Public Entities Can Limit Exposure to Monetary Claims by Modifying Board Policies

In these strained economic times, where governmental budgets can be stretched to their limits, public entities are often faced with unexpected financial exposure to claims and litigation.  Public entities can limit the scope of their exposure to monetary claims by simply adopting policies that shorten the time for presenting claims to a fraction of what California statutes of limitations would usually provide.

The Government Claims Act provides that before a suit for “money or damages” can be filed against a public entity, a claim must first be presented to the entity describing the facts, the nature of the injury, and the estimated amount of damages. (Gov. Code § 910.)  The time limit for presenting a claim under the Act is either six months or twelve months after the alleged injury, depending on the type of claim. (Gov. Code § 911.2.)   Any lawsuit on a cause of action for which a claim is required to be presented must be commenced within six months after the public entity gives notice of its rejection of the claim. (Gov. Code § 945.6; Tapia v. County of San Bernardino (1994) 29 Cal.App.4th 375, 382.)

The presentation requirements help to “ensure prompt claims investigation and possible settlement, enabling the public entity to make appropriate fiscal adjustments and provide the opportunity to avoid future liability by taking remedial steps to prevent a reoccurrence.” (California School Employees Assn. v. Governing Board of South Orange County Community College District (2004) 124 Cal.App.4th 574, 589.) Where a lawsuit is filed against a public entity, failure to first present a claim is fatal to the recovery of money damages.  (Tapia, supra, at p. 383.)

On the other hand, some claims for “money or damages” are specifically exempted from the Government Claims Act’s presentment requirement. Exempted claims include “[c]laims by public employees for fees, salaries, wages, mileage or other expenses or allowances” (§ 905(c)); “applications or claims for money or benefits under any public retirement or pension system” (§ 905(f)); and (since 2013) “claims made … for reimbursement of pupil fees for participation in education activities.”  (§ 905(o)).

In California, a plaintiff may sue for these exempted damages without first presenting a claim, as long as the lawsuit is filed within the applicable statute of limitations. The statute of limitations for commencing legal action on “a liability created by statute, other than a penalty or forfeiture” is three years.  (Code of Civ. Proc. § 338(a).)  For example, in Pasquinelli v. State, Business and Transportation Agency (1975) 45 Cal.App.3d 457, 461, the Court of Appeal held a three-year statute of limitations period applied to the back salary claims of highway patrolmen whose disability leaves of absence were erroneously terminated. Section 338 applied, since the action was based on liability created by statute, and each patrolman was entitled to sue for disability leave salary payable within three years preceding commencement of action.  (Ibid.)

An exception to the Government Claims Act exemptions can limit the scope of a public entity’s exposure to a much shorter period than ordinary statutes of limitations for certain types of claims. Government Code section 935 permits a public entity to prescribe its own rules for presentation of claims that would otherwise fall within the exemptions, as long as the procedures for such claims are not governed by any other statutes or regulations. (Gov. Code § 935(a).) When a public entity adopts its own policy requiring presentment of such claims, presentation of claims according to those procedures is mandatory and an otherwise exempted claim falls within the requirements of the Act. (Gov. Code § 935(b).)

In California School Employees Assn. v. Azusa Unified School District (1984) 152 Cal.App.3d 580, 587, CSEA argued it was not required to present a claim for several classified workers’ claims for back pay pursuant to Education Code section 45203. The Second District Court of Appeal held that, while CSEA was not required by the Government Claims Act to present a claim for wages as a prerequisite to filing a writ of mandate in superior court, a claim had to be presented before filing a lawsuit based on the procedural requirements of the district’s board policy on the filing of monetary claims, in accordance with Government Code section 935. The Court of Appeal explained that Section 45203 did not prescribe procedures for filing a claim for wages; rather, it only gave rise to the duty to pay wages.  In contrast, Government Code section 935 permits a local entity to adopt procedures for presenting claims otherwise exempted by the Act.  (Ibid.)

Similarly, the Fourth District Court of Appeal in Tapia held that a deputy sheriff, Jeannette Tapia, who sought lost wages and reinstatement after the Board of Retirement found her ineligible for disability retirement was required to give the County of San Bernardino notice based on its own presentment requirements, pursuant to Section 935. (Tapia, supra, 29 Cal.App.4th at p. 383.)  Since Tapia failed to furnish the requisite notice, her claim for salary and benefits was barred.  Likewise, the Fourth District in South Orange County Community College District held CSEA was barred from recovering the employees’ Education Code section 88003 claims for lost wages by failure to file a claim, pursuant to the district’s board policies on tort claim filing procedures.  (152 Cal.App.3d at pp. 592-593.)

Conclusion/Recommendations

A public entity that takes advantage of Government Code section 935 by adopting its own procedures for presentment of certain monetary claims that would otherwise be exempted by the Government Claims Act could avoid liability entirely or greatly limit its potential exposure.  In certain cases a public entity that requires presentment within one year as a prerequisite to certain lawsuits would be able to deny any claims not timely presented, and limit its exposure under timely claims to only one year of damages.

Periodic review of board policies is good practice. A policy on presenting claims against the entity — whether a school district, community college district, or other public agency — should be reviewed for compliance with current law. This review also provides an opportunity to incorporate otherwise exempt claims into the presentation requirements, such as claims for wages and pupil fees.

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