Tuesday, October 29, 2019

Hodges v. County of Placer (Cal. Ct. App. - Oct. 29, 2019)

I get it, Court of Appeal.  I really do.  You're saying that just because the County put the money that belonged to the plaintiff into a "trust" account doesn't mean that there was actually a "trust" (e.g., fiduciary) relationship between the parties.  Just like -- as you say -- "a panda is not a true bear."

But doesn't the partial injustice of the present case nonetheless bother you?  At least just a little?

The plaintiff owes some property taxes on his residential property, and (for whatever reason) doesn't pay them.  Fair enough.  The County of Placer will -- and does -- conduct a tax sale, and sell the thing out from under you.  That's the way we enforce your obligation to pay taxes.  Doesn't bother me in the slightest.

But the value of the property is way greater than the value of the taxes.  Which, again, doesn't bother me.  But it does mean that there's a ton of excess money.  The County sells the property for $530,000.  The overdue taxes, including all penalties etc., consists of less than a tenth of that:  approximately $37,000.  Then the County inexplicably keeps another $45,300 that, as the Court of Appeal explains, "went to other charges and expenses which the County did not explain."

And, in the end, after keeping the money for nearly two full years, the County gives the plaintiff the balance of what it thinks it owes him:  $437,096.16.  But doesn't pay a penny of interest on the nearly half a million dollars of plaintiff's money that the County has held on his behalf for the 18+ months in the meantime.  (Parenthetically, the Court of Appeal doesn't mention this, but on the other side, if you are even a single day late in paying your property taxes, the County instantly charges you interest of 10% on the entire balance.  Sounds fair and equitable, right?)

The County held that half million dollars for a ton of time.  It got value for that.  It earned interest, didn't have to float bonds, etc.  It demonstrably got a benefit.  And, reciprocally, the plaintiff incurred financial harm in not getting that money earlier.  Time value of money and all.  A fairly important (and basic) concept.

Why shouldn't the County be forced to pay at least a little bit of interest?  Why, during the time it kept this money, wasn't the County at least a little bit in a fiduciary relationship with the plaintiff?

It's bad enough to take over $45,000 of the plaintiff's money for "charges and expenses which the County did not explain."  It adds insult (and injury) to injury to pile on by not paying even a single penny of interest on the nearly half million dollars of someone else's money you've kept (to your demonstrable benefit) for nearly two years.

Yes, sometimes a "trust" account isn't really indicative of having a "trust"-like relationship with another party.  But sometimes that "trust" account, alongside the facts and equities of the underlying relationship, does impose at least some obligation of trust and fidelity.  Or at least should.

And not paying even a single dollar of interest here would, to me, seem to qualify as an inequitable and unjust result.  For which we could -- but the Court of Appeal does not -- provide a remedy.

My take, anyway.  FWIW.