IN THE COURT
OF APPEAL
4TH
DISTRICT, DIVISION NO. 3
____________________________________________________________
GENE MORAN,
Petitioner
and Appellant,
vs.
CALIFORNIA
DEPARTMENT OF MOTOR VEHICLES,
Respondent
Orange County
Superior Court
The Honorable
Gregory H. Lewis, Judge Presiding
Superior
Court Case No. 05CC05997
Case No.
G035836
____________________________________________________________
OPENING BRIEF
APPEAL OF
DISMISSAL OF THE PETITION FOR WRIT OF MANDATE PURSUANT TO CODE CIV.PROC.
§1085 CHALLENGING THE DEPARTMENT OF MOTOR VEHICLES NONADJUDICATORY
ADMINISTRATIVE DECISION, POLICY, AND THE CONSTITUTIONALITY OF CAL.VEH.CODE
§544(b)
____________________________________________________________
Gene Moran
Huntington
Beach, CA 92649
Appellant
in pro se
Comes
petitioner and appellant Gene Moran (“Moran”), who files an opening
brief and argues that the trial court, the honorable Gregory H. Lewis
(“Judge Lewis”) clearly erred in denying the petition for writ of
mandate pursuant to Code Civ.Proc. §1085 (“Petition”), challenging
the constitutionality pursuant to Cal.Const.Art. I, §7 of: (1) The
salvage title policy of the respondent California Department of Motor
Vehicles (“DMV”) pursuant to Cal.Veh.Code §544(b) (“§544(b)”);
(2) The DMV’s as-applied nonadjudicatory salvage title decision
in Moran’s case pursuant to that policy solely upon receiving and
adopting upon a Notice of Retention of Salvage Vehicle (“Salvage Notice”)
pursuant to Cal.Veh.Code §11515 (“§11515”); and (3) The facial
constitutionality of §544(b).
Judge
Lewis denied the writ of mandate and dismissed the case upon a rationale
that a civil action for monetary damages against Moran’s insurance
company Esurance Insurance Co., Inc. (“Esurance”) was the proper
remedy without ever addressing the Petition’s gravaman issues of the
constitutionality of the DMV’s salvage title decision, §544(b) policy,
and §544(b) itself.
This
appeal is to a final judgment of dismissal on the merits.
I.
ISSUES PRESENTED
1. Is the DMV’s §544(b)
salvage title policy delegating the decision to insurance companies
and adopting on the Salvage Notice pursuant to §11515 at face value
an abuse of discretion and violation of procedural due process pursuant
to Cal.Const.Art. I, §7 under the delegation-of-power doctrine, for
creating an inherent conflict-of-interest, and for want of accountability?
2. Was the DMV’s nonadjudicatory
decision in Moran’s case an abuse of discretion for failure to exercise
discretion in some manner as being procedurally unfair, and as an as-applied
unconstitutional act in violation of due process pursuant to Cal.Const.Art.
I, §7?
3. Is §544(b) facially unconstitutional
on procedural due process grounds pursuant to Cal.Const.Art. I, §7?
4. Was Moran’s Vehicle a
“total loss salvage” as being “uneconomical to repair” under
§544(b) using objective factors comparing the costs to repair the total
damage and the pre-collision fair market value?
II.
STATEMENT
OF THE CASE
This
case presents a first impression issue that has broad, state-wide pubic
importance regarding property interests and due process effecting thousands
of vehicle owners in California who are involved in car accidents, and
seek reimbursement from their insurance companies where the repair costs
are within the vicinity of their objective, pre-collision value.
The gravaman issues involve the supreme law of the due process clause
of the Cal.Const.Art. I, §7 in regards to the DMV’s §544(b) salvage
title policy, their as-applied application of this policy to Moran’s
case, and the facial constitutionality of §544(b). The Legislature
did not foresee the scenario where as here, Esurance never advised Moran
of a salvage title and its adverse ramifications, no procedural remedy
exists within §544(b)’s plain language, and he is never afforded
a meaningful opportunity to dispute or remedy the absentia decision.
On
March 11, 2005, the DMV denied Moran’s request for consideration of
rebuttal evidence in the salvage title decision on his vehicle, a 1992
Volkswagen Corrado VR6, license no. 3CDD299 (“Vehicle”) (Appellant’s
Appendix, “AA”, 091) Moran filed the Petition in West
Superior Court on March 15, 2005 upon the direction of the Central Superior
Court clerk. On May 9, 2005 the West Superior Court clerk transferred
the Petition to Central Superior Court and gave it a new case number.
(AA, 009) On June 7, 2005 the DMV filed a return by way
of answer. (AA, 025) On June 14, 2004, Moran
filed a motion for the issuance of the petition and a concurrently filed
declaration with authenticated exhibits. (AA, 032)
On June 23, 2005 the DMV filed a memorandum of points and authorities
in opposition to the petition. (AA, 105) On June 27, 2005
Moran filed a reply brief. (AA, 116)
On
June 8, 2005, Judge Lewis posted a tentative ruling denying the motion
and petition. (AA, 125) On June 11, 2005 Judge Lewis heard oral
arguments on the motion and made the tentative ruling its final ruling.
(AA,
126-127, RT, 13:13) Judge
Lewis’ adjudication of the Petition was only supported by speculative
conclusions as to other remedies in both the tentative internet posting
and as stated within the hearing transcripts, both without providing
any legal authority or precedent for those conclusions. (AA, 125, RT,
12:9-13:12) Judge Lewis’ statement that Moran has a breach of contract
remedy against Esurance was not part of his tentative ruling, and is
not supported any California authority. (AA, 125; RT, 12:16-19) Judge
Lewis further adopted the DMV's pose by restating their positions near
the end of the oral argument: still with no authority providing reasoning
to the ruling. (RT, 12:20-24) Judge Lewis violated stare decisis
by not following the holding that Kelley Blue Book is an objective standard
in Martinez v. Enterprise Rent-A-Car (2004) 119 Cal.App.4th 46,
54. (RT, 9:14-20)
Moran
was misadvised by the court clerk that judgment of dismissal was entered
on July 11, 2005, and he appealed on that basis on July 25, 2005.
It was later determined that judgment was entered on August 3, 2005.
(AA, 126-127) In this scenario, this Court properly treats
a notice of appeal filed before judgment is entered as if filed after.
Cal.Court Rules 2(e)(1), Berger v. California Ins. Guarantee
Ass’n. (2005) 128 Cal.App.4th .989, 997, fn. 7.
III.
STATEMENT
OF FACTS
On
June 10, 2004, Moran’s Vehicle suffered front-end and window damage.
On June 12, 2004, Moran filed a claim with Esurance. Esurance
instructed Moran to take his Vehicle to Grove Body Shop in Garden Grove,
California, to obtain an estimate. Moran did so and was told by
an Esurance agent that he would be contacted when the estimate was completed.
Moran had the broken window fixed immediately for security purposes.
(AA, 084, 088) Because Moran was without his only mode of
personal transportation, he instructed Grove Body Shop to initiate and
complete the remaining repairs. (AA, 054:18-19)
Over
the next nine days, Esurance agents instructed Grove Body Shop not to
repair the damage to Moran’s Vehicle. On June 21, 2005 Esurance
agents told Moran that they estimated the complete repairs at $6,627.33
and considered the Vehicle a total loss because they believed these
costs surpassed their estimate of the Vehicle’s pre-collision fair
market value by using their own subjective methodology. (AA, 054:21-24)
Moran disagreed and advocated both that the estimated costs of repairs
were grossly overstated by Grove Body Shop and that the objective estimate
of pre-collision value from Kelley Blue Book was nearly $1,500 higher
than their subjective estimate. Esurance refused to use Kelley
Blue Book. Esurance also did not allow Moran to get another estimate.
Instead,
Esurance gave Moran an ultimatum: either have his Vehicle repaired at
Grove Body Shop and pay over $2,000 of his own money, or accept settlement
in one of two ways: payment for a fixed amount and surrender the vehicle
to Esurance, or take a fixed amount they were offering and keep the
Vehicle. (AA, 055:1-19) Esurance made no mention to Moran
that they concluded his Vehicle was a “salvage title,” never obtained
Moran's agreement that his vehicle was a total loss salvage as required
by §544(b), and never advised Moran in writing of the adverse ramifications
of a salvage title on his Vehicle’s resale value as required by Cal.Code
Regs., Tit.10, §2965.8(1)(A) “§2965.8(1)(A)”. (AA, 055:20-056:1)
Despite Moran’s dispute to Esurance’s estimates of the Vehicle’s
damage repair costs, Esurance refused to change their position. Without
agreeing or acquiescing to Esurance’s determinations, Moran was mailed
a check without any advisement that his Vehicle was being reported to
the DMV as a “Total Loss Salvage” pursuant to §11515. (AA, 057:8-10)
On June 22, 2005, Moran
lost $155.79 in vacation pay to take the time to locate parts to repair
his Vehicle. (AA, 056:5) Moran paid to have body parts shipped
to a Sheib Body Shop, and the initial repairs were completed there.
Moran then transferred his Vehicle to Macco Body Shop to have the remaining
repairs that Sheib Body Shop couldn’t perform. The total cost
of these repairs and subsequent parts purchases was $3,539.45. Moran
completed all damage and repairs as estimated by competent mechanics.
(AA, 056:21-057:7) The Kelley Blue Book pre-collision retail value
of Moran’s vehicle in June 2004 was $6,490. (AA, 058:10-11,
092)
On
or about August 1, 2004, Moran has paid the entire “privilege” vehicle
license and registration fees and biennial smog certificate fees for
his Vehicle for 2005 pursuant to Cal.Veh.Code §4602 and Cal.Rev. &
Tax.Code §10752. Moran has also paid the same for 2006.
(AA, 002-003) On August 26, 2004, Moran received notice
from DMV that his Vehicle was reported by Esurance as being a “Total
Loss Salvage,” and that he was required to comply with the requirements
of §11515. (AA, 067) At that point, Moran had never
received any notice of a salvage title or its adverse ramifications
on his Vehicle’s value. (AA, 057:8-10) On September
1, 2004, Moran advised the DMV that the “Total Loss Salvage” report
was erroneous. Moran attached his actual receipts for the total
repairs and the Kelley Blue Book estimate resulting in a difference
of nearly $3,000. Moran then demanded rescission of the requirements
that Moran’s Vehicle be required to register as a “Total Loss Salvage.”
(AA, 080-081)
Over the time period
of September 20, 2004 to November 12, 2004, Moran received absolutely
no response from DMV. On November 12, 2004, Moran called DMV’s
agents and asked why they had not responded. Moran was asked to,
and did fax the letter again. (AA, 082) Over the period
of November 12, 2004 to March 10, 2005, Moran attempted to, but was
unable to persuade the DMV to reconsider their refusal to rescind the
requirement upon Moran to register his vehicle as a “Total Loss Salvage”
upon credible rebuttal evidence provided to them. (AA, 057:20-058:6)
On March 11, 2005, the DMV sent Moran a letter denying his request for
consideration of his rebuttal evidence, but never advised Moran to pay
for any fees elated to an undisputed salvage title in challenging their
decision. (AA, 091) Regardless, Moran paid the “Registration
Related Fees” for undisputed salvage titles fees, although
they are not at issue in this case. Moran thus has “fees on
file” status with the DMV pursuant to Cal.Veh.Code §42270.
The DMV collected those fees pursuant to Cal.Rev. & Tax.Code §10856.
(AA, 002-003)
The
Petition was filed within 30 days of the DMV’s §544 salvage title
decision.
IV.
SUMMARY OF
ARGUMENT
The
issues in this case pose a question of first impression, statewide public
importance regarding California vehicle owner’s property interests
and due process of law. The DMV is an administrative agency of
the State of California charged with the responsibility of registering
vehicles. While garden-variety vehicle registration pursuant to
Cal.Veh. Code §4602 is ministerial, salvage title vehicle registration
pursuant to §544(b) requires a separate determination and the exercise
of discretion in some manner because it involves the weighing of evidence
that potentially results in a substantial diminution of the vehicle
owner’s property interest.
This
Petition and appeal only challenge the constitutionality of the DMV’s
§544(b) salvage title policy in general and as-applied to Moran’s
Vehicle, and the constitutionality of §544(b), all on procedural due
process grounds pursuant to Cal.Const.Art. I, §7. Writ of Mandate
pursuant to Code Civ.Proc. §1085 (“Mandamus”) is the traditional
and proper remedy under controlling case law to challenge all of these
issues, and is Moran’s only adequate and meaningful remedy at law.
The
California Constitution is the supreme law in California that is a
restriction on all other laws. The DMV’s §544(b) salvage title
policy of delegation of the task and accountability to insurance companies,
and adopting on those claims at face value is an abuse of discretion
in violation of Cal.Const.Art. I, §7 in three ways: It is a de-facto
delegation in violation of the delegation-of-power doctrine; it creates
an inherent conflict-of-interest; and allows the DMV to abdicate accountability
to ensure with accuracy and fairness to vehicle owners. The DMV
can delegate the task, but cannot not delegate the accountability to
make §544(b) salvage title determinations to insurance companies, as
it allows the latter to create their own rules and standards that the
Legislature did not specifically provide for.
The
DMV’s §544(b) salvage title policy and decision as applied to Moran
was nonadjudicatory because no hearing is required by statute; However,
in making the §544(b) decision in Moran’s case, the DMV has a constitutional
duty to provide him with procedural due process in accord with Cal.Const.Art.
I, §7: a right to notice and to be heard in a meaningful time and manner.
Insurance companies do not owe its insured’s procedural due process,
and the DMV’s as-applied §544(b) salvage title decision is the only
legally biding determination that Moran can challenge. In regards
to the §544(b) salvage title decision in Moran’s case, the DMV abused
its discretion by failing to exercise discretion in some manner by abdicating
their duty to afford Moran those procedural due process rights.
Section
544(b) is facially unconstitutional on procedural due process grounds.
The Legislature was silent on procedure for disputed salvage title decisions,
and did not foresee nor make a procedural remedy for the scenario where
as here, the insurance company does not follow the notice and approval
requirements of salvage title decisions pursuant to §544(b) and §2965.8(1)(A),
the vehicle owner belatedly becomes aware of the salvage title, and
seeks to challenge the absentia decision.
Moran’s
Vehicle was absolutely not subject to a salvage title as it was not
“uneconomical to repair” as defined under Cal.Veh.Code §4453(b)(1),
§544(b) and Martinez, supra, 119 Cal.App.4th at 54; all
because the total cost of the repairs to his Vehicle from the damage
sustained on June 12, 2004 were nearly $3,000 less than the objective
Kelley Blue Book pre-collision value.
It
was clear error for Judge Lewis to deny the present Petition because
Cal.Const. Art. I, §7 mandates such relief.
V.
ACTION REQUESTED
ON APPEAL
1. Reversal of judgment of
dismissal and remand to the trial court, with an order that the Petition
be issued, ordering the DMV to register Moran’s vehicle without a
salvage title; or
2. To hold that the DMV’s
§544(b) salvage title decision must exercise discretion in some manner
and afford Moran the minimal procedural due process of a meaningful
opportunity to be heard in accord with Cal.Const.Art. I, §7 and its
case law progeny, and order their decision to be reconsidered; or
3. To determine that §544(b)
is facially unconstitutional for want of procedural due process in violation
of Cal.Const.Art. I, §7.
VI.
STANDARDS
OF REVIEW
- Writ of Mandate
Pursuant to Code Civ.Proc. §1085 is
of
the DMV’s Nonadjudicatory §544(b) Policy, the
As-Applied
Decision in Moran’s Case, and §544(b) Facially.
Administrative
agencies are subject to judicial review as a check against arbitrary implementation.
Clinton v. City of New York (1998) 524 U.S. 417, 489 Mandamus safeguards
against the rubber-stamping of administrative agency decisions.
Shelly v. State Personnel Bd. (1975) 15 Cal.3d 194, 217-218
Mandamus
is the appropriate vehicle for challenging the constitutionality of
statutes and official acts. Wenke v. Hitchcock (1972) 6
Cal.3d. 746, 751 It is an “established principle that
mandamus may issue to compel the performance of a ministerial duty
or to correct an abuse of discretion.” Glendale City
Employees’ Ass’n, Inc. v. City of Glendale (1975) 15 Cal.3d
328, 344, emphasis added. Mandamus lies to compel government
officials to exercise their discretionary powers in some manner.
Los Angeles County Employees Assn., Local 660 v. County of Los Angeles
(1973) 33 Cal.App.3d 1, 8; accord, Sego v. Santa Monica Rent Control
Bd. (1997) 57 Cal.App.4th 205, 255 “Traditional
mandamus…will lie to force a particular action by an agency when the
law clearly establishes the petitioner's right to such action.”
Sequoia Union High School District v. Aurora Charter High School
(2003) 112 Cal.App.4th 185, 195, accord, Miller Family Home, Inc.
v. Department of Social Services (1997) 57 Cal.App.4th 488, 491
Further, mandamus lies to correct an abuse of discretion by virtue of
a failure to exercise discretion. Erlich v. Superior Court
(1965) 63 Cal.2d 551, 556
Section
544(b) salvage title registration invokes a substantial property interest
afforded constitutional protection. Despite the DMV’s position,
the present Petition is the proper remedy to challenge their §544(b)
decision designating Moran’s Vehicle as a salvage title and imposing
additional requirements and fees to the registration process.
In a case directly on point, a disputed vehicle registration decision
by the DMV was held to be appropriately reviewed by mandamus. American
President Lines, Ltd. v. Zolin
(1996) 38 Cal.App.4th 910 Just as the DMV erroneously
argued in that case and in the case at bar, Moran’s remedy to correct
an erroneous vehicle registration decision is not filing a lawsuit for
recovery of money. Id
at 919.
The
DMV’s §544(b) salvage title decision in Moran’s case was couched
not as a decision, but rather as a statement of their policy of delegation
of the decision to insurance companies and adoption of that decision
at face value. While this was tantamount to a decision against
Moran, its character and function was nonadjudicatory. “[A] legislative
action is the formulation of a rule to be applied to all future cases,
while an adjudicatory act involves the actual application of such a
rule to a specific set of existing facts.” Dominey
v. Department of Personnel Administration (1988) 205 Cal.App.3d
729, 736, Thus, when an agency formulates generic rules of general applicability
and develops principles to be applied in future cases, the agency acts
in its quasi-legislative and nonadjudicatory capacity. Strumsky
v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d
28, 34-35, fn. 2
Because
the DMV’s nonadjudicatory decision did not result from a proceeding
where by law a hearing is required to be given, evidence is required
to be taken, and discretion in the administration of facts is vested
in the agency, the present petition pursuant to Code Civ.Proc. §1085
is the proper remedy. DeCuir v. County of Los Angeles (1998)
64 Cal.App.4th 75, 81. In fact, “Code Civ.Proc. §1085,
the ‘traditional’ mandamus statute, may be invoked when, as here,
a party seeks judicial review of nonadjudicatory administrative actions.”
Personnel Comm’n of the Lynwood Unified School Dist. v. Board
of Education of the Lynnwood School Dist.
(1990) 223 Cal.App.3d 1463, 1466.
The
present petition for writ of mandate would also be the proper remedy
under the “Public Right/Public Duty” exception, as Moran may challenge
the DMV's §544(b) salvage title policy of delegation to insurance companies
and adoption of their claims at face value because he is “interested
as a citizen in having the laws executed and the duty in question enforced.”
Green v. Obledo (1981) 29 Cal.3d 126, 144
Moreover,
under settled law, Moran has no procedural due process right to review
or challenge a private insurer’s decision because their acts do not
constitute state actions. King v. Meese (1987) 43 Cal.3d
1217, 1233, accord, Garfinkle v. Superior Court (1978)
21 Cal.3d 268, 281-282, “In determining whether procedural due process
is afforded plaintiffs, it is axiomatic that we look only to the asserted
state duty and cognizable state action.”
Thus,
the present Petition was and is the proper remedy at bar.
- Issues of Statutory
Interpretation and the Undisputed
Statutory
construction is a question of law that this court reviews de novo.
California Teacher’s Ass’n v. San Diego Community College
District (1981) 28 Cal.3d 692, 699 An appellate court
is not limited by the interpretation of a statute made by the trial
court, or limited to the evidence presented on the question of statutory
interpretation made by the trial court. Bravo Vending v. City
of Rancho Mirage (1993) 16 Cal.App.4th 383, 391-392.
Florez v. Linens N’ Things, Inc. (2003) 108 Cal.App.4th
447, 451. A trial court’s determination on an administrative
agency’s nonadjudicatory decision is not binding on the appellate
court. Personnel Comm’n of Lynwood Unified School Dist.,
supra, 223 Cal.App.3d at 1466. Also, because the relevant
facts of the case are undisputed, de novo review is proper.
International Engine Parts, Inc. v. Fedderson & Co. (1995)
9 Cal.4th 606, 611-612
This
de novo standard is equally applied whether the administrative decision
is adjudicatory or nonadjudicatory. Eisenberg, Horvitz and
Weiner, California Practice Guide, Civil Appeals And Writs (Rutter
Group 2005) 8:128.5 A fundamental characteristic of de novo review is
that all issues are subject to review. Breakzone Billiards v. City
of Torrance (2000) 81 Cal.App.4th 1205, 1221
- A Disputed
§544(b) Salvage Title Registration is Properly
It
is undisputed that garden-variety vehicle registration renewal pursuant
to Cal.Veh.Code §4602 is a ministerial permit. Cal.Code Regs,
Tit. 14, §15369. Miller v. City of Hermosa Beach (1993)
13 Cal.App.4th 1118, 1139 “A ministerial act
is an act that a public officer is required to perform in a prescribed
manner in obedience to the mandate of legal authority and without regard
to his own judgment or opinion concerning such act's propriety or impropriety,
when a given state of facts exists.” Lockyer v. City and
County of San Francisco (2004) 33 Cal.4th 1055, 1082
A statute does not become mandatory and eliminate any element of discretion
unless it clearly defines the specific duties or course of conduct that
a governing body must take. Rodriguez v. Solis (1992) 1
Cal.App.4th 495, 504-505. It is undisputed that §544(b) does
not specifically define any such duties upon the DMV.
However,
“[b]etween the definitions of ministerial and discretionary acts lies
the following pertinent rule: A refusal to exercise discretion is itself
an abuse of discretion.” Morris v. Harper (2001) 94 Cal.App.4th
52, 62-63 In order to properly analyze a disputed §544(b)
salvage title claim, the DMV must act with discretion in some manner
in a decisionmaking capacity to review specific facts and documentation
from both the vehicle owner and the insurance company making the claim. Any
task that requires such decisionmaking or review of facts is a discretionary act.
Helene Curtis, Inc. v. Los Angeles County Assessment Appeals Board
(2004) 121 Cal.App.4th 29, 37. Thus, discretionary authority arises
when the facts must be determined as necessary to establish the validity
of the claim. Westley v. California Public Employees Retirement System
Board of Administration (2003) 105 Cal.App.4th 1095, 1107
There
are other case law examples providing that any decisionmaking by an
administrative agency requires the exercise of discretion. (See,
e.g., Miller, supra, 13 Cal.App.4th at 1140-1141 [Issuance
of hotel building permit involved the exercise of discretion due to
reliance on private company’s traffic engineering impact report];
accord, City of Los Angeles v. Amwest Surety Ins. Co. (1998)
63 Cal.App.4th 378, 386 [Approval of reversion to acreage of map is
discretionary because it requires personal judgment and is discretionary
act]; Dorcich v. Johnson (1980) 110 Cal.App.3d 487, 496 [Uniform
statewide cancellation fee practices of Secretary of Resources deemed
discretionary]; Day v. City of Glendale (1975), 51 Cal.App.3d
817, 822 [Issuance of grading permit deemed discretionary due to City's
concerns over environmental impact]; People v. Department of Housing
and Community Development (1975) 45 Cal.App.3d 185, 193 [Construction
permit to build mobile home park involved general standards addressing
sound judgment as well as fixed ones, and thus was a mixed ministerial/discretionary
decision]; Friends of Westwood, Inc. v. City of Los Angeles (1987)
191 Cal.App.3d 259, 275-276 [Discretion exercised when public employees
determined adequate specifications for proposed office tower]).
Constitutional
due process invokes a vehicle owner’s property interests, and requires
discretion through verification of insurance company compliance with
the requirements under §544(b) to obtain approval from the vehicle
owner to the salvage title and the written notice of its potential adverse
ramifications pursuant to §2965.8(1)(A). The DMV must also exercise
discretion in some manner due to these adverse ramifications that a
salvage title imposes on vehicle owner’s property interest, as constitutional
due process principles mandate that those property interests supercede
the DMV’s convenience.
A
§544(b) salvage title imposed upon a vehicle adversely affects the
actual pre-collision value of the vehicle through instant diminution
solely on this basis, and renders it suspect for any resale despite
the repairs having been completely performed.1
Indeed, a salvage title imposes a scarlet letter upon a vehicle that
diminishes the resell book value by 20-50%, even if completely rebuilt
as new2. Further, it imposes additional mechanical
testing and financial obligations on them.3 If
erroneous, these are undue burdens.
Before
imposing these salvage title burdens on vehicle owners, the DMV must
exercise discretion in some manner beyond the purely ministerial act
of processing a registration fee and issuing a new certificate pursuant
to Cal.Veh.Code §4602. Directly on point is another vehicle
registration statute, Cal.Veh.Code §8202, which imposes additional
fees on registration of fleet vehicles that requires the DMV’s exercise
of discretion. American Resident Lines, Ltd., supra,
38 Cal.App.4th at 919
Thus,
the DMV’s characterization of §544(b) salvage title vehicle registration
as purely ministerial is misguided; rather, it requires the DMV exercise
discretion in some manner in making §544(b) salvage title vehicle decision
that affords vehicle owner’s procedural due process pursuant to Cal.Const.Art.
I, §7. However, even if the statutory requirements of §544(b)
are both ministerial and discretionary, it must be deemed discretionary
for all purposes. Miller, supra, 13 Cal.App.4th
at 1139.
VII.
ARGUMENT
1)
THE DMV’S
§544(b) SALVAGE TITLE POLICY IS
UNCONSTITUTIONAL
ON PROCEDURAL DUE PROCESS GROUNDS
IN VIOLATION
OF CAL.CONST.ART. I, §7 UNDER THE
DELEGATION-OF-POWER
DOCTRINE, FOR CREATING AN INHERENT CONFLICT-OF-INTEREST, AND FOR
WANT OF ACCOUNTABILITY.
This
case addresses the proper procedure for the DMV to provide vehicle owners
with notice and a right to be heard in a meaningful manner and a process
to dispute and correct erroneous §544(b) salvage title claims in accord
with procedural due process principles under Cal.Const.Art. I, §7.
Thus, this case “poses a question which is of broad public interest,
is likely to recur, and should receive uniform resolution throughout
the state.” Tobe v. City of Santa Ana (1995) 9 Cal.4th 1069,
1116.4
This
Petition and appeal only challenge the procedural due process constitutionality
of the DMV’s §544(b) salvage title policy in general and as-applied
to Moran’s Vehicle, and §544(b) facially. Even though Moran
is not challenging any fees, he has paid all “privilege” licensing
and registration fees for 2005 and 2006 pursuant to Cal.Veh.Code §§4602,
9250, 9250.8(a), and 9250.13, Cal.Rev. & Tax.Code §§10751-10753,
and his biennial smog certificate fees pursuant to Cal.Health &
Safety Code §44401. The DMV collected those fees pursuant to
Cal.Rev. & Tax.Code §10856; Thus, Moran has “fees on file”
status pursuant to Cal.Veh.Code §42270. (AA, 002-004)
The
fees involved with an undisputed salvage title registration include
“vehicle identification inspection fees” pursuant to Cal.Veh.Code
§§9255.1, 9255.2 and 9271, and a “salvage title certificate” and
“license plate fee” pursuant to Cal.Veh.Code §9265; all defined
by the DMV as “Registration Related Fees: Miscellaneous Fees and Service Fees.”
(AA, 007-008) These fees fall within the same statutory
genre as those under the “Vehicle License Fee Law” pursuant to Cal.Rev.
& Tax.Code §10701 et seq., and thus are an exception to fees and
revenues used for enumerated transportation purposes under Cal.Const.Art.
XIX, §7 The DMV never advised Moran that he had to pay
any of these fees before challenging the constitutionality of their
decision or policy in their March 11, 2005 letter. (AA, 091)
Nevertheless, Moran paid these fees. (AA, 002-003)
Under
Cal.Veh.Code §1651, “the director may adopt and enforce rules and
regulations as may be necessary to carry out the provisions of this
code relating to the department.” However, it does not authorize
the delegation of the accountability to insurance companies allowing
them to formulate their own standards and rules, nor to disregard a
vehicle owner’s due process right to dispute and remedy an erroneous
salvage title claim. The DMV is an administrative agency created
by statute that only possesses the powers conferred on it by statute,
and have no authority to enact rules or regulations that alter or enlarge
the terms of legislative enactments. Addison v. Department
of Motor Vehicles (1977) 69 Cal.App.3d 486, 493, 494
After
§544(b) was enacted in 1980, the DMV exercised its discretion and adopted
a policy to effectuate the statutory purpose by delegating to insurance
companies the duty to determine if a vehicle is a “total loss salvage”
as “uneconomical to repair,” and adopting on those decisions at
face value without considering the vehicle owner’s rebuttal evidence
in dispute. Under this policy, a citizen’s vehicle is
presumed guilty of being a salvage title without requiring corroborative
evidence, and there is no disputing their decision. This is procedurally
unfair because it violates minimal constitutional procedural due process
principles pursuant to Cal.Const.Art. I, §7.
The
DMV’s §544(b) salvage title policy wants it both ways. The
DMV wants to delegate the task of deciding whether vehicles are subject
to salvage titles, but it abdicated accountability to ensure procedural
due process through independent verification to prevent errors, or to allow
a remedy to correct existing errors after-the-fact. Constitutional due
process principles mandate that the buck must stop with the DMV.5
The
DMV’s §544(b) salvage title policy is an abuse of discretion because
it was developed in violation of “clearly established law” pursuant
to the constitutional procedural due process principles of Cal.Const.Art.
I, §7, Sequoia Union High School District, supra, 112
Cal.App.4th at 195. The DMV's policy of delegating §544(b) salvage
title decisions to insurance companies is unconstitutional on due process grounds
in three ways: (a) because it violates the delegation-of-power doctrine
with a de-facto delegation that accepts insurance company’s
§544(b) claims at face value and allows them to adopt their own rules
and standards for making this determination without legislative authority;
(b) because it allows insurance companies to labor under an inherent
conflict-of-interest by deciding insured vehicles to be salvage titles that
benefits their financial interests; and (c) because it allows the DMV
to evade accountability for the due process duties of independent verification
of the validity of the claims, remedying of errors, and providing a
fair process.
The
nondelegation doctrine is rooted in the principle of separation of powers.
Mistretta v. United States (1989) 488 U.S. 361, 371 The
Legislature must “lay down by legislative act an intelligible principle
to which the person or body authorized to [act] is directed to conform.”
Whitman v. Am. Trucking Ass'n (2000) 531 U.S. 457, 473
An administrative agency cannot cure an unconstitutional standardless
delegation of power by adopting a limited construction of the statute,
and their voluntary self-denial has no bearing on the answer. Id.
at 472-473 When a state delegates authority to a third party,
it must satisfy the requirements of due process. State of Washington ex.
rel. Seattle Trust Co. v. Roberge (1928) 278 U.S. 116, 121-122
The policy behind the doctrine prohibiting delegation of legislative
power is to ensure that the Legislature resolves the truly fundamental
policy issues, and that a grant of authority is accompanied by sufficient safeguards
to prevent abuses. Kugler v. Yocum (1968) 69 Cal.2d 371, 375.
An unconstitutional delegation of authority occurs when a legislative
body leaves the resolution of fundamental policy issues to others, or
fails to provide adequate direction for the implementation of that policy.
Id. at 376-377
The
DMV ‘s delegation of the §544(b) salvage title decision to insurance
companies allows them to enact their own rules and standards for coming
to that decision without legislative authority. In fact, Esurance
used their own subjective standards and rules for deciding both the
fair market value and repair costs for Moran’s Vehicle. Esurance
never consulted with the DMV in making this claim, and provided no corroborative
documentation in support. However, §544(b) does not specifically
provide for insurance companies to initiate their own standards and rules
for determining if a vehicle is “uneconomical to repair” and subject
to a salvage title. (The Legislature’s omission was somewhat
remedied by a common-law definition in Martinez, supra,
119 Cal.App.4th 46 at 53.)
The
California Supreme Court has held that the delegation-of-power doctrine
only allows for such a delegation if the statute provides for the private
industries power to initiate or enact rules that have the force of law.
King, supra, 43 Cal.3d at 1233-1234.6 It is settled
that just because a third party performs some role in the application
and implementation of an established legislative scheme does not render
the legislation invalid as an unlawful delegation of legislative authority.
Kugler, supra, 69 Cal.2d at 379-380 Therefore, while
it is legally permissible for insurance companies to participate in the
§554(b) salvage title question, their claims to the DMV cannot be conclusive
pursuant to constitutional due process principles because they are without
the force of law. International Association of Plumbing and
Mechanical Officials v. California Building Standards Commission
(1997) 55 Cal.App.4th 245, 254, citing to King, 43 Cal.3d at
1234.
With
the DMV's August 26, 2004 letter (AA, 067), it is presumed that official
duty was performed. Cal.Evid.Code §664 The DMV's delegating the
§544(b) salvage title decision as to whether the vehicle is “uneconomical
to repair” to insurance companies, acting upon that claim at face
value, and then enforcing the salvage title requirements is a state
action. “[T]he state's decision to impose a fine or suspend a
license is a state action.” King, supra, 43 Cal.3d
at 12307 The fact that the DMV’s delegation
is de facto by allowing insurance companies to formulate its
own standards and rules without the express authorization from the Legislature
does not diminish this from being a state action. This is exactly
what the doctrine of delegation of power is to prevent. Kugler,
supra, 69 Cal.2d at 375
Applying
the principles of King and Kugler
to this case, Moran could only challenge the decision that actually
has the force of law: the DMV’s decision that his Vehicle was
a salvage title pursuant to §544(b). In order for the DMV’s
asserted duty to be procedurally adequate, they must provide a program
to satisfy that duty. King, supra, 43 Cal.3d at
1231.
The
DMV’s policy of delegation of salvage title decisions to insurance
companies, even if de facto, violates the delegation-of-power
doctrine, and is procedurally unfair because it does not afford vehicle
owners with any meaningful opportunity to be heard in opposition.
In
most cases, administrative delegation to private industry occurs to
avoid an actual conflict-of-interest, or the appearance thereof.
In the case of the DMV's delegation of §544(b) salvage title determinations
to insurance companies, they have created an inherent conflict-of-interest
with no procedural safeguards against arbitrariness by the insurance
company to carry out their own financial interests.
A
delegation of power that creates a conflict-of-interest is unconstitutional
on due process grounds because it may be arbitrarily used to benefit
the decisionmaker. In general, an administrative agency may not delegate
its public duties to private entities whose objectivity may be questioned
on grounds of the appearance of a conflict-of-interest. Sierra Club
v. Sigler (5th Cir. 1983) 695 F.2d 957, 962 It is a well-settled axiom
of Anglo-American jurisprudence that one may not be the judge of his
own cause. Vista Irrigation District v. San Diego County (1950)
98 Cal.App.2d 270, 272 Thus, the DMV’s §544(b) salvage title
decision required an impartial decision maker. American Motors
Sales Corp. v. New Motor Vehicle Bd. (1977) 69 Cal.App.3d 983, 992.
The
DMV's delegation of §544(b) salvage title decisions to insurance companies allows
the latter to labor under an inherent conflict-of-interest by making
decisions that substantially lowers their financial risk and benefits
their own financial interests. When a vehicle is designated as a salvage
title, it is an imposed scarlet letter that immediately depreciates its
value by 20-50%, and makes it virtually impossible for the owner to sell.
(AA, 005:¶1:1-6, 70:¶3:3-5, 79:¶1) Insurance companies that
continue to insure salvage title vehicles retained by their policy holders
do not reduce their premiums8, while concurrently reducing
their financial risk on any future claims by the insured due to this
substantial diminution in value. Thus, insurance companies reap
an undue windfall resulting from their own decision to the detriment
of their insured. In the same light, persuading their policy holders
to give up their damaged vehicles for a financial settlement also results
in an undue windfall to the insurance company upon selling them on the
market. (AA, 068:¶3, 071:¶6)
In
a scenario similar to the DMV’s §544(b) salvage title policy, the
U.S. Supreme Court struck down an ordinance allowing two-thirds
of home owners to make zoning decisions for the City of Seattle, holding
that the conflict-of-interest created by such a delegation violated due
process. “The superintendent is bound by the decision or inaction
of such owners. There is no provision for review under the ordinance;
their failure to give consent is final. They are not bound by any official
duty, but are free to withhold consent for selfish reasons or arbitrarily
and may subject the trustee to their will or caprice...The delegation
of power so attempted is repugnant to the due process clause of the
Fourteenth Amendment,” citation omitted. Seattle Trust Co.,
supra, 278 U.S. at 121-122 As such, legislative safeguards are
lacking where unfettered rulemaking authority is granted to private parties
possessing a pecuniary interest in the formulation and application of
the rules. State Board v. Thrift-D-Lux Cleaners
(1953) 40 Cal.2d 436, 448, accord, Sundstrum v. County of Mendocino
(1988) 202 Cal.App.3d 296, 307
Thus,
the DMV’s delegation of §544(b) salvage title decisions to insurance
companies creates an inherent conflict-of-interest because it allows
them to make decisions that serve to reduce their risk and benefit them
financially, and thus violates constitutional due process.
- The DMV’s Delegation
of §544(b) Salvage Title Decisions to
Administrative
agencies can be captured by the industries they are to regulate because
those industries have great organizational and resource advantages over
the public as a whole. David Shoenbrod, Delegation and
its Discontents, Power Without Responsibility, (1993) Yale University
Press, 109 Because agency actors lack electoral accountability,
they are often not responsive to the public as a whole. Cass
R. Sunstein, Constitutionalism After the New Deal (1987) 101 Harv.L.Rev.
421, 446-447 The constitutional problem with unchecked delegation
is that it undercuts the legislature's accountability to the electorate
and subjects people to rule through ad-hoc commands rather than democratically
considered general laws. David
Shoenbrod, The Delegation Doctrine, Could the Court Give It Substance?
(1984) 83 Mich.L.Rev. 1223, 1224. The common case of nonaccountability
involves a situation where the legislature, in order to escape accountability,
has refused to draw the legally operative distinctions, leaving that
chore to others who are not politically accountable. Id.
at 1243 Delegation requires close scrutiny because it undercuts
the accountability of the legislation process. Id. at 1288
Thus, administrative functions may be delegated to a private entity only
if the agency retains ultimate authority and accountability to safeguard
the public interest. International Longshoremen's and Warehousemen's
Union v. Los Angeles Export Terminal, Inc. (1999) 69 Cal.App.4th
287, 297-298
Under
Cal.Veh.Code §11541, the DMV “shall administer and enforce all provisions
of this code pertaining to salvage pools.” Thus the DMV has
authority to ensure that §544(b) is properly enforced, and their delegation
of the accountability for salvage title decisions to insurance companies
would appear to be contrary to the legislative intent.
The
DMV’s delegation of §544(b) salvage title decisions to insurance companies is inadequate
on providing accountability to ensure accuracy and fairness. The DMV’s
Salvage Notice form is an indication of this; It doesn’t require independent
verification of the insurance company’s claims that the vehicle in
question is uneconomical to repair, nor requires independent verification
that the insurance company has complied with the law to obtain the vehicle
owner’s agreement to the salvage title pursuant to §544(b) and written
notice to the vehicle owner of the adverse ramifications of a salvage
title pursuant to §2965.8(1)(A); all before any settlement is reached
on the claim. (AA, 115) In the case at bar, the DMV’s
delegation allowed them to avoid a constitutional requirement of accountability
by neglecting any independent verification of the requirements of §544(b)
and §2965.8(1)(A)
This
is unconstitutional on due process grounds.
California
law supports the proposition that governmental delegation of power without
accountability is untenable.
As our Supreme Court has held, “[f]or government to dispose of a person's
significant interests without offering him a chance to be heard is to
risk treating him as a nonperson, an object, rather than a respected,
participating citizen...Thus, even in cases in which the decision-making
procedure will not alter the outcome of governmental action, due process
may nevertheless require that certain procedural protections be granted
the individual in order to protect important dignitary values, or, in
other words, 'to ensure that the method of interaction itself is fair
in terms of what are perceived as minimum standards of political accountability.”
People v. Ramirez (1979) 25 Cal.3d 260, 268, citations omitted,
accord, Bellflower Education Ass’n v. Bellflower Unified School
District (1991) 228 Cal.App.3d 805, 812, In re Donovan J.
(1997) 58 Cal.App.4th 1474, 1477
Because
the DMV’s exercise of discretion in developing such a policy for §544(b)
salvage title decisions through a delegation to insurance companies
allows them to escape accountability to ensure accuracy, a remedy for
errors made, and a fair process, the DMV abused its discretion in violation
of constitutional due process principles under Cal.Const.Art. I, §7.
This
Court must determine a rule of law restricting the DMV’s policy of
de facto delegation of §544(b) salvage title decisions, remove the
insurance companies inherent conflict-of-interest, and require the DMV
to have accountability for accuracy, remedying erroneous claims, and
a fair process, as judicial common-law rule-making is consistent with
accountability because it reflects democratic values by incorporating
community standards. Shoenbrod, supra, Delegation and
its Discontents, Power Without Responsibility, (1993) at 157
2)
THE DMV’S
§544(b) SALVAGE TITLE POLICY AND AS-APPLIED DECISION IN MORAN’S CASE
WAS A PROCEDURALLY UNFAIR
ABUSE OF
DISCRETION IN VIOLATION CAL.CONST.ART. I,
§7.
The
DMV’s position is that their §544(b) decision is ministerial because
their policy dictates that it be decided by insurance companies and
adopted on at face value, and that they have no discretion to verify
these claims. This refusal to exercise discretion in some manner
in Moran’s case is itself an abuse of discretion. Morris
v. Harper, supra, 94 Cal.App.4th at 62-63
If
the DMV's decision was procedurally unfair, its must be set aside or
affirmative relief must be granted to Moran. Associated Builders
& Contractors, Inc. v. San Francisco Airports Comm'n (1999)
21 Cal.4th 352, 361. It also must be set aside if the administrative
decision conflicts with statute, even absent an arbitrary or capricious
decision. California Ass'n of Psychology Providers v. Rarik (1990)
51 Cal.3d 1, 11
- Moran Was Entitled
to Procedural Due Process from the DMV
Pursuant
to Cal.Const.Art. I, §7 and Its Case Law Progeny.
The
California Constitution is “the supreme law of our state--a seminal
document of independent force that establishes governmental powers and
safeguards individual rights and liberties.” Sands v. Morongo
Unified School Dist. (1991) 53 Cal.3d 863, 902-903. It is
a limitation or restriction on the powers of the Legislature.
Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685, 691-692
Moran was entitled to due process of law from the DMV pursuant to Cal.Const.Art.
I, §7 and §544, as “[T]he constitutional provision requiring due
process of law is, in effect, automatically incorporated into every statute.”
Brook v. City of Oakland (1911) 160 Cal. 423, 432.
Where
the State attaches “a badge of infamy” such as a salvage title to
a citizen’s property interest in their vehicle, procedural due process
comes into play. Weiman v. Updegraff (1952) 344 U.S. 183,
191. “The essence of due process is the requirement that a person
be given notice and a meaningful opportunity to present their case.
Mathews v. Eldridge (1974) 424 U.S. 319, 348-349 Procedural
due process challenges based on the California Constitution are also
analyzed using the Mathews paradigm. O'Connell v. City of
Stockton (2005) 128 Cal.App.4th 831, 849, fn. 6 A rock-bottom
minimum due process requires some form of notice to apprise the pendency
of the action affecting their property interest and an opportunity to
present their objections and an opportunity to respond. Groppi
v. Leslie (1972) 404 U.S. 496, 506, accord, Ryan v. California
Interscholastic Federation-San Diego Section (2001) 94 Cal.App.4th
1048, 1072
The
basic requirements of procedural due process apply to administrative
agencies. Department of Alcoholic Beverage and Control v.
Alcoholic Beverage Control Appeals Board
(2005) 127 Cal.App.4th 615, 619 When the agency process itself is fundamentally
unfair, even determinations supported by substantial evidence may be
overturned because it is the very unfairness that undermines the reliability
of the administrative decision. Gates v. Department of Motor Vehicles
(1979) 94 Cal.App.3d 921, 926
The
DMV’s adoption of rules and regulations must act within the Constitution.
Sokol v. Public Utilities Commission (1986) 65 Cal.2d 247, 256
An administrative agency's obligation to adhere to the Constitution
is not limited to mere promulgation of rules, but extends to the agency's
application of legislation to the facts presented. Southern
Pacific Transportation Co. v. Public Utilities (1976) 18 Cal.3d
308, 311, fn. 2, superceded by Constitutional amendment on other
grounds as recognized in Lockyer, supra, 33 Cal.4th
at 1087
Moran’s
challenge to the constitutionality of the DMV’s §544(b) nonadjudicatory
salvage title decision pursuant to their policy is an “as-applied
challenge,” because it is a claim that a statute is unconstitutional on
the facts of a particular case or to a particular party. Tobe,
supra, 9 Cal. 4th at 1084 An essential predicate
for an as-applied challenge is that the statute has actually been applied.
Bowen v. Kirkpatrick (1988) 487 U.S. 589, 600 That is,
“there must be a present impermissible application of the challenged
statute or ordinance which the court can remedy.” Tobe,
supra, 9 Cal.4th at 1085
Specifically
under Mathews, the constitutional sufficiency of a governmental
scheme that affects property interests should be resolved by considering
three factors: “[f]irst, the private interest that will be affected
by the official action; second, the risk of an erroneous deprivation
of such interest through the procedures used, and the probable value,
if any, of additional or substitute procedural safeguards; and finally,
the Government's interest, including the function involved and the fiscal
and administrative burdens that the additional or substitute procedural
requirement would entail.” Id. at 335
The
exercise of discretion to deny a permit or other type of application
is a function that an administrative agency that must satisfy with at
least minimal requirements of procedural due process.
B.C. Cotton, Inc. v. Voss (1995) 33 Cal.App.4th 929, 953-954. The
process that is due may depend upon a variety of factors, including
the nature of the interest involved, the nature of the proceeding, and
the possible burden on that proceeding. Hannah v. Larche
(1960) 363 U.S. 420, 442
An
agency's interpretation of a statute or regulation is contextual, and
dependent on the presence or absence of factors that support the merit
of the interpretation. Yamaha Corp Of America v. State Bd.
Of Equalization (1998) 19 Cal.4th 1, 7
The DMV’s interpretation of §544(b) as allowing delegation of salvage
title decisions to insurance companies and making them conclusive without
exercising discretion in some manner or ensuring accountability abdicates
their constitutional duty to provide due process.
Neither
Esurance nor the DMV ever provided Moran with prior notice of the salvage
title claim, and he only became aware of it upon the DMV’s August
26, 2004 letter. (AA, 067) While Cal.Veh.Code §14101(a)
does not require the DMV to afford Moran an oral hearing, nothing in
§544(b) provides that the DMV “shall” or “must” accept an insurance
company’s salvage title claim at face value. Due process would
require that Moran be afforded notice and a “meaningful opportunity
to be heard”; a procedurally fair §544(b) salvage title process whereby
the DMV exercises discretion in some manner to properly determine if
his Vehicle was truly a salvage title before making the designation.
By analogy, if the DMV receives inaccurate or mistaken records, due
process requires an opportunity to be heard to challenge those inaccuracies.
Pollack v. Department of Motor Vehicles (1985) 38 Cal.3d 367, 380,
fn. 8 These policies prevent unfair, one-sided administrative
decisions.
“An unjust decision
may very likely be the result where no opportunity is given to those
affected to call attention to such mistakes. That is why it is
a fundamental principle of all adjudication, judicial and administrative
alike, that the mind of the decider should not be swayed by materials
which are not communicated to both parties and which they are not given
an opportunity to controvert.” Michael Asimow, Toward a New
California Administrative Procedure (1992) 39 UCLA L.Rev. 1067, 1112,
fn.150
Moran
never agreed that his Vehicle was a “total loss,” and Esurance tendered Moran
settlement of the claim without mentioning salvage titles or what adverse
ramifications it imposed on his Vehicle. (AA, 055:20-056:1)
However, Moran had no meaningful alternative but to accept the monetary
resolution from Esurance in order to effectuate his current crisis to
get his Vehicle repaired immediately. This “Hobson’s Choice”
was an adhesive contractual dilemma whereby Moran desperately needed his
Vehicle fixed and had no real bargaining power to negotiate with Esurance
to effectuate it. “[T]he relationship of insurer and insured is inherently
unbalanced; the adhesive nature of insurance contracts places the insurer
in a superior bargaining position.” Egan v. Mutual of Omaha Ins.
Co. (1979) 24 Cal.3d 809, 820 Thus, Moran reasonably
had to timely accept Esurance’s offer, find the parts and repair shops
on his own, and accept the loss of the use of his Vehicle to get it
repaired within the time constraints of the repair shops.
Esurance’s
claim that Moran’s vehicle was a “total loss” did not convey “salvage
title,” and Moran had no knowledge of the latter terms adverse ramifications.
Moran never agreed to Esurance’s salvage title claim to his Vehicle
because he never received any written notice of the report of the salvage
title prior to payment being made by Esurance as required by §11515.
(AA, 057:8-10) Moran also never received any written notice that
their decision to report his Vehicle as a salvage title may adversely
affect the future resale value as required by §2965.8(1)(A). (AA, 055:20-056:1)
The
DMV never verified if Esurance tendered settlement of the claim by obtaining
Moran’s agreement that the Vehicle was a salvage title as required by
§544(b)9 or advising him thereof, and provided him with written
notice of the adverse ramifications of the salvage title as required
under 2965.8(1)(A)10, both before notifying the DMV pursuant
to §11515. In fact, Esurance complied with neither of these requirements.
(AA, 055:20-056:1)
The
DMV’s negligence or deliberate indifference to Esurance’s violations
of these statutory requirements, and adopting upon their Salvage Notice
at face value was a gross failure to properly exercise discretion in
some manner. Morris v. Harper, supra, 94 Cal.App.4th
at 62-63
- The DMV’S §544(b)
Salvage Title Decision in Moran’s
To
be procedurally fair, the DMV must exercise discretion in some manner
and afford Moran a meaningful opportunity to be heard on Esurance’s
claims that his Vehicle was a salvage title as meeting the statutory
and common law requirements of a salvage title under §544(b); i.e.,
they must afford him a procedural fair §544(b) salvage title process
before refusing to exercise discretion in some manner and requiring
him to register his Vehicle as a salvage title with its scarlet letter
and adverse ramifications. People v. Superior Court
(1993) 18 Cal.App.4th 31, 35.
Moran
made his objections to the DMV’s §544(b) salvage title decision with
credible rebuttal evidence contradicting the claims of Esurance. (AA,
084-090) However, the DMV refused to exercise discretion in some
manner to determine the correctness of Esurance’s salvage title claims.
The DMV’s March 11, 2005 letter to Moran and responsive court pleadings
are indicative of their deliberate indifference and unwillingness to
afford fairness to vehicle owners, and lack of concern for having reliable
and accurate information to base the decision on. On the one hand, they
believe that the insurance company makes the “determination.” of
whether a vehicle is a “total loss” (AA, 091:¶1, 110:4-5); on the
other hand, the DMV agrees to allow a court to decide if Esurance erred
in claiming Moran’s Vehicle qualified as a salvage title and would
only then reverse the designation. (AA, 091:¶3)
This
advocacy by the DMV portrays the agency as an innocent bystander to
the §544(b) salvage title process whereby the “buck stops” everywhere
else for this vehicle registration issue delegated to them by the Legislature.
The DMV ostensibly argued that they owed Moran no due process of law
because they had a “mandatory duty” to accept Esurance’s uncorroborated
claims at face value without exercising discretion in some manner to
provide Moran notice and a meaningful opportunity to be heard in dispute
of those claims. (AA, 109:7-9) Nothing in the plain language
of §544(b) provides for this purported “mandatory duty”; rather,
the supreme law of constitutional due process principles pursuant to
Cal.Const.Art. I, §7 are mandatory and superceding of any statute.
Sands, supra, 53 Cal.3d at 902-903
The
DMV abused its discretion by failing to exercise discretion in some
manner before making a decision adversely effecting Moran’s property
interest in his Vehicle, and thus violated of constitutional procedural
due process principles. The DMV had authority to exercise discretion
in some manner, as California law provides that the DMV could
accept rebuttal evidence from vehicle owners where determinations are
disputed. Woosley v. State of California (1992) 3 Cal.4th
758, 786. One court has specifically held the DMV’s construence
of a statute unconstitutional by disallowing a party saddled with a
presumption to put on rebuttal evidence, and thus operated to convert
a rebuttable presumption into a conclusive one. See Hamilton
v. Gourley (2002) 103 Cal.App.4th 351, 362-363, [DMV’s
misconstruing Cal.Veh.Code §15300(a)(1) converted a rebuttable
presumption into a conclusive one, and thus “depriving Hamilton of
the most essential elements of procedural due process.”]
The
DMV had the constitutional duties to provide Moran with notice and opportunity
to be heard before designating his Vehicle to be a salvage title, and
to verify that all statutory requirements were satisfied. They
also had the authority to exercise discretion in some manner to decide
if the claims of Esurance were valid, and to follow the controlling
law interpreting §544(b), Martinez, supra, 19 Cal.App.4th
46, but failed to do so. The totality of the DMV’s failures
was a gross abuse of discretion that resulted in a process that was
procedurally unfair to Moran.
Thus,
Judge Lewis clearly erred in denying the Petition. The writ of
mandate should have issued for the as-applied constitutional violation
of due process requirements pursuant to Cal.Const.Art. I, §7 that control
§544(b).
3)
SECTION 544(b)
IS FACIALLY UNCONSTITUTIONAL
ON PROCEDURAL
DUE PROCESS GROUNDS PURSUANT
TO CAL.CONST.ART.
I, §7 BECAUSE THE LEGISLATURE
DID NOT PROVIDE
VEHICLE OWNERS WITH ANY VEHICLE
TO DISPUTE THE
DMV’S SALVAGE TITLE DECISIONS
OR A REMEDY
TO CORRECT ERRONEOUS ONES.
The
Constitution is a limitation or restriction on the powers of the Legislature.
Methodist Hosp. of Sacramento, supra, 5 Cal.3d at 691-692
A statute does not acquire immunity from judicial review of its constitutional
validity from the passage of time, as this would run afoul of the separation
of powers doctrine establishing the court's inherent power to review a
statute's constitutional validity. O'Connell, supra, 128
Cal.App.4th at 841-842, citing to Marbury v. Madison (1803)
5 U.S. (Cranch) 137, 176-180, [It is the role of the courts to interpret
the Constitution and say what the law is, and contrary expectations
from the legislative branch must be disappointed.]
To
support a determination of facial unconstitutionality, voiding the statute
as a whole, a petitioner must demonstrate that the act's provisions
inevitably pose a present total and fatal conflict with applicable constitutional
prohibitions. Tobe, supra, 9 Cal.4th at 1084 When
confronted with a facially unconstitutional statute, a reviewing court
has one of two alternatives. “If a statute is unconstitutional as applied,
the State may continue to enforce the statute in different circumstances
where it is not unconstitutional, but if a statute is unconstitutional
on its face, the State may not enforce the statute under any circumstances.”
United States v. Raines (1960) 362 U.S. 17, 21-22
- The Legislature’s
Silence on Procedural Remedies
A
statute that is want of procedural due process to a property interest
is unconstitutional. Bell v. Burson
(1971) 402 U.S. 535, 539 A litigant's nonfrivolous assertion
of a procedural right may not be chilled through fear of subsequent
reprisals in the form of monetary penalties. In Re Marriage
of Flaherty (1982) 31 Cal.3d 637, 650 The registration
of a vehicle as a salvage title pursuant to §544(b) requires a separate
determination that invokes a vehicle owner’s property interest because
of the adverse diminution of value to the vehicle by up to 50%, and
additional mechanical testing costs and fees to the State. (AA,
005:¶11-6, 067) Due process principles require reasonable
notice and opportunity to be heard before governmental deprivation of
a significant property interest. Horn v. County of Ventura
(1979) 24 Cal.3d 605, 612.
A statute's constitutionality on procedural due process grounds is especially
imperative when there is no standard at all providing an administrative
agency with procedural guidance. “Procedural due process rules are
shaped by the risk of error inherent in the truth-finding process as
applied to the generality of cases, not the rare exceptions...Retrospective
case-by-case review cannot preserve fundamental fairness when a class
of proceedings is governed by a constitutionally defective evidentiary
standard.” Santosky v. Kramer (1982) 455 U.S. 745, 757, citations
omitted This includes a statute such as §544(b) that affects
a property interest and does not permit an administrative hearing.
Bryte v. City of La Mesa (1989) 207 Cal.App.3d 687, 690-691,
overruled on other grounds by amendment to Cal.Wel. & Inst.Code
§8102, as noted in People v. One Ruger.22 Pistol
(2000) 84 Cal.App.4th 310, 313-314.
As
an example of the Legislature providing procedural due process in the
vehicle registration fees, Cal.Veh.Code §8202 specifically provides
for notice to vehicle owners to dispute additional registration fees
or lien on registration, and a meaningful opportunity to be heard through
the submission of additional documentation and a hearing. Id.
at (a),(b) American President Lines, Ltd., supra,
38 Cal.App.4th at 919. In contrast, §544(b)
does not have any such provisions for providing procedural due process
for vehicle owners to challenge the claims of insurance companies that
their vehicles are a “total loss” or “uneconomical to repair,”
or the DMV’s adoption of them at face value; all before imposing a
salvage title. This is not consistent within the clear and unambiguous
language of Cal.Const.Art. I, §7(a), that “a person may not be deprived
of life, liberty, or property without due process of law.” Lungren
v. Deukmejian (1988) 45 Cal.3d 727, 735.
The
Legislature’s failure to provide the DMV with any guidance for validating
§544(b) salvage title claims is itself want of procedural due process.
“[L]egislative guidance by way of policy and primary standards is
not enough if the Legislature 'fail(s) to establish an effective mechanism
to assure the proper implementation of its policy decisions.”
Kugler, supra, 69 Cal.2d at 376-377 In addition, the Legislature's
failure to provide procedural safeguards to ensure accountability and provide
fairness to vehicle owners on §544(b) salvage title decisions renders
it constitutionally invalid. “The need is usually not for standards
but for safeguards...When statutes delegate power with inadequate protection
against unfairness or favoritism, and when such protection can easily
be provided, the reviewing courts may well either insist upon such protection
or invalidate the legislation.” Id. at 381
The
Legislature's failure to include any provisions allowing a meaningful
inquiry into the validity of the §544(b) salvage title claims made by insurance
company renders the statute to be unconstitutional on procedural due
process grounds. See Gonzales v. Fox (1977) 68 Cal.App.3d.Supp.
16, 18-19.
Thus,
on its face, §544(b) is unconstitutional on due process grounds as
it does not specifically provide for vehicle owners with any meaningful
opportunity to be heard in disputed of salvage title claims before imposing
a salvage title and its adverse ramifications.
- In Lieu of Abrogation
on Constitutional Due Process
It
is the duty of the courts to interpret statutes so as to make them workable
and reasonable. Regents of University Of California v. Superior Court
(Karst) (1970) 3 Cal.3d 529, 536-537 “It is settled that the ‘law’
of this state includes the common law as well as the Constitution and
the codes...The code establishes the law of this state respecting the
subjects to which it relates'; but this ... does not mean that there
is no law with respect to such subjects except that embodied in the
code...[W]here the code is silent, the common law governs.”
Code Civ.Proc. §§1895, 1899, Rojo v. Kliger (1990) 52 Cal.3d
65,74
In
lieu of abrogation on constitutional grounds, this Court should develop
a rule for all California vehicle owners providing procedural due process
in §544(b) salvage title decisions, as it has such common law powers
to enforce constitutional procedural due process rights and remedy injustice.
Properly, this Court should analogize Cal.Veh.Code §8202 to structure
a common law rule resolving the specific issue at bar because it covers
the same general subject matter. Roger J. Traynor, Statutes
Revolving in Common-Law Orbits (l968) 17 Cath.U.L.Rev. 401, 405-26
4)
MORAN’S VEHICLE
DID NOT QUALIFY AS A SALVAGE TITLE UNDER THE UNDISPUTED FACTS AND
CONTROLLING CALIFORNIA LAW.
Moran
never agreed to the total loss conclusion of Esurance, either verbally
or in writing. Esurance never discussed this specific issue with
Moran, and he was never made aware of the adverse consequences of a
salvage loss title by Esurance before a check was mailed and cashed.
(AA, 055:20-056:1) Moran’s Vehicle was not uneconomical to repair
as Esurance adopted on an embellishment of the actual costs of repair
without seeking or allowing Moran any second opinions. (AA, 055:14-20)
Moran first learned of the salvage title when he received a letter from
the DMV’s in August 2004, and acted diligently. (AA, 067)
The
DMV argued that it would be an “impossible burden” to provide vehicle
owner’s disputing salvage title claims with procedural due process,
but provided no statistical evidence to corroborate this claim.
(AA, 110:7-15)
- Moran’s Unchallenged
Facts and the DMV’s Waiver
The
DMV never challenged Moran’s facts, and failed to support their “burdensome”
claims with supporting statistical evidence. Because the DMV failed
to challenge Moran’s facts, and never produced any statistical research
to support their claim that they would be unduly burdened to provide
due process to vehicle owners disputing §544(b) salvage title decisions,
they have waived these issues on appeal. “[I]ssues not raised
in the trial court are waived.” Woodbridge Escondido Property
Owners Ass’n v. Nielsen (2005) 130 Cal.App.4th
559, 574. See also Tobe, supra, 9 Cal.4th
at 1172, [City's failure to proffer rebuttal evidence to petitioner's
factual claims results in waiver of facts presented in petition.]
Moreover,
the DMV’s “impossible burden” claim is untenable. A statute
that is want of procedural due process cannot be saved by a government
claim of an incidental effect of conserving public resources.
California Teachers Ass’n v. State of California (1999)
20 Cal.4th 327, 346. However, even absent a waiver
on this claim, the DMV regularly monitors vehicle values when determining
registration fees. Cal.Rev. & Tax.Code §10753 provides that
the DMV “shall determine the market value of the vehicle.”
Moran's registration fees for his Vehicle were based upon its fair market
value “as determined by the Department.” Cal.Rev. & Tax.Code
§10752 This establishes that the DMV does regularly determine
vehicle values in the performance of its duties, but it refuses to do
so in §544(b) salvage titles. (AA, 002)
It
is thus undisputed that the total costs of the repairs to Moran’s
Vehicle were almost $3,000 less that its objective pre-collision value,
and providing vehicle owners disputing §544(b) salvage title claims
with procedural due process is not an “impossible burden.”
The DMV’s waivers and the undisputed facts absolutely precludes Moran's
vehicle from qualifying as salvage title under §544(b).
- Under the Undisputed
Facts and California Law pursuant
to
Cal.Veh.Code §4453(b)(1), §544 and Martinez, Moran’s
Under
controlling California law, Moran’s Vehicle does not meet the qualifications
of a salvage title. Within California’s registration statutes,
Cal.Veh.Code §4453(b)(1) defines a total loss salvage vehicle as one
where “the cost of repairs exceeds the retail value of the vehicle.”
As
mentioned supra, the only case to interpret §544(b) is Martinez, 119
Cal.App.4th 46. Section 544(b) does not define “total loss salvage,”
but only addresses the term “uneconomical to repair.” As the
Martinez court held, the common law definition of a vehicle’s
“total loss” is consistent with Cal.Veh.Code §4453(b)(1), where
the total cost of the repairs exceed the vehicle’s pre-collision fair
market value.” Id. at 54 Further, “to qualify
as a ‘total loss salvage vehicle,’ the vehicle must be damaged to
the extent that “the owner...considers it
uneconomical to repair...” Id. at 54 Moran considered
his Vehicle economical to repair and proved this by having the repairs
performed for nearly $3,000 less than its objective Kelley Blue Book
pre-collision value. (AA, 058:10-12)
However,
the other piece of this analysis, the pre-collision fair market value,
must be based upon an objective standard from widely accepted
sources such as Kelley Blue Book. Id. at 56 “Thus,
it would be up to the owner to determine what the pre-damage ‘book’
value of the vehicle was and to obtain repair estimates…section 544
requires that ‘total loss salvage vehicle’ status be objectively
determined. Otherwise, the label is meaningless.” Id.
at 54-55
There
is no broad constitutional rule that the members of an administrative
agency may not investigate the facts, institute proceedings, and then
make the necessary adjudications. Winthrow v. Larkin (1975) 421
U.S. 35, 53 Also, the DMV was not precluded by Cal.Const.Art.3,
§2.5 from applying the holdings from Martinez. Thus, an
administrative agency remains free to interpret the existing
law in the course of discharging its statutory duties. Goldin v.
Public Util. Comm'n (1979) 23 Cal.3d 639, 669 fn. 18.
The
DMV failed to apply Cal.Veh.Code §4453(b)(1) and the holding in
Martinez. The DMV also failed to exercise proper discretion
and adopted upon Esurance’s claims that the pre-collision fair market
value of Moran’s Vehicle was just over $4,900 by using their own
subjective standard. Esurance has refused to provide a copy
of this document to Moran. (AA, 055:10-15) Esurance estimated
the complete repairs at $6,627.33. The objective Kelley Blue Book
pre-damage retail value of Moran’s Vehicle was $6,490. (AA, 058:10-12,
092 ) After several weeks of rental cars, two body shops
and multiple individual parts purchases, the total cost to repair Moran’s
Vehicle was $3,539.45. This is $3,087.88 less than Esurance estimated
claims to repair Moran’s Vehicle. Most importantly, the total
cost of the repairs of Moran’s Vehicle was $2,950.55 less than the
objective Kelley Blue Book pre-collision value. (AA, 058:10-12,
092)
Thus,
Moran’s Vehicle was not subject to a salvage title under §544(b)
because it does not meet the statutory or common law definitions of
“total loss,” the “uneconomical to repair” decision was not
made from Moran’s subjective viewpoint, and the objective Kelley Blue
Book standard was not used to determine its pre-collision fair market
value.
VIII.
CONCLUSION
Based
upon the foregoing, Judge Lewis clearly erred in denying the Petition
because: (a) the DMV abused its discretion in violation of Cal.Const
Art. I, §7 in both the developing of a §544(b) salvage title policy
of delegation to insurance company and adoption on them at face value
and their nonadjudicatory decision in Moran’s case; (b) Section
544(b) is unconstitutional for want of procedural due process; and (c)
Moran’s Vehicle is not subject to a salvage title.
This Court should reverse the denial of the Petition and remand with
orders that it be granted, create a rule of law for California vehicle
owners to challenge disputed §544(b) salvage title claims, and abrogate
this statute as unconstitutional on procedural due process grounds pursuant
to Cal.Const.Art.I, §7.
WORD COUNT
DECLARATION
I certify that this brief contains
11,626 words as calculated on Word Count on Microsoft Word.
Dated this 22nd Day of September,
2005
