,
par. 3, p. C-2; 42 U.S.C. § 9607(b)(3).)5
Accordingly, we conclude that plaintiff has stated a cause of action for lien
imposition without due process of law, involving the amount of the $588,000 lien
increase and the properties to be covered by the lien. (See fn. 3, ante.)
DISPOSITION
The judgment of dismissal is reversed as to plaintiff’s writ of mandate cause of
action and affirmed as to her declaratory relief cause of action. We direct the trial court
4 See segment entitled The Word—Due or Die, The Colbert Report (Mar. 6, 2012)
available at [as of
Nov. 26, 2014].
5 Plaintiff has not challenged the informal rules of procedure comprising the
Department’s Lien Procedure hearing.
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to issue a writ of mandate requiring the Department (a) to remove its lien recorded
June 26, 2011, and (b) to hold a Lien Procedure hearing at which plaintiff will be allowed
to challenge, pursuant to the reasonable basis procedure specified in the penultimate
paragraph above, (1) the amount of the $588,000 lien increase (including the necessity of
the work comprising that increase) and (2) the properties to be covered by the lien
(including which of plaintiff’s parcels are so covered). (See pt. II.B., ante, at pp. 11-12.)
Should the Department simply remove the $588,000 lien increase, these directions to the
trial court will be unnecessary, and plaintiff’s property will be burdened with only the
$245,000 uncontested lien. (See pp. 4-5, ante.) Plaintiff is awarded her costs on appeal.
(Cal. Rules of Court, rule 8.278(a)(2), (3), (5).)6 (CERTIFIED FOR PUBLICATION)
BUTZ , J.
We concur:
HULL , Acting P. J.
MURRAY , J.
6 We grant the Department’s request for judicial notice as to items 1 and 2, which the
trial court judicially noticed as well. We deny the request as to items 3 through 8, given
that this case has been resolved on the pleadings pursuant to demurrer review.
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