Stanford Law School - Robert Crown Law Library

Filed 12/3/07

IN THE SUPREME COURT OF CALIFORNIA

CITY OF STOCKTON et al.,
Petitioners,
S139237
v.
) Ct.App.
3
C048162
THE SUPERIOR COURT OF
SACRAMENTO COUNTY,
Sacramento
County
Respondent;
Super. Ct. No. 03AS00193
CIVIC PARTNERS STOCKTON, LLC,
Real Party in Interest.

Government Code section 905 requires that “all claims for money or
damages against local public entities” be presented to the responsible public entity
before a lawsuit is filed.1 Failure to present a timely claim bars suit against the
entity. (§ 945.4.) Here we hold that these requirements apply to breach of
contract claims. We also adopt the practice of referring to the claims statutes as
the “Government Claims Act,” to avoid the confusion engendered by the informal
short title “Tort Claims Act.”
In this suit against a city and its redevelopment agency, the trial court
overruled defendants’ demurrer, deciding that the claim requirements did not
apply to plaintiff’s contract causes of action. The Court of Appeal issued a writ of

1 The statute provides some exceptions to the claim presentation
requirement, none of which are relevant here. Further unspecified statutory
references are to the Government Code.

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mandate directing that the trial court sustain the demurrer. We affirm the Court of
Appeal’s judgment, with modifications.
I. BACKGROUND2
Plaintiff Civic Partners Stockton, LLC (Civic) alleged that it executed two
redevelopment contracts in May 2000 with defendant Redevelopment Agency of
the City of Stockton (the Agency). One contract involved rehabilitation of the
Hotel Stockton; the other was for construction of an adjacent cinema. In May
2001, defendant City of Stockton (the City) leased the upper floors of the hotel
from Civic for office space.
Three months later, however, the City repudiated the lease. Mark Lewis,
the City manager and executive director of the Agency, demanded that Civic find
another use for the upper floors of the hotel. Civic had been depending on the
lease to support its financing for the hotel project. The financing for the cinema
depended on a viable hotel operation. Lewis proposed senior housing as an
alternative for the upper floors. That change required redesigning the hotel’s
interior and altering the financial arrangements to include federal and state income
tax credits. By the end of 2001 Civic had completed new plans for the hotel, as
well as tax and financial analyses and other work needed to apply for the tax
credits. This work cost Civic several hundred thousand dollars.
In January 2002, Lewis informed Civic that the Agency wanted Cyrus
Youssefi and his company, CFY Development, to take over the upper floors, the
senior housing plan, and the tax credit application. Civic began discussions with
Agency personnel about how to protect Civic from the losses resulting from the
breaches of the hotel and lease agreements. The Agency agreed to preserve
Civic’s rights in the rest of the hotel and reimburse it for its investment and
overhead expenses.

2 We take the underlying facts from the complaint and documents subject
to judicial notice. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081;
Big Valley Band of Pomo Indians v. Superior Court (2005) 133 Cal.App.4th 1185,
1189-1190.)
2

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Civic agreed to give the Agency a set of its plans for the hotel. In a letter
agreement dated February 19, 2002, Steve Pinkerton, the Agency’s Director of
Housing and Redevelopment, accepted Civic’s conditions that the plans would
remain Civic’s property, and could only be used by the Agency or others “subject
to an agreement between the Agency and Civic [] regarding the future renovation
of the Hotel (including reimbursement of costs to date), as well as a cooperative
agreement” regarding other components of the project including the cinema. At
some point in February, Pinkerton also agreed to pay the balance due on Civic’s
contract with its architect.
The next month, Pinkerton agreed to assume a loan taken by Civic (the
Paramount loan), to recognize amounts due to Civic, and to take certain steps to
mitigate Civic’s losses. Civic sent Pinkerton a memorandum dated March 15,
2002, outlining the terms of the agreeement. Pinkerton never questioned or
disavowed those terms. For a time, the Agency abided by the terms of the
February and March agreements, taking steps to assume the Paramount loan,
discussing reimbursements with Civic, and forwarding an agreement on property
intended for the cinema project.
On March 19, 2002, without informing Civic, the Agency entered into a
new hotel development agreement with a company named Hotel Stockton
Investors, operated by Youssefi. This agreement conflicted with Civic’s hotel
agreement, which was still in effect. The Agency gave Civic’s plans to Youssefi
and took steps to repudiate its agreements with Civic and to oust it from the
redevelopment projects. It did not reimburse Civic for its investment in the plans
as required by Civic’s hotel agreement. It made its own arrangements with the
architect, obtaining all the plans and associated project documents. It accused
Civic of breaching the hotel contract, and gave notice to terminate the agreement.
Although it had approved a cinema lease between Civic and Kirkorian Premiere
Theatres, the Agency approached Kirkorian in an attempt to take over Civic’s
position. Ultimately, the Agency executed a lease with another theater operator.
3

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Civic did not present a claim before filing suit. Its original complaint,
dated January 12, 2003, sought declaratory relief to establish its rights in the hotel
plans, damages from Youssefi and his companies for interference with its
contracts, and damages from the City and the Agency for breaching the hotel
agreement and the mitigation agreement of February 19, 2002. The City and the
Agency demurred, but did not rely on the government claim requirements. The
trial court sustained the demurrer on the grounds that Civic’s rights in the hotel
plans were governed by federal copyright law and within the exclusive jurisdiction
of the federal courts, that the City was not liable on the contract claims because it
was not a party to either the redevelopment contracts or the February 19 and
March 15 agreements, and that the February 19 and March 15 agreements could
not support a cause of action against the Agency because the statutory
requirements for public contracting were not met.
Civic’s amended complaint, dated March 12, 2003, sought damages from
the City for breach of the lease for the upper floors of the hotel, from the Agency
for breach of the hotel and cinema agreements, from the City for interfering with
the hotel and cinema agreements, and from Youssefi and his companies for
interference with Civic’s contracts. Civic again sought declaratory relief
regarding its ownership rights in the plans. The City and the Agency demurred
again, still without raising the claim requirements.
The court sustained the demurrer. It found that Civic had stated sufficient
facts to support contract claims against the City for breach of the lease, and against
the Agency for breach of the hotel and cinema agreements. However, Civic had
failed to specify whether the contracts were oral, written, or implied; the court
granted leave to amend as to these claims. The demurrer was sustained without
leave to amend as to the declaratory relief claim, on the ground that the only
recoverable damages were under federal copyright law, over which the court
lacked jurisdiction.
4

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The second amended complaint, dated June 8, 2004, restated the contract
and interference with contract causes of action, specifying that the contracts in
question were written. The claim for declaratory relief regarding Civic’s rights in
the hotel plans was omitted. The City and the Agency demurred for the third time.
They argued that Civic’s contract claims were defective because they depended on
the February 19 and March 15 agreements, which were never properly approved.
They also asserted that the second amended complaint was barred because Civic
had failed to comply with the government claim requirements. They noted that in
State of California v. Superior Court (Bodde) (2004) 32 Cal.4th 1234, filed May
24, 2004, this court ruled that failure to plead compliance with the claim
requirements is a ground for demurrer. (Id. at p. 1239.)
The trial court overruled this demurrer. It decided that the factual
allegations supported the contract claims, and that the claims statutes did not affect
contractual liability. The City and the Agency then cross-complained against
Civic, seeking damages for breaches of the hotel and cinema contracts and the
hotel lease, misrepresentation, and failure of consideration. They also petitioned
the Court of Appeal for a writ of mandate directing the trial court to sustain their
demurrer. They pointed out that the claims statutes unquestionably governed
Civic’s tort claim for interference with contract, and contended they also applied
to Civic’s contract claims under the weight of the case authority.
The Court of Appeal agreed. It held that the claim presentation
requirements apply to contract causes of action against government defendants,
and rejected a series of arguments by Civic attempting to excuse its
noncompliance. However, the court ruled that if the City and the Agency pursued
their cross-complaint, Civic would be allowed to file a cross-complaint of its own
asserting defensive claims. The trial court was directed to enter an order
sustaining the demurrer; the Court of Appeal did not reach the question whether
leave to amend was proper. We granted Civic’s petition for review.
5

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II. DISCUSSION
We independently review the Court of Appeal’s decision. (Smiley v.
Citibank (1995) 11 Cal.4th 138, 146.) Civic concedes, as it did below, that its tort
cause of action for interference with contract was subject to the claim
requirements, unless compliance was somehow excused.
A.
The Claims Statutes and Contract Causes of Action
Section 905 requires the presentation of “all claims for money or damages
against local public entities,” subject to exceptions not relevant here. Claims for
personal injury and property damage must be presented within six months after
accrual; all other claims must be presented within a year. (§ 911.2.) “[N]o suit for
money or damages may be brought against a public entity on a cause of action for
which a claim is required to be presented . . . until a written claim therefor has
been presented to the public entity and has been acted upon . . . or has been
deemed to have been rejected . . . .” (§ 945.4.) “Thus, under these statutes, failure
to timely present a claim for money or damages to a public entity bars a plaintiff
from filing a lawsuit against that entity.” (State of California v. Superior Court
(Bodde), supra, 32 Cal.4th at p. 1239.)
The purpose of the claims statutes is not to prevent surprise, but “to provide
the public entity sufficient information to enable it to adequately investigate
claims and to settle them, if appropriate, without the expense of litigation.
[Citations.] It is well-settled that claims statutes must be satisfied even in face of
the public entity’s actual knowledge of the circumstances surrounding the claim.”
(City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 455.) The claims
statutes also “enable the public entity to engage in fiscal planning for potential
liabilities and to avoid similar liabilities in the future.” (Baines Pickwick Ltd. v.
City of Los Angeles (1999) 72 Cal.App.4th 298, 303 (Baines Pickwick); see
Minsky v. City of Los Angeles (1974) 11 Cal.3d 113, 123.)
Contract claims fall within the plain meaning of the requirement that “all
claims for money or damages” be presented to a local public entity. (§ 905.) As
6

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the Baines Pickwick court noted, other statutory terms further demonstrate the
Legislature’s intent that the claim requirements apply to contract causes of action.
(Baines Pickwick, supra, 72 Cal.App.4th at pp. 303-304.) Section 905.2 requires
the presentation of all claims against the state “[f]or money or damages on express
contract.” (§ 905.2, subd. (b)(3).) Section 910, governing the contents of claims
against both the state and local entities, requires specification of the “date, place
and other circumstances of the occurrence or transaction which gave rise to the
claim asserted” (§ 910, subd. (c), italics added), and a “general description of the
indebtedness, obligation, injury, damage or loss incurred . . . .” (§ 910, subd. (d),
italics added.) Section 910.2 provides that “[c]laims against local public entities
for supplies, materials, equipment or services need not be signed by the claimant
or on his behalf if presented on a billhead or invoice regularly used in the conduct
of the business of the claimant.” Section 930.2 permits local government contracts
to include provisions for the presentation of “any or all claims arising out of or
related to the agreement.” (See also § 930, providing the same authorization for
state contracts.) In view of these provisions, it is no surprise that courts have
routinely applied the claim requirements to contract causes of action against local
government defendants.3
The legislative history of the “money or damages” term of sections 905 and
945.4 confirms that they were meant to include contract claims. The current

3 E.g., Canova v. Trustees of Imperial Irr. Dist. Employee Pension Plan
(2007) 150 Cal.App.4th 1487, 1493-1494; Baines Pickwick, supra, 72 Cal.App.4th
at pp. 303-304; Alliance Financial v. City and County of San Francisco (1998) 64
Cal.App.4th 635, 641; Schaefer Dixon Associates v. Santa Ama Watershed Project
Authority (1996) 48 Cal.App.4th 524, 530-531; Ocean Services Corp. v. Ventura
Port Dist. (1993) 15 Cal.App.4th 1762, 1775; Dilts v. Cantua Elementary School
Dist. (1987) 189 Cal.App.3d 27, 31; Loehr v. Ventura County Community College
Dist. (1983) 147 Cal.App.3d 1071, 1079; Baillargeon v. Department of Water &
Power (1977) 69 Cal.App.3d 670, 681-682; Voth v. Wasco Public Util. Dist.
(1976) 56 Cal.App.3d 353, 356; Stromberg v. Los Angeles County Flood Control
Dist. (1969) 270 Cal.App.2d 759, 760, 762; Pacific Gas and Elec. Co. v. City of
Union City (2002) 220 F.Supp.2d 1070, 1078.
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statutory scheme was the second enacted to replace a multiplicity of former claim
requirements. In 1959, the Legislature acted on the Law Revision Commission’s
recommendation to provide a unified procedure for claims against local entities by
adding former division 3.5 to the Government Code, including former sections
703 and 710, the predecessors of sections 905 and 945.4. (Stats. 1959, ch. 1724,
p. 4133 et seq.; Recommendation and Study Relating to the Presentation of Claims
Against Public Entities (Jan. 1959) 2 Cal. Law Revision Com. Rep. (1959) pp. A-
7, A-8, A-11 et seq.)4
Former section 703 referred to “claims for money or damages” just as
section 905 does now, and former section 710 included the reference to “no suit
for money or damages” currently found in section 945.4. As explained in the
study supporting the Law Revision Commission recommendation, references to
claims “for damages” in the pre-1959 statutes were understood to include both tort
and breach of contract claims, but not ordinary claims for money due on a
contract. Statutes requiring claims “for money” were construed to cover “all
forms of monetary demands including pension claims and all types of tort and
contract claims.” (Recommendation and Study Relating to the Presentation of
Claims Against Public Entities, 2 Cal. Law Revision Com. Rep., supra, at pp. A-
82, A-83, fns. omitted.)
The study noted that the recommended scope of the new statutes governing
claims for “money or damages” was consistent with that of the preexisting
statutes, and stated that “[i]nsofar as the claim is one for breach of contract, the
need for early investigation and negotiation is frequently as important as in the
case of tort claims.” (Recommendation and Study Relating to the Presentation of
Claims Against Public Entities, 2 Cal. Law Revision Com. Rep., supra, at p. A-
117.) Routine claims for money due were “in a different category” and did not

4 The scheme in effect today was established in 1963, when the Legislature
combined the requirements for claims against local entities with those for claims
against the state in part 3 of division 3.6 of the Government Code. (Stats. 1963,
ch. 1715, p. 3372 et seq.)
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require a formal claims procedure. (Ibid.) The study suggested allowing
contractual waiver of “compliance with the claims statutes as to causes of action
founded upon express contract other than claims for damages for breach of
contract.” (Ibid.) Thus, it is clear that the references to “money or damages” now
found in sections 905 and 945.4 were always intended to embrace contract as well
as tort claims. (See Alliance Financial v. City and County of San Francisco,
supra, 64 Cal.App.4th at pp. 641-642.)
Civic’s argument that breach of contract claims are not subject to the claim
requirements is based primarily on section 814, which provides: “Nothing in this
part affects liability based on contract or the right to obtain relief other than money
or damages against a public entity or public employee.” It is true that some Courts
of Appeal have read section 814 to exclude contract causes of action from the
scope of the claim requirements. (Harris v. State Personnel Bd. (1985) 170
Cal.App.3d 639, 643, disapproved on another point in Coleman v. Department of
Personnel Administration (1991) 52 Cal.3d 1102, 1123, fn. 8; Gonzales v. State of
California (1977) 68 Cal.App.3d 621, 627; National Automobile & Cas. Ins. Co.
v. Pitchess (1973) 35 Cal.App.3d 62, 64-65.) Others, however, have rejected that
view, reasoning that section 814 pertains only to immunity from liability, and has
no effect on the claims requirements. (Baines Pickwick, supra, 72 Cal.App.4th at
pp. 308-309; Loehr v. Ventura County Community College Dist., supra, 147
Cal.App.3d at p. 1079; see also Crow v. State of California (1990) 222 Cal.App.3d
192, 199.) This reasoning finds ample support in the language, structure, and
purpose of the statutes.
Section 814 is found in part 2 of the statutory scheme, which the
Legislature captioned “Liability of Public Entities and Public Employees.” (§ 814
et seq., added by Stats. 1963, ch. 1681, p. 3267.) The claim presentation
requirements are in part 3, which was enacted separately. (§ 900 et seq., added by
Stats. 1963, ch. 1715, p. 3372; 1 Cal. Government Tort Liability Practice
(Cont.Ed.Bar 4th ed. 1999) Claims Against Public Entities, § 1.45, pp. 29-30 (Cal.
9

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Government Tort Liability Practice).) Thus, the claim requirements are not
included in section 814’s declaration that “nothing in this part affects liability
based on contract.” Section 814 simply reaffirms the long standing rule that
governmental immunity does not encompass contractual liability. (See Souza &
McCue Constr. Co. v. Superior Court (1962) 57 Cal.2d 508, 510, citing cases.)5
That proposition has no necessary connection to the requirement that a claim be
presented before suit is filed. Prior notice of claims serves the purpose of
facilitating investigation and possible settlement, whether or not the public entity
would otherwise be immune from liability. (See Loehr v. Ventura County
Community College Dist., supra, 147 Cal.App.3d at p.1079; People ex rel. Dept.
of Parks and Recreation v. West-a-Rama, Inc. (1973) 35 Cal.App.3d 786, 794.)
Civic contends we invoked section 814 to exclude contract claims from the
reach of the claims statutes in E. H. Morrill Co. v. State of California (1967) 65
Cal.2d 787, and Longshore v. County of Ventura (1979) 25 Cal.3d 14. However,
in E. H. Morrill this court made no reference to the claim presentation procedures,
confining itself to the question of governmental immunity. (E. H. Morrill, supra,
65 Cal.2d at pp. 793-794.) Nor did the Longshore court indicate that the scope of
the claim requirements is affected by section 814. To the contrary, it held that the
claim before it fell within a statutory exception to those requirements, and

5 A legislative committee comment on section 814 explains that the
provision was intended to clarify the scope of governmental immunity with regard
to monetary liability on contracts: “The various provisions of this part determine
only whether a public entity or public employee is liable for money or damages.
These provisions do not create any right to any other type of relief, nor do they
have any effect on any other type of relief that may be available against a public
entity or public employee. [¶] The doctrine of sovereign immunity has not
protected public entities in California from liability arising out of contract. This
section makes clear that this statute has no effect on the contractual liabilities of
public entities or public employees.” (Leg. Com. com., reprinted at 32 West’s
Ann. Gov. Code (1995 ed.) foll. § 814, p. 163; see 1 Cal. Government Tort
Liability Practice, supra, § 1.44, p. 28.)
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discussed the immunity exemption of section 814 as a separate matter.
(Longshore, supra, 25 Cal.3d at p. 22.) Civic’s reliance on section 814 fails.
Because of the broad scope of the claim requirements, a number of Courts
of Appeal have followed the suggestion in Baines Pickwick that “Government
Claims Act” is a more appropriate short title than the traditional “Tort Claims
Act.” (Baines Pickwick, supra, 72 Cal.App.4th at pp. 309-310; see, e.g., Bates v.
Franchise Tax Bd. (2004) 124 Cal.App.4th 367, 373, fn. 2; Gatto v. County of
Sonoma (2002) 98 Cal.App.4th 744, 750, fn. 3; Hart v. Alameda County (1999) 76
Cal.App.4th 766, 774, fn. 2.)6 We agree that this practice is a useful way to reduce
confusion over the application of the claim requirements. Henceforth, we will
refer to division 3.6, parts 1 through 7 of the Government Code (§ 810 et seq.) as
the Government Claims Act.7
B.
Restitution Claims
Civic contends its contract causes of action are based on the law of
restitution, and are therefore exempt from the claims statutes under Minsky v. City
of Los Angeles, supra, 11 Cal.3d 113 (Minsky), and Holt v. Kelly (1978) 20 Cal.3d

6 References to the “Government Claims Act” may be found in some
earlier cases, but the usage was not broadly accepted until after the Baines
Pickwick decision. (See Trend Homes, Inc. v. Central Unified School Dist. (1990)
220 Cal.App.3d 102, 113; Gurrola v. County of Los Angeles (1984) 153
Cal.App.3d 145, 148.)
7
The Baines Pickwick court identified only the claim presentation statutes
in part 3 (§ 900 et seq.) as the “Government Claims Act.” (Baines Pickwick,
supra, 72 Cal.App.4th at pp. 309-310.) Other courts, however, have applied that
title to the entire scheme referenced above, replacing the old “Tort Claims Act”
label in its entirety. (E.g., Javor v. Taggart (2002) 98 Cal.App.4th 795, 800;
Trend Homes, Inc. v. Central Unified School Dist., supra, 220 Cal.App.3d 102,
113; see 1 Cal. Government Tort Liability Practice, supra, § 1.1, p. 3.) We adopt
that practice. “Government Claims Act” is an appropriately inclusive term and an
apt short version of the comprehensive title bestowed by the 1963 Legislature:
“Claims and Actions Against Public Entities and Public Employees.” (Stats. 1963,
ch. 1681, p. 3267.) Furthermore, it has been noted that the employee
indemnification and defense provisions found in parts 2 and 7 of the act apply to
contract as well as tort causes of action. (1 Cal. Government Tort Liability
Practice, supra, § 4.2, p. 114.)
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560. In Minsky, the plaintiff sought the return of money seized by the police from
an arrested person and allegedly diverted to the Policeman’s and Fireman’s
Pension Fund after the criminal charges were resolved. (Minsky, at pp. 117-118.)
This court held that a claim for the recovery of specific property is not one for
“money or damages” under the Government Claims Act. (Id. at p. 121.) Even if
the cash taken from the arrestee was no longer traceable, the “initial exemption of
the action from the claims statute is not lost simply because the city takes the
further wrongful step of disposing of the bailed property. The city cannot be
permitted to invoke the claims statute, originally not available to it, by virtue of a
later wrongful dissipation of the property. To so hold would be in effect to allow
the local entity to profit by its own wrong, penalizing a plaintiff who, in light of
the specific recovery remedy apparently available to him, justifiably did not file a
claim.” (Id. at p. 122, fn. 14.)
Minsky was followed in Holt v. Kelly, which similarly involved a claim for
the return of personal propery seized at the time of an arrest. (Holt, supra, 20
Cal.3d at pp. 564-565.) The rule that suits to recover specific property are not
subject to the claim requirements has also been applied in actions to recover
property seized under a search warrant, or compensation for its value. (Long v.
City of Los Angeles (1998) 68 Cal.App.4th 782, 786-787; Hibbard v. City of
Anaheim (1984) 162 Cal.App.3d 270, 277-278.) None of these cases involved a
government contract.
Civic argues that it transferred its plans and assets to the Agency in the
expectation that it would be compensated for them, bringing it within the rule of
Minsky and Holt. Civic characterizes that rule as an exemption of all restitution
claims from the claim requirements. Such a blanket exclusion has never been
recognized. The Minsky rationale is that a claim for specific property effectively
held by the government as a “bailee” for the claimant is not one for “money or
damages” under the Government Claims Act. (Minsky, supra, 11 Cal.3d at p.
121.) The Minsky court’s reference to “general constructive trust principles” must
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be understood in that context. (Ibid.) Subsequent cases have limited the Minsky
exception to situations in which the defendant had a duty to return seized property,
enforceable by way of mandamus. (Holt v. Kelly, supra, 20 Cal.3d at p. 564-565;
Long v. City of Los Angeles, supra, 68 Cal.App.4th at p. 787; Hibbard v. City of
Anaheim, supra, 162 Cal.App.3d at p. 277; see Hart v. County of Alameda, supra,
76 Cal.App.4th at pp. 780-781.)8 When a claim for “money or damages” is not
based on a governmental obligation to return specific property, it is subject to the
claim requirements.
Civic identifies no specific property held by defendants that it was entitled
to recover. Rather, it contends it yielded assets in exchange for a promise of
compensation. An attempt to enforce such a contractual agreement is a claim for
“damages” under section 905.9 The Minsky line of cases provides no excuse for
Civic’s failure to comply with the claim requirements.
C.
Estoppel and Waiver
Civic argues that defendants were estopped from relying on the
Government Claims Act, or that they waived their defense under the act, either by
failing to notify Civic that its claim was defective, by cross-complaining against
8
Civic also relies on Bertone v. City & County of San Francisco (1952)
111 Cal.App.2d 579, a case cited in Minsky to support the conclusion that the
claims procedures do not apply to a claim for specific recovery of money.
(Minsky, supra, 11 Cal.3d at pp. 122-123.) Bertone involved a deposit given by
the plaintiff to cover a disputed water bill. It does not help Civic. Not only did it
involve a specific sum of money held in a trust account, but it predated the
Government Claims Act and applied a local ordinance governing only “claims for
damages.” (Bertone, supra, at pp. 587, 588.)

9 As the Court of Appeal noted, the contract causes of action in Civic’s
second amended complaint alleged breach of three express contracts and did not
seek the return of property. Civic argues that its claims to ownership of the
copyright in the hotel plans, included in the first two complaints, were claims for
restitution exempt from the claim requirements. However, these claims were
omitted from the complaint before us. In any event, all claims for damages arising
from defendants’ alleged misappropriation of the plans would be subject to the
Government Claims Act. Civic has not sought recovery of the plans themselves or
their replacement value, but rather compensation for their unauthorized use.
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Civic, or by failing to promptly raise the act as a defense in their first two
demurrers. These arguments fail.
“It is well settled that a public entity may be estopped from asserting the
limitations of the claims statute where its agents or employees have prevented or
deterred the filing of a timely claim by some affirmative act. [Citations.] Estoppel
most commonly results from misleading statements about the need for or
advisability of a claim; actual fraud or the intent to mislead is not essential.
[Citation.]” ( John R. v. Oakland Unified School Dist. (1989) 48 Cal.3d 438, 445;
see also Ortega v. Pajaro Valley Unified School Dist. (1998) 64 Cal.App.4th 1023,
1044-1045, citing cases.) Civic specifies no act or statement by defendants that
prevented it from filing a timely claim. It asserts that in early 2002 defendants
assured it that its interests would be protected, in an effort to avoid a claim against
them. But Civic alleges no conduct that might have deterred it from presenting a
claim after defendants failed to keep their promises. (Cf. Ocean Services Corp. v.
Ventura Port Dist., supra, 15 Cal.App.4th at p. 1776.) Thus, it does not establish
even a colorable estoppel claim.10
Civic’s principal waiver argument is equally defective. It contends the
defense-waiver provisions of sections 910.8 and 911 apply because defendants did
not advise it that the correspondence between the parties in February and March of
2002 was insufficient to constitute a claim. Section 910.8 provides that “[i]f, in
the opinion of the board or the person designated by it, a claim as presented fails
to comply substantially with the requirements of Sections 910 and 910.2, . . . the
board or the person may, at any time within 20 days after the claim is presented,
give written notice of its insufficiency, stating with particularity the defects or
omissions therein.” Under section 911, “[a]ny defense as to the sufficiency of the
claim based upon a defect or omission in the claim as presented is waived by

10 Civic filed an offer of proof in the Court of Appeal, in an attempt to
show that it could amend its complaint to show waiver or estoppel. However,
nothing in this document tends to show that defendants misled Civic regarding the
claim requirements after the parties’ negotiations failed.
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failure to give notice of insufficiency with respect to the defect or omission as
provided in Section 910.8 . . . .”
For a document to constitute a “claim as presented” under section 910.8, it
must “disclose[] the existence of a ‘claim’ which, if not satisfactorily resolved,
will result in a lawsuit against the entity.” (Phillips v. Desert Hospital Dist.
(1989) 49 Cal.3d 699, 709.) Nothing in the correspondence relied on by Civic
indicates that litigation might ensue if defendants did not comply with the terms
under discussion. This is the most essential element of a “claim as presented,”
because it satisfies the primary purposes of the Government Claims Act:
facilitating the investigation of disputes and their settlement without trial if
appropriate. (Ibid.; see also, e.g., Alliance Financial v. City and County of San
Francisco, supra, 64 Cal.App.4th at p. 647; Wilson v. Tri-City Hospital Dist.
(1990) 221 Cal.App.3d 441, 445, 449.) Civic has alleged that the parties
attempted to restructure their plans in a mutually agreeable fashion, but it points to
nothing that would have specifically alerted defendants to weigh the alternatives
of litigation or compromise.11
Civic also argues that defendants waived the right to rely on the claim
requirements by filing a cross-complaint. It contends the cross-complaint unjustly
allows defendants to pursue contract claims against it while asserting the bar of the
claims statutes on Civic’s claims arising from the same transactions. The Court of
Appeal considered this problem and offered a solution for Civic’s predicament.
The court noted that case law permits a purely defensive cross-complaint to be
asserted against a public entity despite the defendant’s noncompliance with the
claims act, when (1) the public entity initiated the litigation between it and the

11
Civic suggests in passing that it substantially complied with the claim
requirements, but it fails to support that argument. Substantial compliance
demands at least some compliance with all the statutory claim requirements. (City
of San Jose v. Superior Court, supra, 12 Cal.3d at pp. 456-457.) A “claim as
presented,” on the other hand, may be established on a lesser showing; it is defined
as a claim that “fails to comply substantially.” (§ 910.8; see Phillips v. Desert
Hospital Dist., supra, 49 Cal.3d at p. 707.)
15

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cross-complainant; (2) the cross-complaint arises from the same transaction or
event on which the entity’s claim is based; and (3) the cross-complaint asserts only
defensive matter, without seeking affirmative relief. (Krainock v. Superior Court
(1990) 216 Cal.App.3d 1473, 1478 (Krainock); see also 1 Cal. Government Tort
Liability Practice, supra, §§ 5.33, 5.34, pp. 197-198.) Although Civic initiated
this litigation, the Court of Appeal held that in the interest of fairness, Civic should
be allowed to file a cross-complaint of its own asserting any defensive claims it
might have if defendants choose to pursue their cross-complaint.
While we agree with the Court of Appeal that it would be unjust to leave
Civic defenseless against the cross-complaint, it is unnecessary to extend the
Krainock exception to cover the circumstances before us. Krainock involved an
unusual situation, in which a school district cross-complained for indemnity
against a codefendant who then sought to file his own cross-complaint for
indemnity from the district. (Krainock, supra, 216 Cal.App.3d at pp. 1476-1477.)
This case is different; Civic initiated the litigation between the parties, and
defendants filed their cross-complaint only after their demurrer was erroneously
overruled. Under the usual rules of pleading, Civic may raise affirmative defenses
in its answer to the cross-complaint (Code Civ. Proc., § 432.10), but may not seek
affirmative relief (Code Civ. Proc., § 431.30, subd. (c)).12 At this early stage of
the litigation, we express no view on whether the Government Claims Act might
apply to particular affirmative defenses, such as setoff. (See Construction
Protective Services, Inc. v. TIG Specialty Ins. Co., supra, 29 Cal.4th at pp.198-
199; CDM Investors v. Travellers Casualty & Surety Co. (2006) 139 Cal.App.4th
12
“Affirmative relief” is an award, such as damages, that goes beyond
merely defeating the plaintiff’s recovery. (See Construction Protective Services,
Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198.) An “affirmative
defense,” on the other hand, is one that depends on facts beyond those put at issue
by the plaintiff. (See Walsh v. West Valley Mission Community College Dist.
(1988) 66 Cal.App.4th 1532, 1546.)
16

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1251, 1269.) Civic’s answer is not before us, nor have the parties briefed the
application of the claim requirements in this context.
Finally, Civic asserts in contradictory fashion that it was not defendants’
cross-complaint that waived the claims act defense, but their delay in raising the
defense in the demurrer proceedings. Civic contends that if defendants had
promptly asserted the claim requirements, it could have filed a timely claim.13 In
essence, this argument equates the filing of a lawsuit with a “claim as presented”
under section 910.8, obligating the public entity to notify the plaintiff of the
necessity to present a proper claim if the entity is to preserve its defense under the
claims statutes. (See Phillips v. Desert Hospital Dist., supra, 49 Cal.3d at p. 705.)
Such a procedure would be irreconcilable with the statutory scheme. The
legislature’s intent to require the presentation of claims before suit is filed could
not be clearer. (§ 945.4.) The purpose of providing public entities with sufficient
information to investigate claims without the expense of litigation is not served if
the entity must file a responsive pleading alerting its opponent to the claim
requirements. Civic cannot shift responsibility for ascertaining the claim
requirements to defendants.
D.
Leave to Amend
After directing the trial court to sustain the demurrer, the Court of Appeal
declined to reach the question whether Civic should be granted leave to amend,
reasoning that only the sufficiency of the second amended complaint was properly
before it. On this point, the court missed the mark. The issue of leave to amend is
always open on appeal, even if not raised by the plaintiff. (Aubry v. Tri-City
Hospital Dist. (1992) 2 Cal.4th 962, 970-971.) This case arrived at the Court of
Appeal by the unusual path of a writ petition challenging an order overruling a
13
Civic’s first complaint was filed in January 2003. The period for
asserting contract claims is one year. (§ 911.2.) Other than the City’s alleged
breach of the hotel lease, the conduct giving rise to Civic’s claim occurred in
2002. Defendants did not raise the claims act defense until their third demurrer in
2004.
17

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demurrer. (See San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th
893, 912-913; Curry v. Superior Court (1993) 20 Cal.App.4th 180, 183.)14
However, the ordinary standards of demurrer review still apply. (See Okun v.
Superior Court (1981) 29 Cal.3d 442, 447, 460; Big Valley Band of Pomo Indians
v. Superior Court, supra, 133 Cal.App.4th at pp. 1189-1190; Tyco Industries, Inc.
v. Superior Court (1985) 164 Cal.App.3d 148, 153.)
Denial of leave to amend is not unusual following writ review of an
overruled demurrer, because extraordinary relief is typically contemplated when
there is a dispositive issue of subject matter jurisdiction (e.g., San Diego Gas &
Electric Co. v. Superior Court, supra, 13 Cal.4th at pp. 903, 913); a cause of
action is plainly and irremediably defective (e.g., Babb v. Superior Court, supra, 3
Cal.3d at p. 851); or a defense is necessarily complete (e.g., Casterson v. Superior
Court (1993) 101 Cal.App.4th 177, 182-183). However, leave to amend is
properly granted where resolution of the legal issues does not foreclose the
possibility that the plaintiff may supply necessary factual allegations. (E.g.,
People ex rel. Dept. of Transportation v. Superior Court (1992) 5 Cal.App.4th
1480, 1486.) If the plaintiff has not had an opportunity to amend the complaint in
response to the demurrer, leave to amend is liberally allowed as a matter of
fairness, unless the complaint shows on its face that it is incapable of amendment.
(State of California v. Superior Court (1984) 150 Cal.App.3d 848, 863-864; cf.
Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at p. 971; Temescal Water Co. v.
Department of Public Works (1955) 44 Cal.2d 90, 107; Virginia G. v. ABC Unified
School Dist. (1992) 15 Cal.App.4th 1848, 1852.)

14 As in San Diego Gas & Electric Co. v. Superior Court, the parties do not
question the propriety of writ review, and it was clearly appropriate here. (San
Diego Gas & Electric Co. v. Superior Court, supra, 13 Cal.4th at p. 913.) A
significant legal issue is presented, and the benefits of the claims act defense
would be effectively lost if defendants were forced to go to trial. (See Babb v.
Superior Court (1971) 3 Cal.3d 841, 851; Big Valley Band of Pomo Indians v.
Superior Court, supra, 133 Cal.App.4th at pp. 1189-1190.)
18

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Here, Civic has not had an opportunity to amend its complaint to meet
defendants’ Government Claims Act defense. While it has yet to advance a
successful argument against that defense, the second amended complaint does not
on its face foreclose any reasonable possibility of amendment.
III. DISPOSITION
We modify the judgment of the Court of Appeal to include directions to
order the trial court to grant Civic leave to amend the second amended complaint,
should Civic seek to do so, and to omit the directions that Civic be allowed to file
a cross-complaint. As so modified, the judgment is affirmed.
CORRIGAN, J.

WE CONCUR:
GEORGE, C. J.
KENNARD, J.
BAXTER, J.
WERDEGAR, J.
CHIN, J.
MORENO, J.

19

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See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion City of Stockton v. Superior Court
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 133 Cal.App.4th 1052
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S139237
Date Filed: December 3, 2007
__________________________________________________________________________________

Court:

Superior
County: Sacramento
Judge: Jeffrey L. Gunther

__________________________________________________________________________________

Attorneys for Appellant:

Wulfsberg Reese Colvig & Firstman, Charles W. Reese, Timothy A. Colvig, Mark A. Stump, Jeffrey R.
Ward; Goldfarb & Lipman, Lee C. Rosenthal; Richard E. Nosky, Jr., City Attorney, and Michael T.
Rishwain, Assistant City Attorney, for Petitioners.

Orbach, Huff & Suarez, David M. Huff and Ryan W. Baldino for Los Angeles Unified School District as
Amicus Curiae on behalf of Petitioners.

Jennifer B. Henning for California State Association of Counties and League of California Cities as Amici
Curiae on behalf of Petitioners.

__________________________________________________________________________________

Attorneys for Respondent:

No appearance for Respondent.

Law Offices of Malcolm A. Misuraca and Malcolm A. Misuraca for Real Party in Interest.

Downey Brand, Melissa A. Thorme and Gregory T. Broderick for Fallbrook Public Utility District as
Amicus Curiae on behalf of Real Party In Interest.

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Counsel who argued in Supreme Court (not intended for publication with opinion):

Charles W. Reese
Wulfsberg Reese Colvig & Firstman
Kaiser Center
300 Lakeside Drive, 24th Floor
Oakland, CA 94612
(510) 835-9100

Malcolm A. Misuraca
Law Offices of Malcolm A. Misuraca
1118 Ferdinand Street
Coral Gables, FL 33134
(415) 305-5485

---

Petition for review after the Court of Appeal granted a petition for peremptory writ of mandate. This case includes the following issue: Must a claim be presented under the Government Claims Act (Gov. Code, section 810 et seq.) in order to bring an action against a public entity for breach of contract?

Opinion Information

Date:	Citation:	Docket Number:	Category:	Status:
Mon, 12/03/2007	42 Cal.4th 730 original opinion	S139237	Review - Civil Original Proceeding	closed; remittitur issued

Disposition
Dec 3 2007	Opinion: Affirmed as modified

Dockets
Nov 29 2005	Petition for review filed   real party Civic Partners Stockton, LLC
Dec 1 2005	Record requested
Dec 2 2005	Received Court of Appeal record   one doghouse
Dec 19 2005	Answer to petition for review filed   City of Stockton et al., Petitioners Charles W. Reese, Counsel
Dec 29 2005	Reply to answer to petition filed   RPI Civic Partners Stockton, LLC
Jan 20 2006	Time extended to grant or deny review   to and including February 27, 2006, or the date upon which review is either granted or denied.
Feb 1 2006	Petition for review granted (civil case)   Chin, J., was absent and did not participate. Votes: George, C.J., Kennard, Baxter, Werdegar, Moreno, and Corrigan, JJ.
Feb 1 2006	Letter sent to:   Malcolm A. Misuraca, counsel for RPI, and a copy to Charles W. Reese, counsel for petitioner enclosing a copy of this court's order granting review and directing their attention to CRC, rule 29.1. The parties are each required to file a "Certification of Interested Entities or Persons." The completed form and seven copies should be returned to this Court within 15 days.
Feb 14 2006	Certification of interested entities or persons filed   Civic Partners Stockton, LLC, real party in interest. Malcolm A. Misuraca, retained
Feb 17 2006	Certification of interested entities or persons filed   City of Stockton & the Redevelopment Agency of the City of Stockton, Petitioners. Jeffrey R. Ward, retained counsel
Feb 22 2006	Request for extension of time filed   Atty Misuraca for Civic Partners Stockton, LLC (real party in interest) requesting to March 13, 2006 (10-days) to file opening brief on the merits (to court for permission)
Feb 24 2006	Extension of time granted   On application of Civic Partners Stockton, LLC, real party in interest, and good cause appearing, it is ordered that the time to serve and file the opening brief on the merits is extended to and including March 13, 2006.
Mar 13 2006	Opening brief on the merits filed   Real Party Civic Partners Stockton, LLC Attorney Malcolm A. Misuraca, Retained
Mar 29 2006	Request for extension of time filed   Atty Reese counsel for petitioners, City of Stockton and Redevelopment Agency of the City of Stockton, requesting to April 21, 2006, to file answer brief on the merits (to court for permission)
Mar 29 2006	Filed:   Declaration of Charles W. Reese counsel for petitioners
Apr 7 2006	Extension of time granted   On application of petitioners and good cause appearing, it is ordered that the time to serve and file the answer brief on the merits is extended to and including April 21, 2006.
Apr 21 2006	Answer brief on the merits filed   The City of Stockton and Redevelopment Agency of The City of Stockton, Petitioners. Charles Reese, counsel
Apr 21 2006	Request for judicial notice filed (granted case)   by Atty Charles Reese for The City of Stockton and Redevelopment Agency of The City of Stockton, petitioners
May 3 2006	Request for extension of time filed   Atty Misuraca counsel for RPI Civic Partners requesting to July 1 to file reply brief to the merits (to court for permission)
May 12 2006	Extension of time granted   On application of real party in interest Civic Partners Stockton, LLC and good cause appearing, it is ordered that the time to serve and file the reply brief on the merits is extended to and including July 1, 2006.
May 22 2006	Received:   Notice of Errata - page 7 missing from the City of Stockton's and the Redevelopment Agency's (Petitioners) Motion for Judicial Notice filed on April 21, 2006. received from Atty Jeff Ward
Jun 26 2006	Reply brief filed (case fully briefed)   Real Party Civic PartnersStockton, LLC Attorney Malcolm A. Misuraca, retained
Jul 24 2006	Received application to file Amicus Curiae Brief   Jennifer B. Henning counsel for Amici Curiae California State Association of Counties and League of California Cities requesting leave to file brief in support of petitioners. (to court for perm.)
Jul 26 2006	Received application to file Amicus Curiae Brief   by Los Angeles Unified School District in support of petitioners David M. Huff, counsel
Jul 26 2006	Permission to file amicus curiae brief granted   The application of California State Association of Counties and League of California Cities for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jul 26 2006	Amicus curiae brief filed   by California State Association of Counties and League of California Cities in support of petitioners. Jennifer B. Henning, counsel
Aug 2 2006	Permission to file amicus curiae brief granted   The application of Los Angeles Unified School District for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Aug 2 2006	Amicus curiae brief filed   Los Angeles Unified School DIstrict in support of petitioners Ryan W. Baldino, counsel
Aug 15 2006	Request for extension of time filed   by Atty Malcolm A. Misuraca counsel for Civic Partners Stockton, LLC, real party in interest and requesting permission to file a joint response to both briefs (to court for permission to file)
Aug 17 2006	Extension of time granted   On application of real party in interest and good cause appearing, it is ordered that the time to serve and file a joint response brief to both amicus briefs is extended to and including August 31, 2006.
Aug 30 2006	Response to amicus curiae brief filed   by: Real Paties in Interst, Civic Partners Stockton, LLC filing a Joint response brief to both amicus briefs of L.A.U.S.D. // California State Assoc. of Counties and League of California Cities
Sep 13 2006	Received:   brief and application to file "Supplemental AC Brief" AC Los Angeles Unified School District
Sep 25 2006	Opposition filed   by Atty Misuraca counsel for Civic Partners Stockton, real party in interest, to request to file a supplemental amicus brief from amici Los Angeles Unified School District
Sep 25 2006	Application to file amicus curiae brief denied   The application of Los Angeles Unified School District for permission to file a SUPPLEMENTAL amicus curiae brief is hereby denied.
Jan 17 2007	Received application to file Amicus Curiae Brief   from Atty Melissa Thorme obo Fallbrook Public Utility District in support of real party in interest Civic Partners Stockton, LLC.
Jan 23 2007	Opposition filed   by attorney Charles W. Reese for petitioners The City of Stockton et al. to application of Fallbrook Public Utility District for leave to file an amicus curiae brief (opposition submitted w/application from amicus)
Feb 1 2007	Permission to file amicus curiae brief granted   The application of Fallbrook Public Utility District for permission to file an amicus curiae brief in support of respondent and real parties in interest is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Feb 1 2007	Amicus curiae brief filed   Fallbrook Public Utility District in support of respondent and real parties in interest. Melissa A. Thorme, counsel
Feb 21 2007	Response to amicus curiae brief filed   The City of Stockton and The Redevelopment Agency of The City of Stockton, Petitioners. Charles W. Reese, counsel *** response to Fallbrook Public Utility District's amicus curiae brief ***
Feb 27 2007	Received:   Application of AC Los Angeles Unified School District to join in response of Petitioners City of Stockton, etal to AC Fallbrook Public Utility District
Mar 16 2007	Order filed   The application of amicus curiae Los Angeles Unified School District for permission to join the answer brief of the City of Stockton and The Redevelopment Agency to Fallbrook Public Utility District's amicus curiae brief is hereby granted.
Mar 16 2007	Filed:   Application of AC Los Angeles Unified School District to join in response of Petitioners City of Stockton, et al.., to AC Fallbrook Public Utility District
Aug 8 2007	Case ordered on calendar   to be argued on Thursday, September 6, 2007, at 1:30 p.m., in San Francisco
Aug 9 2007	Filed:   Letter from counsel for petitioners, City of Stockton et al., requesting that oral argument be rescheduled for the month of October.
Aug 10 2007	Argument rescheduled   to be called and continued to the October 2007 calendar, a special session to be held in Santa Rosa
Aug 13 2007	Request for judicial notice granted   The request for judiicial notice filed on April 21, 2006, is granted.
Sep 5 2007	Case ordered on calendar   to be argued on October 2, 2007, in Santa Rosa, at 1:30 p.m. special session at the Sonoma Country Day School, 4400 Day School Place, Santa Rosa
Sep 13 2007	Argument rescheduled   to be argued on the following day: on October 3, 2007, at 9:00 a.m., in Santa Rosa.
Sep 20 2007	Request for Extended Media coverage Granted   The request for extended media coverage, filed September 18, 2007, is granted, subject to the conditions set forth in rule 1.150, California Rules of Court.
Sep 25 2007	Request for Extended Media coverage Filed   by The Santa Rosa Press Democrat
Sep 28 2007	Request for Extended Media coverage Granted   The request for extended media coverage, filed by The Santa Rosa Press Democrat on September 25, 2007, is granted, subject to the conditions set forth in rule 1.150, California Rules of Court.
Oct 3 2007	Cause argued and submitted
Nov 30 2007	Notice of forthcoming opinion posted
Dec 3 2007	Opinion filed: Judgment affirmed as modified   Majority Opinion By: Corrigan, J. Joined by: George, C.J., Kennard, Baxter, Werdegar, Chin and Moreno, JJ.
Jan 8 2008	Remittitur issued (civil case)
Jan 14 2008	Received:   receipt for remittitur

Briefs
Mar 13 2006	Opening brief on the merits filed
Apr 21 2006	Answer brief on the merits filed
Jun 26 2006	Reply brief filed (case fully briefed)
Jul 26 2006	Amicus curiae brief filed
Aug 2 2006	Amicus curiae brief filed
Aug 30 2006	Response to amicus curiae brief filed
Feb 1 2007	Amicus curiae brief filed
Feb 21 2007	Response to amicus curiae brief filed

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