California Supreme Court Watch

Mar 17, 2021
Davis v. Fresno Unified School Dist., S266344.

#21-128 Davis v. Fresno Unified School Dist., S266344. (F079811; 57 Cal.App.5th 911; Fresno County Superior Court; 12CECG03718.) Petition for review after the Court of Appeal reversed the judgment in a civil action. The court limited review to the following issue: Is a lease-leaseback arrangement in which construction is financed through bond proceeds, rather than by or through the builder, a “contract” within the meaning of Government Code section 53511?

Petition for review granted: 3/17/2021

Opinion filed; judgment affirmed in full: 4/27/2023

See the Court of Appeal Modified Opinion.

See the Court of Appeal Opinion.

See the Harris Petition for Review.

See the Fresno Unified School District Petition for Review.

See the Oral Argument.

In the news:  Morano, California Supreme Court rules Fresno Unified’s contract illegal. Will it get $36 million back?, The Fresno Bee (May 1, 2023).

See the California Supreme Court Opinion.  (Davis v. Fresno Unified School Dist. (2023) 14 Cal.5th 671.)

“[W]e granted review to address a single question: ‘Is a lease-leaseback arrangement in which construction is financed through bond proceeds rather than by or through the builder a ‘contract’ within the meaning of Government Code section 53511?’ We conclude that the specific lease-leaseback arrangement at issue here is not a ‘contract[]’ within the meaning of Government Code section 53511 (section 53511). A local agency contract is subject to validation under section 53511 if it is inextricably bound up with government indebtedness or with debt financing guaranteed by the agency. To satisfy this standard, the contract must be one on which the debt financing of the project directly depends. The lease-leaseback arrangement at issue here does not satisfy this standard because the underlying project was fully funded by a prior sale of general obligation bonds, and payment of the debt service on the bonds was from ad valorem property taxes. Therefore, payment did not depend on the lease-leaseback arrangement or even on completion of the project. In light of this conclusion, we affirm the judgment of the Court of Appeal.”

Justice Jenkins authored the opinion of the Court, in which Chief Justice Guerrero and Justices Corrigan, Liu, Kruger, Groban, and Evans concurred.