Reported / Citable
Background
San Francisco adopted new water rates in May 2023. Three ratepayers filed a class action alleging the rates violated Proposition 218, which restricts property-related fees and charges. Their complaint sought a refund, declaratory and equitable relief, and a writ of mandate after they had presented a government claim.
The city defended the action for more than a year before moving for judgment on the pleadings. It argued that Government Code section 53759 required any attack on the rates to proceed as a reverse-validation action under Code of Civil Procedure sections 860 through 870. The trial court agreed that the specialized procedure applied and that the plaintiffs had not complied with its requirements.
The Court’s Holding
The Court of Appeal affirmed. Validation proceedings are in rem actions designed to determine the validity of a public-agency matter once and for all, with a judgment binding everyone who has an interest. When the Legislature activates that procedure for a particular agency action, private challengers cannot avoid it by selecting labels such as refund, declaratory relief, or mandate.
The court held that section 53759 made the validation procedure mandatory and jurisdictional for attacks on covered water rates. Because subject-matter jurisdiction cannot be created by consent, forfeiture, or estoppel, the city’s initial decision to litigate the merits did not waive the defect. The plaintiffs’ failure to bring and serve a compliant reverse-validation action was fatal, so the court did not need to decide the parties’ separate dispute over the 120-day limitations period.
Key Takeaways
- A lawsuit attacking covered water or sewer rates must be pleaded and prosecuted under California’s reverse-validation statutes.
- Calling the requested remedy a refund does not avoid validation when success would require a finding that the agency’s rate action was invalid.
- The public agency cannot waive a jurisdictional failure by answering the complaint or litigating for an extended period.
- Practitioners must account for the special publication, service, and timing rules at the outset; ordinary civil procedures are not a substitute.
Why It Matters
Rate challenges carry unusually unforgiving procedural requirements. Lawyers evaluating a Proposition 218 claim should determine immediately whether section 53759 activates reverse validation, because a facially plausible constitutional claim can be lost without any decision on its merits.
That analysis should occur before an ordinary government-claim or class-action strategy is selected. Reverse validation can require service by publication and compliance with special provisions intended to bind the world, not just named parties. A complaint seeking money may still attack the legal validity of the underlying rate, so counsel should examine the substance of every requested remedy rather than rely on its caption.
The ruling also gives agencies greater certainty that rate validity will be resolved in a single proceeding binding all interested parties. At the same time, an agency’s delay in raising the issue will not rescue a noncompliant plaintiff, making early procedural analysis essential on both sides. Potential challengers should calendar the shortest plausible deadline and should not expect waiver arguments to preserve an otherwise defective suit.
The court’s decision to avoid the limitations question is also important. Even a complaint filed within what a plaintiff believes is the correct period can fail if it uses the wrong procedural vehicle. Compliance means more than beating a deadline; it includes invoking the validation framework in a manner capable of producing the universally binding judgment the Legislature intended.