John Maxey et al vs. Truckee Sanitary District

Contentions, deductions and conclusions of law, however, are not presumed as true. Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967. A plaintiff is not required to plead evidentiary facts supporting the allegation of ultimate facts; the pleading is adequate if it apprises the defendant of the factual basis for the plaintiff's claim. Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6. A demurrer is not the appropriate procedure for determining the truth of disputed facts. Fremont Indemnity Co., 148 Cal.App.4th at 113-114.

“If a complaint does not state a cause of action, but there is a reasonable possibility that the defect can be cured by amendment, leave to amend must be granted.” Milligan v. Golden Gate Bridge Highway & Transportation Dist. (2004) 120 Cal.App.4th 1, 6.

Sham Pleading Doctrine 1

Defendant argues all of Plaintiff’s causes of action are barred under the sham pleading doctrine. The Court agrees

Under the sham pleading doctrine, plaintiffs are precluded from amending complaints to omit harmful allegations, without explanation, from previous complaints to avoid attacks raised in demurrers or motions for summary judgment. Hendy v. Losse (1991) 54 Cal.3d 723, 742–743 (affirming an order sustaining Defendants’ demurrer without leave to amend when the Plaintiff filed an amended complaint omitting harmful allegations from the original unverified complaint); see also Colapinto v. County of Riverside (1991) 230 Cal.App.3d 147, 151 (“If a party files an amended complaint and attempts to avoid the defects of the original complaint by either omitting facts which made the previous complaint defective or by adding facts inconsistent with those of previous pleadings, the Court may take judicial notice of prior pleadings and may disregard any inconsistent allegations.”).

The sham pleading doctrine cannot be mechanically applied. Dones v. Life Insurance Company of North America (2020) 55 Cal.App.5th 665, 688. The doctrine is not intended to prevent honest complainants from correcting erroneous allegations or to prevent the correction of ambiguous facts. Ibid. Rather, the doctrine must be taken together with its purpose, which is to prevent an amended pleading which is only a sham, when it is apparent that no cause of action can truthfully be stated. Ibid.

The sham pleading doctrine applies not only to an amended pleading that is filed in the same action, but also to the pleadings filed in a separate action. Larson v UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336, 343–344 (court may properly take judicial notice of party's earlier pleadings and positions as well as established facts from both the same case and other cases). “ “A plaintiff may not avoid a demurrer by pleading facts or positions in an amended complaint that contradict the facts pleaded in the original complaint or by suppressing facts which prove the pleaded facts false. [Citation.] Likewise, the plaintiff may not plead facts that contradict the facts or positions that the plaintiff pleaded in earlier actions or suppress facts that prove the pleaded facts false. [Citation.]” Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 877 (emphasis in original, citations omitted). “The principle is that of truthful pleading.” ’ ... [Citation.] When the plaintiff pleads inconsistently in separate actions, the plaintiff's complaint is nothing more than a sham that seeks to avoid the effect of a demurrer. [Citations.] Under such circumstances, the court will disregard the falsely pleaded facts and affirm the demurrer.” Id. at 877-878 (emphasis in original, citations omitted).

Facts that the plaintiff has pleaded in the original complaint are conclusively deemed true as against the plaintiff, and the plaintiff may not amend the complaint to contradict this judicially admitted matter. Dang v Smith (2010) 190 Cal.App.4th 646, 657–658. “The only effect of an earlier allegation in such a context is to prevent the pleader from amending her pleading so as to contradict the judicially admitted matter.” Ibid. (emphasis in original). “Because the original allegation is conclusively deemed true, the pleader is not permitted to assert its logical opposite.” Ibid. (emphasis in original). A plaintiff may contradict a previous judicial admission, however, when the plaintiff's request for leave to amend is supported by a showing of mistake or other excuse for changing the plaintiff's allegations of fact. Walters v Boosinger (2016) 2 CA5th 421, 438; Minish v Hanuman Fellowship (2013) 214 CA4th 437, 456–457 n12. 2

Plaintiff’s First Amended Verified Complaint from Case No. 2:25-cv-01609-AC allege that TSD placed assessments, enforceable through liens, on their properties despite the facts that the properties were uninhabited and located outside the moratorium area for which LAFCO authorized assessments, and that plaintiffs had never applied for sewer connection permits. Defendant’s RJN, Ex. B at 4-5. By Resolution 87-104 dated February 12, 1987, the TSD Board approved the assessment in the Amended Engineer’s Report which the Board directed to exclude the Greenbelt Parcels of the G/D Residents Association, because the Board believed “that there was no reasonable prospect of being developed in any way that would utilize the subject sewer system improvements.” Defendant’s RJN, Ex. B at 5. The Amended Engineer’s Report divided the parcels to be assessed between the G/D lots and the “Outside” parcels including plaintiffs’ and other large uninhabited lands. The Board of Directors by Resolution 87-104 “confirms and levies the individual assessment as stated in the Amended Engineer’s Report.” Defendant’s RJN, Ex. B at 5. The Amended Engineers Report and a Second Amended Report dated April 2, 1987, designated the lands, including plaintiffs’ properties, lying beyond the boundaries of the G/D subdivision as “Outside Parcels” because they were not eligible for any benefit of Federal Grant funds. Defendant’s RJN, Ex. B at 5. Even though the terms of the resolutions and the engineers reports excluded plaintiffs’ lands, which were uninhabited and therefore expressly excluded from the sewer moratorium, plaintiffs were each charged assessments. Defendant’s RJN, Ex. B at 5. Plaintiffs paid these assessments even though the language of the resolution authorizing the assessment specifically did not apply to their uninhabited parcels. Defendant’s RJN, Ex. B at 5. In 2023, the lands at issue were rezoned as permanent open space which prohibits any future development, including connection to the TSD system. Defendant’s RJN, Ex. B at 5-6. Plaintiffs allege that when the rezoning was formalized in 2024, and they learned that no wastewater collection facilities had been built on or near their properties, Plaintiff Douglass contacted TSD to demand an accounting and refund of the assessments previously levied against his land. Defendant’s RJN, Ex. B at 6. The TSD denied plaintiffs’ demand stating that the time to file a government claim had expired. RJN, Ex. B at 6. Plaintiffs also claim that Defendants utilized an arbitrary, fraudulent and confiscatory computation of the unauthorized assessment and they increased plaintiffs’ respective assessments without justification or notice. RJN, Ex. B at 6.

Facts that the plaintiff has pleaded in the original complaint are conclusively deemed true, and the pleader is not permitted to assert is logical opposite in subsequent pleadings. Dang, supra, 190 Cal.App.at 657–658. In the Complaint at issue here, Plaintiffs argue the underlying assessment fees were valid and seek “surplus and refund assessment proceeds” because they never derived the benefit of the fund. However, the language of the Complaint displays Plaintiffs again seek a refund of the original fees paid which is the same underlying argument as in the Federal complaint. Plaintiff simply relabels “assessments” as “surplus funds”. However, the “gravamen of all of plaintiffs’ claims is simply that at the time the assessments were levied in 1987, they were unlawful on their face because plaintiffs’ properties were undeveloped.” RJN, Ex. A at 6-7. The Federal First Amended Verified Complaint included several pages of alleged facts which asserted TSD “intentionally violated” orders, “intentionally levied assessments with sewer connection fees that did not have an application for connection for service”, “knowingly utilized an assessment formula”, “did not give reasonable notice to Plaintiffs” and so on. RJN, Ex. B at 6-10.

Plaintiffs now state they do not challenge the validity or imposition of the 1987 assessments, but rather want a return of any “surplus and unused assessment funds”. Complaint, ¶ 20. However, the letter Plaintiffs rely upon to show they made a formal demand for a refund of “$325,938 plus interest paid by Plaintiffs” for the “surplus funds” is the same letter Plaintiffs relied upon in their Federal complaint to demand a refund of assessment funds. RJN, Ex. D. Therefore, under the sham pleading doctrine, Plaintiff cannot assert their letter sought a “refund of $325,938 unused connection fees” which were assessed in the federal case, but now relabel those same funds as “surplus funds” to circumvent the reasons for which the federal complaint was dismissed. RJN, Ex. D. Because Plaintiffs have plead the same fees as illegal assessment fees in one pleading and valid surplus funds in another, it is clear Plaintiffs’ “complaint is nothing more than a sham that seeks to avoid the effect of a demurrer.” Cantu, supra, 4 Cal.App.4th at 877. “Under such circumstances, the court will disregard the falsely pleaded facts and affirm the demurrer.” Ibid. For this reason, the demurrer as to Plaintiffs’ complaint is sustained. There is no reasonable possibility the defect can be cured, so amendment is denied.

Statute of Limitations

As discussed above, the gravamen of each of Plaintiffs causes of action is the refund of fees assessed in approximately 1987. Complaint ¶¶ 9, 32 (First Cause of Action (“COA”) “Mandatory Refund of All Assessments”), 41 (Second COA seeks “mandatory return” of “special assessments”), 46-47 (Third COA “TSD owes a balance...for all special assessments” and Plaintiffs seeks “to refund sums”), 50-52 (Fourth COA “Defendants failed to...refund...the special assessments and Plaintiffs seeks to have TSD “refund payors”), and (Fifth COA seeks a declaration that assessment funds “must all be refunded”).

Here, as in the Federal case, Plaintiff argued the injury did not occur in 1987 when the Plaintiffs paid the special assessments. In the present Complaint, Plaintiffs assert they are due a refund of any “surplus collected by TSD through its special assessments” which were “placed in a dedicated fund and returned in cash to the property owners who paid the assessment.” Complaint, ¶ 12. Pursuant to Streets and Highways Code § 10400, “The validity of an assessment or supplementary assessment levied under this division shall not be contested in any action or proceeding unless the action or proceeding is commenced within 30 days after the assessment is levied.” S&H Code § 10400. Pursuant to Code of Civil Procedure § 329.5, the validity of an assessment against real property for public improvements “shall not be contested in any action or proceeding unless the action or proceeding is commenced within 30 days after the assessment is levied, or such longer period as the legislative body may provide. The First Amended Verified Complaint in the federal case states Plaintiffs’ lands were deemed “not eligible for any benefit of Federal Grant funds” because they were “Outside Parcels” laying beyond the boundaries of the G/D subdivision in a report dated April 2, 1987. RJN, Ex. B, ¶ 16. Therefore, regardless of how Plaintiffs characterize the funds, the time to contest the validity of the assessment based on Plaintiffs’ lots not being eligible for a benefit was at the time the assessment was levied. Thus, because Plaintiffs failed to do so within the statutory timeframe, their claims are untimely. The demurrer is sustained on this basis. Because the defect cannot be cured, no leave to amend is granted.

Defendant also argues Plaintiffs’ claims fail under the alternative theory of a tax refund. The Court again agrees. 4

A claim for a tax refund must be filed within four years after making the payment sought to be refunded. Rev. & Tax Code § 5097(a)(2). If such a claim for refund is rejected, an action must be commenced within six months from the date of rejection. Rev. & Tax Code § 5141(a). At bar, Plaintiffs allege making payments from 1987 and continuing after 1991, and that as of 2001 a certain amount of payments had been made. Complaint, ¶¶ 9-10. Plaintiffs made a demand for a refund on March 19, 2024 which was denied on April 18, 2024 and May 17, 2024. Complaint, ¶¶ 21-24. Plaintiffs did not file any civil suit until it commenced its federal action on June 10, 2025 and the present action on December 22, 2025, far after the expiration of the six-month limit. As such, the demurrer can be sustained.

Government Claims Act

Defendant argues all causes of action are barred by Plaintiffs’ failure to comply with the Government Claims Act (“GCA”). The Court agrees.

Pursuant to the GCA, a complaint for money or damages against a public entity must be preceded by a proper administrative claim. Gov. Code § 905. Such a claim must be presented no later than one year after the accrual of the cause of action. Gov. Code § 911.2(a). A claimant may make an application for leave to present a late claim within one year after the accrual of the cause of action. Gov. Code § 911.4(b). If the application to file a late claim is denied, a petition may be made to the court to file a late claim, which must be filed within six months after the application to the board is denied. Gov. Code §§ 911.6; 946.6(a).

In the present Complaint, Plaintiffs assert the Government Claims Act is not applicable because it relates to entitlement to refund of a special assessment. Complaint, ¶ 30. However, the prior federal complaints allege Plaintiffs made a “demand and concomitant Notice of Claim under CA Government Code Sections 910 et seq.” and “Leave to File Late Claim”, both of which were denied on December 19, 2024. RJN, Ex. B, ¶ 22. As discussed above, Plaintiffs cannot acknowledge in one case their claims are subject to the GCA but attempt to recategorize the basis for its claims in another to avoid the effects of a demurrer by contradicting the prior claim.

At bar, Plaintiffs failed to petition the court to file a late claim as required. Thus, the demurrer is sustained. Because there the defect cannot be cured by amendment, leave to amend is denied.

2. CU0002600 Lost Horizon Ranch, LLC vs. Stephen Brennan

The petition for release of mechanic’s lien is denied without prejudice.

Introduction

The case concerns the property located at 14556 Powerline Road, Grass Valley, CA 95946 (“Property”). Petitioners Lost Horizon Ranch, LLC and Ryan Zuccaro are the owners and manager of the Property. On July 18, 2025, Respondent Stephen Brennan recorded a mechanic’s lien against the property in the amount of $3,900.00 for labor, services, equipment, or materials furnished by Respondent for removal of old deck and new deck build.

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