Filed 11/1/19 Successor Agency to the Blyth Redevelopment Agency v. Bosler CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

—-

SUCCESSOR AGENCY TO THE BLYTHE REDEVELOPMENT AGENCY et al.,

Plaintiffs and Appellants,

v.

KEELY BOSLER, As Director, etc.,

Defendant and Respondent.

C081165

(Super. Ct. No. 34201480001969CUWMGDS)

This is yet another case arising out of the dissolution of California’s redevelopment agencies. Following dissolution, the Department of Finance (DOF) determined that an item on a Recognized Obligation Payment Schedule (ROPS) submitted by the Successor Agency to the Blythe Redevelopment Agency (Successor Agency) based on an Installment Sale and Leaseback Agreement (the Agreement) between the City of Blythe (City) and its redevelopment agency did not constitute an enforceable obligation. Plaintiffs commenced this action, inter alia, seeking a writ of mandate commanding DOF to recognize the Agreement as an enforceable obligation. The trial court, applying the law in effect up to that point in time, concluded that the Agreement was not a loan under Health and Safety Code section 34191.4, denied the petition, and entered judgment in favor of DOF.

On the same day the trial court issued its ruling, the Governor signed Senate Bill No. 107 into law, which became effective immediately. (Stats. 2015, ch. 325, eff. Sept. 22, 2015 (Senate Bill No. 107).) Among other things, Senate Bill No. 107 amended section 34191.4 to provide definitions of “loan agreement.” (§ 34191.4, subd. (b)(2), added by Stats. 2015, ch. 325, § 21.)

Plaintiffs assert that the issues to be resolved on this appeal should be determined under the applicable provisions as amended by Senate Bill No. 107. Plaintiffs assert that the trial court’s determination should be reversed because the Agreement constituted a loan agreement within the meaning of section 34191.4, subdivision (b)(2), and hence an enforceable obligation.

We agree with plaintiffs that Senate Bill No. 107’s amendments to section 34191.4, subdivision (b), adding definitions of “loan agreement” do retroactively apply to actions occurring on or after June 28, 2011. However, we further conclude that DOF is the body that should first consider whether the Agreement constituted a loan agreement under section 34191.4, subdivision (b)(2), as amended by Senate Bill No. 107. Insofar as DOF, post-judgment, has made its final determination as to whether the Agreement represents an enforceable obligation, then it is for the trial court in the first instance to review that determination. Accordingly, we shall reverse the judgment and remand the matter to the trial court: (1) for DOF to inform the court of its administrative decision as to whether the Agreement constitutes a “loan agreement” under section 34191.4, subdivision (b)(2), as amended by Senate Bill No. 107, and if DOF maintains it is not, (2) for the court to review that determination.

FACTUAL AND PROCEDURAL BACKGROUND

First Amended Petition and Factual Allegations

On December 1, 2014, plaintiffs filed their first amended petition for writ of mandate and complaint for declaratory and injunctive relief (first amended petition). According to the first amended petition, by the mid-1990’s, the City had outgrown its city hall building. The City constructed a new city hall building which opened in 1998. Meanwhile, the City’s police department had also outgrown its headquarters, but the City lacked sufficient general revenue to acquire or construct a new police headquarters building. Therefore, the City elected to convert the former city hall building into the new police headquarters. The building was within the Blythe Redevelopment Agency’s Redevelopment Project No. 1 project area.

On October 14, 1997, after a duly noticed public hearing held by the city council, the Blythe Redevelopment Agency (RDA) adopted Resolution No. RA 97-64, pursuant to which the RDA proposed to pay for the cost of converting and improving the former city hall building for use as the new police headquarters. The RDA stated that it desired to pay for the acquisition and improvement of the facility with tax increment revenue through installment payments over 30 years. Pursuant to section 33445, the RDA’s governing board determined that: (1) the project was of benefit to the project area, (2) the payment of funds for all or part of the cost would assist in the elimination of one or more blighting conditions in the project area by remedying lack of adequate infrastructure and improving public safety, (3) the payment of funds for all or part of the cost was consistent with the RDA’s implementation plan, and (4) no other reasonable means of financing the project were available to the City. Resolution No. RA 97-64 also authorized and directed the chairman of the RDA to execute the Agreement with the City. Resolution No. RA 97-64 stated that, by “entering into [the Agreement] with the [RDA], under which the City will sell and transfer ownership of the Facility to the [RDA] and simultaneously lease it back for a nominal rent, the City will both relieve the financial burden on its general fund and also have the use of a new police facility.”

After holding a duly noticed public hearing pursuant to section 33679, on October 14, 1997, the city council adopted Resolution No. 97-524, stating that the RDA desired to pay the cost of the project and the city council consented. The city council made the same findings pursuant to section 33445 as did the RDA’s governing board. Resolution No. 97-524 also approved of the Agreement between the City and the RDA and authorized and directed the mayor to execute the Agreement.

The mayor and chairman of the RDA executed the Agreement dated January 1, 1998, on behalf of the City and the RDA. Pursuant to the Agreement, the City “would sell and transfer ownership of the Facility to the former [RDA] for a term of 30 years and, simultaneously, the former [RDA], as the new owner, would lease the Facility to the City for a nominal rent during such term.” Under section 3.1 of the Agreement, the City agreed to sell the building to the RDA, and the RDA agreed to purchase it, with all rights, title, and interest in the building conveyed to the RDA on January 1, 1998. The RDA would make annual installment payments of principal, and semi-annual payments of interest, to the City over a 30-year period from tax increment revenues. According to plaintiffs, section 33445, subdivision (c), authorized the RDA to enter into the Agreement for purposes of reimbursing the City for the costs of the project through periodic payments over a term of years. Also, according to plaintiffs, under section 33445, “the obligation of the former [RDA] under the Agreement constituted an indebtedness of the former [RDA] which was payable from tax increment revenue.” Thus, “[a]s contemplated by Section 33445 and the Agreement, the City would advance the costs to remodel the Facility, and the former [RDA] was to reimburse the City for $650,000 of such costs, plus interest, by making periodic payments to the City over a period of 30 years. By paying third party vendors and contractors directly, the City effectively loaned to the former [RDA] the costs of remodeling the Facility — costs that the former [RDA] itself would have paid if it had possessed sufficient resources at the time to do so.” According to an installment payment schedule, the RDA would pay $68,951.51 on January 1 of each year beginning in 1999 and ending in 2028. On the date of the last installment payment, all rights, title, and interest in the building “shall have been deemed reconveyed to the City.”

Following execution of the Agreement, the City hired contractors and vendors to complete the project. The City spent $921,238.44 for the project, which was completed in the summer of 1999.

The RDA made the contemplated payments from 1999 until 2012. Following the “Great Dissolution” of redevelopment agencies in California, the Successor Agency made an installment payment of $68,951.51 on January 1, 2013, without objection from DOF. That was the last installment payment made under the Agreement.

DOF determined that the Successor Agency had remitted all of its encumbered balances to the Riverside County Auditor-Controller and satisfied all other statutory prerequisites. On August 30, 2013, DOF issued to the Successor Agency a finding of completion under section 34179.7.

Thereafter, DOF objected to the January 1, 2014, installment payment under the Agreement. DOF asserted that the requirements of section 34191.4, applicable where DOF has issued a finding of completion to a successor agency, had not been satisfied. On July 8, 2014, the Successor Agency adopted Resolution No. SA 2014-002, requesting that its oversight board find that the loan established by the Agreement was made for legitimate redevelopment purposes and that the Agreement gave rise to an enforceable obligation. The oversight board adopted Resolution No. OB 2014-003 on July 16, 2014, finding that the loan established by the Agreement was indeed made for legitimate redevelopment purposes, and that the Agreement gave rise to an enforceable obligation, “provided that the loan be repaid under modified terms in compliance with” section 34191.4, subdivision (b).

The Successor Agency notified DOF of Resolution No. OB 2014-003, but DOF again concluded that the Agreement did not constitute an enforceable obligation. In a letter dated September 2, 2014, DOF stated that, “[b]ased on our review and application of the law, [Resolution No. OB 2014-003], related to re-establishing the Police Facility Agreement as an enforceable obligation, is not approved.” DOF reiterated its position that section 34171, subdivision (d)(2), states that an enforceable obligation does not include “any agreements, contracts, or arrangements between the city that created the RDA and the former RDA.” DOF continued: “Per the resolution, the purpose of the agreement was to reimburse the City for construction costs advanced by the City for improvements to convert a former City Hall building to a police headquarters facility (Facility). Additionally, this is an agreement between the former RDA and the City for the RDA to purchase the Facility owned by the City and to lease the Facility back to the City, not a loan agreement. Therefore, the agreement is not an enforceable obligation.”

According to plaintiffs, DOF’s position was “that there was no loan made by the City to the former [RDA] up front; instead, according to [DOF], the purpose of the Agreement was for the former [RDA] to reimburse the City for construction costs advanced by the City.” Plaintiffs further asserted that DOF “contends that the Agreement is not a loan agreement but is instead a purchase and sale agreement by which the former [RDA] purchased the Facility and leased it back to the City.”

In the first cause of action of the first amended petition, seeking a writ of mandate, plaintiffs asserted that DOF’s conclusion that the Agreement did not give rise to an enforceable obligation was arbitrary, capricious, and an abuse of discretion. Plaintiffs asserted that, once a finding of completion was issued to the Successor Agency under section 34179.7, and after the oversight board found that the loan established by the Agreement was made for legitimate redevelopment purposes under section 34191.4, subdivision (b), and that the Agreement therefore was an enforceable obligation, DOF lacked authority to review whether it was indeed an enforceable obligation. By exercising authority it lacked, DOF exceeded its authority and abused its discretion. Plaintiffs requested a writ of mandate commanding DOF to recognize the Agreement as an enforceable obligation.

In the second cause of action, also seeking a writ of mandate, plaintiffs asserted that DOF abused its discretion in concluding that the Agreement did not constitute a loan and therefore was not an enforceable obligation under section 34191.4, subdivision (b). Plaintiffs insisted that the Agreement was indeed an enforceable obligation under that section “because the City effectively loaned to the former [RDA] the costs of remodeling the Facility.”

In the third cause of action, plaintiffs sought a judgment declaring that the Agreement was an enforceable obligation.

The trial court scheduled a hearing on the first amended petition. Plaintiffs submitted their trial brief, with exhibits. Plaintiffs also submitted a request for judicial notice, the subjects of which included RDA Resolution No. RA 97-64, City Council Resolution No. 97-524, and Successor Agency Resolution No. SA 2014-002.

Hearing Before the Trial Court

In a hearing on September 18, 2015, plaintiffs’ attorney noted that the Legislature had recently passed Senate Bill No. 107, which would add to section 34191.4, subdivision (b), definitions of a loan agreement. Plaintiffs maintained that the definitions would be retroactive “so it would cover the installment payments that have been denied by” DOF. According to plaintiffs, “this particular [Agreement] would satisfy the new definition of Loan Agreement, which would impact the outcome of the case.” Plaintiffs requested either the opportunity to file supplemental briefs on the effect of Senate Bill No. 107, or, if the court intended to rule on the matter, the opportunity to file a motion for reconsideration pursuant to Code of Civil Procedure section 1008.

DOF asserted that Senate Bill No. 107 was not yet the law, and that the case must be decided on the law as it was at the time of DOF’s determination. In response to that argument, plaintiffs’ attorney asserted that Senate Bill No. 107, specifically the definitions of “loan agreement,” by the terms of the legislation, “goes back to June 28 of 2011.” Plaintiffs’ attorney continued: “[b]ecause of that language, it would apply to the installment payments that have been denied, so it is appropriate for the Court to consider it . . . because of the retroactive application.” Plaintiffs’ attorney expressed plaintiffs’ preference to “wait and see if the Governor signs it,” to postpone ruling on the matter until the Governor signed it, and to allow supplemental briefing. The trial court took the matter under submission.

The Trial Court’s Ruling

On September 22, 2015, the trial court issued its decision, affirming its tentative ruling denying the first amended petition. The court granted plaintiffs’ requests for judicial notice. In describing the Agreement, the court stated: “Under the [Agreement], the City agreed to ‘sell’ the old City Hall building to the [RDA], and the [RDA] agreed to pay, as the ‘purchase price’ for the facility, the principal amount of $650,000, plus interest at the rate of 10% per annum, payable in annual installments of $68,951.51, for thirty years. During the ‘term’ of the Agreement, the [RDA] agreed to lease the facility to the City for the nominal amount of $1 [per year]. The parties further agreed that at the end of the term of the Agreement, all rights, title, and interest of the [RDA] in the old City Hall building automatically will revert to the City. Further, during the term of the Agreement, the parties agreed that City would be responsible for paying all taxes and assessments relating to the facility. Thus, although denominated a ‘Sale and Leaseback Agreement,’ the transaction is not a ‘true sale.’ ”

The court stated that the “chief issue in this case is whether the . . . Agreement constitutes a ‘loan’ under section 34191.4.” The trial court stated that, under then-existing law, section 34191.4 did not define the term “ ‘loan,’ ” and therefore it looked to the usual, ordinary meaning of the term. The court agreed with DOF that the Agreement did not qualify as a loan because it “provide[d] for a one-way transfer of money to the City, without requiring any action whatsoever by the City. The Agreement does not require the City to advance monies on behalf of the [RDA] to cover the costs of renovating the old City Hall. Nor does it require the [RDA] to pay the City back for any renovation costs incurred by the City. At most, the Recitals to the Agreement indicate that the City desires to convert the building to use as a police headquarters, but the Agreement does not describe any proposed construction project.”

The court continued: “The Agreement does not make the [RDA] responsible for any renovation work or obligate the [RDA] to reimburse the City for any renovation costs it may incur. Rather, the Agreement unequivocally states that the City alone would be responsible for any improvements made to the building during the term of the Agreement. Under the Agreement, the [RDA] merely agreed to pay the ‘purchase price’ of the facility. Thus, on its face, the Agreement was a sale, not a loan.” The court stated that it was convinced that the Agreement was not a “ ‘true sale,’ ” and also that it was not a true “ ‘reimbursement contract’ ” because it did not require the RDA to reimburse any renovation costs and it did not obligate the City to undertake any renovation work. The court observed that, under the Agreement, the City would have received the full “ ‘purchase price’ ” even if it did not renovate the building. The court further observed that the total to be paid to the City by the RDA was approximately $2.1 million, far in excess of the contracted renovation amount of $1.3 million and even more than the $920,000 the City actually paid for the renovations.

The court continued: “It well may be the case that the City and [RDA] entered into the . . . Agreement with the goal of having the [RDA] ‘reimburse’ the City’s costs of renovating the old City Hall building. However, the Agreement . . . goes beyond ‘reimbursement.’ It essentially gifted $2.1 million in property tax revenues to the City’s general fund, for the City to do with as it pleased. The fact that the City chose to use some of the revenues to renovate the old City Hall does not change the terms of the Agreement or make it any less objectionable.” (Fn. omitted.)

The trial court concluded that DOF did not abuse its discretion in determining that the Agreement was not a loan for purposes of section 34191.4, and that DOF did not abuse its discretion in concluding that the amounts due under the Agreement were not enforceable obligations.

Finally, the court stated that “it is not obvious . . . that S.B. 107, if it becomes law, would alter the result in this case. Thus, the request for leave to file a supplemental brief is denied.”

In a judgment filed October 26, 2015, the trial court denied the first amended petition and entered judgment in favor of DOF.

DISCUSSION

I. Additional Background and the Parties’ Relevant Contentions

On September 22, 2015, four days after the hearing, the same day the trial court issued its ruling, and over a month before judgment was entered, the Governor signed Senate Bill No. 107 into law, effective immediately. (Stats. 2015, ch. 325, eff. Sept. 22, 2015.) Senate Bill No. 107 was “a very lengthy bill that made many different kinds of changes to different parts of the dissolution statutes.” (City of Grass Valley v. Cohen (2017) 17 Cal.App.5th 567, 580 (Grass Valley).) Among other things, Senate Bill No. 107 added to section 34191.4 definitions of “loan agreement” for purposes of that section. (§ 34191.4, subd. (b)(2), added by Stats. 2015, ch. 325, § 21, eff. Sept. 22, 2015.)

Plaintiffs assert that the relevant provisions of Senate Bill No. 107 should control the issues on this appeal. Plaintiffs assert that, pursuant to the terms of Senate Bill No. 107, the provisions of section 34191.4, including that section’s definitions of a “loan agreement,” apply retroactively to June 28, 2011. Plaintiffs note that this court has the discretion and authority to consider legal issues raised for the first time on appeal. In this regard, plaintiffs state that they identified this issue before the trial court, and the trial court declined to consider it. Therefore, the trial court has not been deprived of the opportunity to weigh in on the issue. Despite the fact that judgment was entered and the notice of appeal was filed after Senate Bill No. 107 became effective, plaintiffs assert that the enactment of Senate Bill No. 107 can be deemed a change in the law while this appeal was pending. Plaintiffs assert that we should decide this case on the merits under the provisions of Senate Bill No. 107 rather than requiring them to file a new action or remand the matter to the trial court for reconsideration. In their briefing, DOF argued that deciding this appeal under Senate Bill No. 107 would allow plaintiffs “to make an end-run around the administrative process and proper judicial review.” DOF also noted that “[a]fter statutory amendments and judicial decisions, [it] has continued to reexamine and refine its interpretation of the law.”

II. Retroactivity of the Relevant Provisions of Senate Bill No. 107

In City of San Jose v. Sharma (2016) 5 Cal.App.5th 123 (San Jose), upon which DOF relies, we noted that, after the parties in that case filed their briefs, the Legislature enacted Senate Bill No. 107. (San Jose, at p. 149.) As this court explained in Grass Valley: “In [San Jose] . . . , we held that one statutory change, regarding treatment of pension taxes collected before that statute’s effective date, was not retrospective. [Citations.] We declined to address the impact of the new legislation ‘on tax increment associated with the retirement levy’ after its effective date, and remanded that issue to the trial court to consider in the first instance.” (Grass Valley, supra, 17 Cal.App.5th at pp. 580-581.) However, as the court in Grass Valley further stated, “[San Jose] did not hold all of Senate Bill No. 107 (2015-2016 Reg. Sess.) to be prospective. Cases are not authority for propositions not considered.” (Id. at p. 581.)

In Grass Valley, the plaintiffs asserted that “postjudgment legislation” contained in Senate Bill No. 107 “changes the definition of an enforceable obligation in such a way as to encompass” an agreement at issue in that appeal. (Grass Valley, supra, 17 Cal.App.5th at pp. 578-580.) At issue in Grass Valley was “section 34171, subdivision (d)(2), which generally bars the enforceability of agreements between an RDA and its creator,” but which was amended by Senate Bill No. 107 “to add: ‘Notwithstanding this paragraph, an agreement entered into by the [RDA] prior to June 28, 2011, is an enforceable obligation if the agreement relates to state highway infrastructure improvements to which the [RDA] committed funds pursuant to Section 33445.’ ” (Grass Valley, at p. 579, quoting § 34171, subd. (d)(2).) The agreement at issue in Grass Valley—the “Dorsey Agreement”—was made within that statutory time period. (Grass Valley, at p. 579.)

The plaintiffs in Grass Valley argued that “there is a generally applicable rule that an appellate court must apply the law in effect at the time of the appeal . . . .” (Grass Valley, supra, 17 Cal.App.5th at p. 579.) DOF countered that the new definition in section 34171, subdivision (d)(2), was not to be applied retroactively, and, “even if the new definition is retrospective, whether the Dorsey Agreement falls within that new definition is a matter that should be decided in the first instance via [DOF’s] administrative review process.” (Grass Valley, at p. 579.)

The Grass Valley court first determined that the new definition at issue, created by Senate Bill No. 107, expressly applied to agreements entered into by redevelopment agencies prior to June 28, 2011, which preceded enactment of Senate Bill No. 107. (Grass Valley, supra, 17 Cal.App.5th at p. 581; see § 34171, subd. (d)(2).) Indeed, the court noted that, because Senate Bill No. 107 became effective after the redevelopment agencies had been stripped of their powers, the new definition “could not have any application if it were prospective. It would be inapplicable to any relevant agreement and thus meaningless.” (Grass Valley, at p. 581.) The court applied the presumption against idle or surplus legislation, and thus agreed with the plaintiffs’ position that the Legislature intended the relevant provision of Senate Bill No. 107 to operate retrospectively. (Grass Valley, at p. 582.)

We conclude that the definitions of “loan agreement” in section 34191.4, subdivision (b)(2), are to apply retroactively. Section 34191.4, subdivision (d), added by Senate Bill No. 107 (Stats. 2015, ch. 325, § 21), provides, in pertinent part, “This section shall apply retroactively to actions occurring on or after June 28, 2011.” First, the intent of the Legislature that the definitions of “loan agreement” in section 34191.4 are to apply retroactively is even more clear and unequivocal than the expression of retroactivity at issue in Grass Valley. Second, the same rationale eschewing interpretations that would result in idle or surplus legislation is applicable here. Section 34191.4, subdivision (b), is concerned with “loan agreements entered into between the redevelopment agency and the city, county, or city and county that created the redevelopment agency,” and whether they shall be deemed enforceable obligations following a finding by the oversight board that the loan was for “legitimate redevelopment purposes.” (§ 34191.4, subd. (b)(1).) Whether an agreement would constitute a loan agreement within the meaning of section 34191.4 depends upon the nature of the agreement reached between the former RDA and the city, county, or city and county that created the former RDA. Senate Bill No. 107 became effective after the former redevelopment agencies were stripped of their authority and powers, and thus the relevant provision “could not have any application if it were prospective. It would be inapplicable to any relevant agreement and thus meaningless.” (Grass Valley, supra, 17 Cal.App.5th at p. 581.) Therefore, we conclude that the definitions of “loan agreement” under section 34191.4, subdivision (b)(2), do indeed apply retroactively to actions taken on or after June 28, 2011—including DOF’s actions at issue here—as plainly stated in section 34191.4, subdivision (d).

III. DOF Determination of a Loan in the First Instance

Like in Grass Valley, our retroactivity determination does not end the discussion. In that case, after determining the retroactivity issue, the court stated: “[W]e decline to declare that the Dorsey Agreement is enforceable within the meaning of the new statutory definition, as the City asks us to do. We concur with [DOF’s] alternative view, consistent with our holding in [San Jose], that whether or not the new definition applies to a given agreement is not an issue that should be litigated in the first instance by an appellate court.” (Grass Valley, supra, 17 Cal.App.5th at p. 582.) The Grass Valley court continued: “In [San Jose] we held the trial court was best suited to address the particular issue that remained to be decided in that case. [Citation.] However, the issue to be decided in this case—whether the Dorsey Agreement is the kind of project contemplated by the new definition of Senate Bill No. 107 (2015–2016 Reg. Sess.)—is one that properly would have gone first to the [DOF], had the new definition been in existence when the City invoked the meet and confer process. In our view, the [DOF] is the appropriate body to consider the issue in the first instance. Accordingly, we shall direct the trial court to command the [DOF] to consider in the first instance whether or not the Dorsey Agreement is an enforceable agreement under the new definition.” (Ibid., fn. omitted.)

The same considerations apply here. On this record (see part IV. of the Discussion, post), DOF had not determined, in the first instance, whether the Agreement qualifies as a “loan agreement” and an enforceable obligation under section 34191.4, as amended by Senate Bill No. 107. As we determined in Grass Valley, this “is not an issue that should be litigated in the first instance by an appellate court.” (Grass Valley, supra, 17 Cal.App.5th at p. 582.) Whether the Agreement qualifies as a loan agreement is a determination “that properly would have gone first to [DOF], had the new definition been in existence when the City invoked the meet and confer process.” (Ibid.)

IV. Motion for Factual Findings and Requests for Judicial Notice

Plaintiffs have filed a “motion for factual determinations on appeal” and a request for judicial notice. Plaintiffs request that we take judicial notice of Oversight Board Resolution No. OB 2015-004, passed, approved, and adopted on October 28, 2015, after judgment was entered in this matter, which, among other things, found that the Agreement was a “loan agreement” within the meaning of the then-newly enacted section 34191.4, subdivision (b)(2), and an enforceable obligation. Plaintiffs further request that we take judicial notice of a December 8, 2015, notice from DOF declining to approve Oversight Board Resolution No. OB 2015-004 upon concluding that the Agreement does not satisfy the new definition of “loan agreement” in section 34191.4, subdivision (b)(2)(B) or (C). Plaintiffs further request that we make factual determinations, based on these documents, that the oversight board adopted Oversight Board Resolution No. OB 2015-004, and that DOF in its December 8, 2015, letter rejected Oversight Board Resolution No. OB 2015-004 based on its conclusion that the Agreement did not constitute a loan agreement within the meaning of section 34191.4, subdivision (b)(2). In other words, plaintiffs request that we take judicial notice of the fact that DOF has made its administrative determination under section 34191.4 as amended by Senate Bill No. 107 and the results thereof, and further requests that we make our determinations, taking into account these developments, and dispose of the matter ourselves without further proceedings before DOF or in the trial court.

As another panel of this court stated in City of Petaluma v. Cohen (2015) 238 Cal.App.4th 1430 (Petaluma): “ ‘Reviewing courts generally do not take judicial notice of evidence not presented to the trial court. Rather, normally “when reviewing the correctness of a trial court’s judgment, an appellate court will consider only matters which were part of the record at the time the judgment was entered.” [Citation.]’ [Citation.] Only exceptional circumstances justify deviation from that rule, either by taking judicial notice or exercising the power to take evidence under Code of Civil Procedure section 909. [Citation.] [¶] [Former] ‘California Rules of Court, rule 23(b) and Code of Civil Procedure section 909 authorize the appellate court to take evidence relating to any facts occurring at any time prior to appeal. However, the rule does not contemplate the reviewing court should take original evidence to reverse a judgment [citation] and is not available where there is no good cause shown for the unavailability of the evidence below.’ ” (Id. at p. 1438, fn. 7, italics added, original italics omitted; accord In re Zeth S. (2003) 31 Cal.4th 396, 405 [although appellate courts are authorized by Code of Civil Procedure section 909 and [former] rule 23 of the California Rules of Court to make findings of fact, the authority should be exercised sparingly; absent exceptional circumstances, such findings should not be made].)

Here, there is good cause for why these items were not before the trial court. They constitute actions taken after the trial court entered judgment in this matter. However, we nevertheless adhere to the general rule that, absent exceptional circumstances, appellate courts on review will not take original evidence to reverse a judgment. (Petaluma, supra, 238 Cal.App.4th at p. 1438, fn. 7; accord DeYoung v. Del Mar Thoroughbred Club (1984) 159 Cal.App.3d 858, 863, fn. 3; First Nat. Bank of Findlay v. Terry (1930) 103 Cal.App. 501, 509.)

Plaintiffs assert that, contrary to the foregoing, Code of Civil Procedure section 909, and its predecessor, may be invoked to reverse a judgment. Plaintiffs rely on Morrison v. Jaksick (1960) 187 Cal.App.2d 175 (Morrison). Plaintiffs rely upon the statement in that case that “[t]he purpose of [former] rule 23(b) of the Rules on Appeal and [former] section 956a of the Code of Civil Procedure is to enable an appellate court, in an appropriate case, to terminate litigation by affirmance, or modification and affirmance, of the judgment, or by reversal with directions to enter judgment for appellant if it appears that on no reasonable theory could respondent make a further showing in the trial court.” (Id. at p. 181, italics added.) In Morrison, however, the court denied the motion to produce additional evidence and affirmed the judgment. (Ibid.) More significantly for our purposes is the Morrison court’s observation that, in order for a court of review to accept new evidence for a reversal, it must appear that “on no reasonable theory could respondent make a further showing in the trial court.” (Ibid.) Were we to take judicial notice as requested, we could observe that DOF has concluded that the Agreement is not a loan agreement and is not an enforceable obligation. However, we cannot say that, if challenged in the trial court on that determination, DOF could make no further showing advancing a reasonable theory as to those matters.

Plaintiffs also rely on Conservatorship of Hart (1991) 228 Cal.App.3d 1244 (Hart). In Hart, the Court of Appeal stated: “In nonjury matters California reviewing courts are empowered to make their own factual determinations and, ‘for the purpose of making the factual determinations or for any other purpose in the interests of justice,’ to take additional evidence. [Citations.] The power has been narrowly construed: Most reviewing courts have applied to both factual determinations and evidence taking the rule of the leading case on findings at the appellate level that the power should be exercised ‘sparingly’ and only to affirm the trial court’s judgment with or without modification, or to reverse the judgment with directions to enter judgment for the appellant, and thus to end the lawsuit.” (Id. at p. 1257, italics added.) The Hart court ultimately elected to “take further evidence in the interests of justice.” (Id. at p. 1259.) The “most significant” special circumstance motivating the Hart court to take the unusual step of considering new evidence was that the conservatee whose interest would most directly be served by consideration of the new evidence “was neither represented nor capable of representing herself before the superior court.” (Ibid.) Another factor the Hart court considered was that “what the evidence reveals above all is a serious breakdown in the administration of justice: Readily obtainable and obviously relevant information concerning enormous previous gifts simply was not produced in the superior court. We cannot disregard this.” (Ibid.) No similarly compelling circumstances exist here.

We do not find any “exceptional circumstances” which would warrant the acceptance and consideration of new evidence here. (Petaluma, supra, 238 Cal.App.4th at p. 1438, fn. 7.) The interests to be served by accepting plaintiffs’ new evidence would be to save time, money, effort, and judicial resources, interests that could be present in any case a party seeks to have a reviewing court consider new evidence. We do not consider these interests, under the circumstances of this case, to be so exceptional as to warrant the consideration of new evidence, particularly inasmuch as plaintiffs seek reversal through that new evidence. (Ibid.)

Plaintiffs assert that DOF’s letter “represent[s] [DOF’s] final determination of whether the Agreement at issue complies with SB 107 . . . . Either [DOF] correctly interpreted SB 107, or it did not.” This calls to mind this court’s words in Grass Valley, addressing the plaintiffs’ contention that the facts were undisputed and that the reviewing court should decide the issue to save time and litigation expenses. (Grass Valley, supra, 17 Cal.App.5th at p. 582, fn. 9.) The Grass Valley court responded: “if the facts are undisputed, that should make the administrative process simple.” (Ibid.) Similarly, assuming DOF has made its final determination under section 34191.4 as amended by Senate Bill No. 107, review of that determination should be resolved in the first instance in the trial court.

For the foregoing reasons, we deny plaintiffs’ motion for factual findings, and we deny all of plaintiffs’ pending requests for judicial notice “ ‘because the proffered material is unnecessary to our decision.’ ” (Grass Valley, supra¸ 17 Cal.App.5th at p. 594, fn. 13, quoting City of Emeryville v. Cohen (2015) 233 Cal.App.4th 293, 312, fn. 13. (Emeryville).)

V. Conclusion

As in Grass Valley, DOF “is the appropriate body to consider the issue in the first instance.” (Grass Valley, supra, 17 Cal.App.5th at p. 582.) It may be, as asserted by plaintiffs in their motion for factual findings and request for judicial notice, that DOF indeed has considered whether or not the Agreement is a loan agreement within the meaning of section 34191.4, as amended by Senate Bill No. 107, and thus whether it constituted an enforceable obligation. Assuming that is the case, that does not mean DOF has not or could not reconsider its decision or otherwise refine its position, or does not have more to offer factually, and, in any event, “the trial court [i]s best suited to address the particular issue[s] that remain[] to be decided in th[is] case.” (Grass Valley, at p. 582, citing San Jose, supra, 5 Cal.App.5th at p. 152.) “We are not well positioned to resolve these issues, which should be resolved in the first instance, if necessary, in a trial court proceeding.” (San Jose, at p. 152.) Moreover, as DOF has noted in its briefing, “[d]issolution law has been a work in progress that has benefited from multiple layers of review.” Therefore, we decline to consider whether the Agreement qualifies as a loan agreement under section 34191.4, as amended by Senate Bill No. 107, and thus whether it constitutes an enforceable obligation. Instead, we will reverse the judgment and remand the matter to the trial court so that DOF can inform the court of its administrative decision and the court can make its determination in the first instance if DOF maintains the Agreement is not a loan agreement as defined in section 34191.4, subdivision (b)(2).

 

DISPOSITION

The judgment is reversed and the matter is remanded for: (1) DOF to proffer its administrative decision as to whether the Agreement is a “loan agreement” under section 34191.4, subdivision (b)(2), as amended by Senate Bill No. 107, and if DOF maintains it is not, (2) for the trial court to review that determination. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).)

/s/ ,

MURRAY, J.

We concur:

/s/

BUTZ, Acting P. J.

/s/

HOCH, J.