TO: Board of Supervisors
FROM: Sheryl L. Bratton, County Counsel
REPORT BY: Thomas C. Zeleny, Chief Deputy
SUBJECT: Amendment No. 1 to Agreement No. 240267B with Colantuono, Highsmith & Whatley, P.C., for legal services in Pacific Bell Telephone et al. v. County of Napa.
RECOMMENDATION
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Approve and authorize Amendment No. 1 to Agreement No. 240267B with the law firm of Colantuono, Highsmith & Whatley, P.C., for continued legal services and representation at the Court of Appeal in Pacific Bell Telephone et al. v. County of Napa. (Fiscal Impact: $60,000 expense; General Fund; County Counsel; Not Budgeted; Discretionary)
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BACKGROUND
Various telecommunications companies (“companies”) filed lawsuits in Napa County Superior Court alleging that the County improperly rejected their claims for partial refunds of property taxes for fiscal years 2014-2015 through 2022-2023. The companies have filed similar claims in counties across California, based on their legal theory that the unitary tax rate used to calculate the tax on their properties violates the California Constitution. The companies acknowledge the County is following State law. They complain that State law violates the California Constitution. The companies’ claims were litigated in Santa Clara County, resulting in a published appellate court decision sustaining that county’s demurrer and denying the companies’ claims for refunds.
Napa County entered into a series of tolling agreements with the companies, which dismissed three cases without prejudice and tolled other refund claims prior to filing litigation. The total amount of refund claims filed with Napa County that are currently tolled is $3,159,514.10 and will continue to grow with each tax year.
Napa County and the companies are litigating additional refund claims in case number 23CV001211, where they seek a combined $945,015.13 in refunds plus interest. The parties entered into a stipulated judgment in Napa County’s favor because the trial court was bound to follow the published decision in the Santa Clara County case. The companies appealed the stipulated judgement, arguing the Santa Clara County case was wrongly decided and the First District Court of Appeal should rule differently. They filed similar appeals against other counties in every appellate district in California, seeking the same type of refunds. Napa County recently filed its appellate brief in the case. Oral argument will likely be scheduled for later this calendar year.
On January 11, 2024, the County hired Colantuono, Highsmith & Whatley to defend the County in the litigation. The level of effort needed to defend the County in the litigation has increased significantly. Various taxpayer associations are likely to file legal briefs in support of the companies as they have in other appellate districts, to which the County must respond. The original contract was for $80,000. This amendment will increase the maximum compensation by $60,000 and adjust the law firm’s hourly rates for calendar year 2025, as provided for in the Agreement, increasing by $10 to $15 per hour depending on the position. If a budget adjustment is necessary, it will be requested as part of the mid-year budget adjustment for County Counsel.
Requested Action: Approve and authorize Amendment No. 1 to Agreement No. 240267B with the law firm of Colantuono, Highsmith & Whatley, P.C.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Where is it budgeted? |
County Counsel |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
The nature of this litigation is complicated, and Colantuono’s firm is recognized statewide as having exceptional legal expertise with fees, charges, taxes and finance. |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
None. |
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Consequences if not approved: |
County Counsel will defend the litigation with existing staff. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by CEQA Guidelines section 15378 because the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment.