City of King City v. Community Bank of Central

Opinion

RUSHING, P. J. —

Officials of the City of King City (City) deposited some $4.4 million of funds under their control into the Community Bank of Central California (Bank), and then pledged the funds to the bank as collateral for a loan to a developer engaged in a redevelopment project under the supervision of the local redevelopment agency, Community Development Agency (Agency). The developer apparently defaulted on the loan, and Bank refused to return the funds to City, which then brought this action for a writ of mandate compelling Bank to do so. City alleged that the deposit consisted of “City general fund monies” and that the pledge was void for the reason, among others, that it “could not be, and was not, authorized” by the City Council (Council) or the City Agency Board (Board). Bank sought a continuance

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to permit discovery into the circumstances surrounding certain actions by the Council, the Board, or both, which, in Bank’s view, conferred authority on the mayor to make the pledge. Bank also sought to inquire into the origin of the deposited money, asserting that it may have come from Agency funds and not, as City alleged, City funds. The trial court denied the request for a delay to conduct discovery and categorically excluded oral testimony concerning the events at issue. After what amounted to a lengthy law and motion hearing, it ruled on the merits in City’s favor. It reasoned that there was no effective Council authorization for a pledge of the funds because the minutes of Council meetings, on their face, reflected only an authorization to make a

loan

to the developer. The court ruled that even if evidence outside the minutes disclosed a broader intent, it would not assist Bank because such evidence was inadmissible. The court further concluded that discovery into the origin of the funds would be futile because City would be entitled to prevail even if the funds belonged to the Agency. The court therefore granted the petition and directed issuance of a peremptory writ requiring return of the funds to City.

We hold that the court committed prejudicial error in several respects. First, the duty asserted by City does not arise from any “office, trust, or station” occupied or assumed by Bank, and therefore will not support the issuance of mandate. (Code Civ. Proc., § 1085, subd. (a).) As a result, the matter should have proceeded as an ordinary civil action, with Bank entitled to the usual processes of discovery and trial. Second, the denial of discovery into the origins and ownership of the pledged funds was both erroneous and prejudicial because evidence that the funds belonged to the Agency would tend to defeat City’s claims as pleaded, refute its claimed entitlement to an extraordinary writ, and support an inference (among others) that the ambiguous measures in question were adopted by the Agency and were intended to authorize an expenditure on its behalf, not City’s. Third, the court’s categorical denial of discovery and exclusion of evidence on the ground that it violated the “deliberative privilege” of legislators likewise constituted prejudicial error because it went beyond barring inquiry into the subjective thoughts and motives of legislators to exclude perfectly proper objective indicia of legislative intent, including the circumstances of the enactments in question and what actually took place at public meetings where those enactments, or matters related to them, were publicly discussed and adopted. In the absence of a statute requiring a more specific recital in the minutes (or other specified public record), courts faced with the interpretation of a municipal enactment are as free to consult evidence of legislative intent as when they interpret state or federal legislation. In this regard, the trial court further erred by adopting City’s misreading of certain statutes, which require a “recorded vote” on spending measures, so as to render such a measure entirely invalid unless it is set down in detail on the face of the minutes.