City of King City v. Community Bank of Central

Officials of the City of King City (City) deposited some $4.4 million of funds under their control into the Community Bank of Central California (Bank), and then pledged the funds to the bank as collateral for a loan to a developer engaged in a redevelopment project under the supervision of the local redevelopment agency, Community Development Agency (Agency). The developer apparently defaulted on the loan, and Bank refused to return the funds to City, which then brought this action for a writ of mandate compelling Bank to do so. City alleged that the deposit consisted of “City general fund monies” and that the pledge was void for the reason, among others, that it “could not be, and was not, authorized” by the City Council (Council) or the City Agency Board (Board). Bank sought a continuance to permit discovery into the circumstances surrounding certain actions by the Council, the Board, or both, which, in Bank’s view, conferred authority on the mayor to make the pledge. Bank also sought to inquire into the origin of the deposited money, asserting that it may have come from Agency funds and not, as City alleged, City funds. The trial court denied the request for a delay…