Justia California Court of Appeals Opinion Summaries

Articles Posted in Tax Law
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The Albion Little River Fire Protection District, organized under Health and Safety Code 13800, lies within a state responsibility area. MRC, a commercial timberland operator, owns 8,269.54 acres of commercial timberland within the District’s geographical boundaries. In 2014, the District adopted an ordinance that levied a special parcel tax, at the rate of $75 per unit, for fire protection, suppression, prevention, and related services. In a special election, 82 percent of District voters approved that ordinance. MRC has paid all taxes owed under the ordinance, under protest, and filed unsuccessful claims with Mendocino County seeking refunds. MRC filed complaints, citing Revenue and Taxation Code sections 5096 and 5097, alleging that the MRC parcels “were not included in the District because they were commercial forest lands and timbered lands declared to be in a state responsibility area within the meaning of [section] 13811.” The trial court agreed and found that MRC was owed $60,870.08, with interest. The court of appeal affirmed, rejecting an argument that the refund claims were barred because they challenged the validity of the ordinance which was validated and immune from review by the time MRC filed its complaint. The action did not challenge the validity of the ordinance, but only its applicability to particular parcels. View "Mendocino Redwood Co., LLC v. County of Mendocino" on Justia Law

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Defendant County of Placer sold plaintiff Patrick Hodges’s real property at a tax sale. The County later paid plaintiff the excess proceeds remaining from the sale less payments made to others. Plaintiff contended the County, its board of supervisors, and its treasurer breached a fiduciary duty they owed him, and converted his personal property, when they did not audit a payment made from the proceeds to others and did not pay him interest or earnings on its investment of the proceeds while it held them in trust. The trial court sustained the County’s demurrer to plaintiff’s second amended complaint without leave to amend and entered a judgment of dismissal. The trial court determined plaintiff could not state a claim for breach of a fiduciary relationship because no such relationship existed between him and the County. Even if a fiduciary relationship existed, plaintiff did not allege any breach or any damages arising from a breach. The court also found plaintiff could not state a claim for conversion. He did not allege the County committed a wrongful act in withholding the excess proceeds or that it interfered with his possession of the proceeds. After the Court of Appeal concurred with the trial court and affirmed its judgment. View "Hodges v. County of Placer" on Justia Law

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In the November 2014 election, a majority of the City of Rialto’s (the City) voters approved Measure U, a ballot measure adopted by the City which imposed an “annual business license tax” of “up to One Dollar [($1.00)] per year for each One (1) cubic foot of liquid storage capacity” on “[a]ny person engaged in the business of owning[,] operating, leasing, supplying[,] or providing a wholesale liquid fuel storage facility” in the City. The four plaintiffs-appellants in these actions, Tesoro Logistic Operations, LLC (Tesoro), Equilon Enterprises, LLC (Equilon), SFPP, L.P. (SFPP), and Phillips 66 Company (P66), owned all of the wholesale liquid fuel storage facilities, also known as tank farms or terminals, in the City. Plaintiffs were engaged in the business of “refining and marketing fuel nationwide.” Gasoline and other fuels were transported from refineries to plaintiffs’ facilities in the City, where the fuels were placed in large storage tanks and mixed with additives before they were are transported to gasoline stations or other purchasers for retail sale. Beginning in 2015, the City assessed Measure U taxes on plaintiffs based on the liquid fuel storage capacity of plaintiffs’ wholesale liquid fuel storage tanks in the City. Plaintiffs paid the taxes under protest and filed these actions challenging Measure U’s validity on statutory and constitutional grounds. Plaintiffs moved for judgments on the pleadings, and for summary judgment or summary adjudication, then the City filed its own motions for judgments on the pleadings. Following a hearing, the trial court concluded there were no disputed issues of fact, that all of the motions presented the same questions of law, and that the Measure U tax was a valid business license tax. The court thus denied plaintiffs’ motions, granted the City’s motions, and entered judgments in favor of the City. In these appeals, plaintiffs renewed their legal challenges to Measure U. After review, the Court of Appeal concluded the Measure U tax was an invalid real property tax. Thus, the Court reversed judgments in favor of the City, and remanded to the trial court with directions to grant plaintiffs’ motions for judgments on the pleadings and to enter judgments in favor of plaintiffs on plaintiffs’ complaints. View "Tesoro Logistic Operations, LLC v. City of Rialto" on Justia Law

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Taxpayers filed suit alleging that their dividends derived from interest on government bonds were unconstitutionally taxed. The Court of Appeal held that Article XIII of the California Constitution exempts interest on state and local bonds from personal taxable income. However, Article XIII is silent on exempt interest dividends paid to shareholders. Therefore, based on its plain language, the court held that there was no conflict between the constitutional exemption and California Revenue and Taxation Code section 17145, which purports to tax interest income on bonds exempted from taxation under Article XIII. Furthermore, the court held that Brown v. Franchise Tax Bd.'s suggestion that distributions to a shareholder made by a regulated investment company retain their tax-exempt status as interest was inapplicable here. View "Mass v. Franchise Tax Board" on Justia Law

Posted in: Tax Law
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The Mitigation Fee Act, Government Code 66000-66003, requires local agencies seeking to impose fees on private developers as a condition of approval of a development, to determine how there is a “reasonable relationship” between the type of development project, the fee’s use, and the need for the public facilities. The developer of a 100-unit agricultural employee housing complex in Monterey County’s Salinas Union High School District designed the project to accommodate 200-800 seasonal farmworker employees in dormitory-like apartments during the growing season. The project description stated that it was designed for “agricultural employees only, without dependents.” A report prepared for the county board of supervisors found that the project would “not have an adverse impact on schools.” The board approved the project, adopted a mitigated negative declaration under CEQA, and approved a combined permit, subject to conditions, which described the development for “agricultural employees only without dependents.” When the developer applied for project approval, the District adopted an impact fee on new residential construction of $3 per square foot. The court of appeal reversed the trial court, finding that the statutes do not require a school district to separately analyze the impact of a unique subtype of residential construction not contemplated in the statute. To hold otherwise would disrupt the school district’s quasi-legislative authority to impose prospective, district-wide fees based upon development type. View "Tanimura & Antle Fresh Foods v. Salinas Union High School District" on Justia Law

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The San Mateo County Assessor assessed Silverado’s assisted living facility’s fair market value for property tax purposes at $26.4 million for the October 2011 base year value assessment and the 2012/2013 regular assessment. Silverado appealed. The County Assessment Appeals Board found that the income approach analysis was appropriate for determining the fair market value based on the present value of the property’s expected future income stream. The trial court found that the Board appropriately used an income approach analysis but agreed with Silverado that the analysis did not adequately make “all necessary deductions” to remove the value of intangible assets that Silverado claimed had been impermissibly subsumed in the assessment value. The court remanded for the “narrow purpose” of allowing the Board to clarify its valuation using an income approach analysis, based on the evidence that had been admitted at the administrative hearings. Silverado sought attorney fees under Revenue and Taxation Code 1611.6 and 5152. The court of appeal affirmed the denial of the motion. Because the Board’s resolution of Silverado’s appeals was neither arbitrary nor capricious, nor caused by a legal position taken in bad faith, no award is warranted under section 1611.6. With respect to section 5152, there was no basis for finding that a tax law or regulation was unconstitutional or invalid. View "SSL Landlord, LLC v. County of San Mateo" on Justia Law

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Revenue and Taxation Code section 69.5, implementing 1986’s Proposition 60, allows qualified homeowners over 55 years of age to transfer the property tax basis of their principal residence to a replacement dwelling of equal or lesser value in the same county, Cal. Const., art. XIII A 2(a). San Mateo County determined that plaintiffs, who are otherwise qualified under the statute, were not entitled to transfer the property tax basis from their original home to a newly constructed replacement home because they formed a limited liability company (LLC) to purchase the land on which they installed the manufactured replacement home that they purchased. Plaintiffs sued; the trial court granted the county summary judgment. The court of appeal reversed. The plaintiffs, rather than the LLC, constructed the replacement home. They sold their original property and constructed a replacement property which, at the time of their claim, they owned and occupied as their primary residence. They are precisely the persons for whom the statute was intended to provide property tax relief. The fact that, to satisfy a bank requirement, they made temporary use of an LLC before taking title to their replacement property provides no justification under the terms of the statute or in logic or fairness for denying them relief. View "Wright v. County of San Mateo" on Justia Law

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DFS is in the business of duty-free sales at airports and holds an exclusive lease and concession to sell merchandise duty-free in the San Francisco International Airport (SFO) international terminal. AN extension of DFS’s lease agreement triggered a reassessment; the Assessor valued DFS’s possessory interest in the leased properties using the income approach. The parties disputed the income stream used by the Assessor in applying that methodology, which was the full amount of the Minimum Annual Guaranteed rent (MAG). For 2011 this was $26.4 million. Capitalizing that entire amount, and after deducting certain expenses and applying a discount factor, the Assessor arrived at a present value for the possessory interest of $59 million. DFS challenged the assessment under Revenue and Taxation Code provisions that bar the taxation of intangible rights. Section 110(d)(3) expressly exempts from taxation the exclusive right to operate a concession. DFS argued that the MAG was consideration not only for its taxable use and occupancy of space but also for the valuable but non-taxable exclusive concession rights it obtained under the agreement to sell merchandise on a duty-free basis. The court of appeal agreed and reversed. Exclusivity is essential to the business and DFS was willing to pay extra money for it and would have no interest in being at SFO without it. View "DFS Group, L.P. v. County of San Mateo" on Justia Law

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The Court of Appeal affirmed the trial court's grant of the District's motion for judgment on the pleadings in an action seeking to invalidate a voter-approved special property tax imposed by the District. Public Resources Code section 5566 requires that collected tax money be spent on parks and recreation land and facilities. The court held that section 5566 was not ambiguous and did not read the statute to require a uniform effect or outcome, but rather uniform application. The court held that the District's Measure A special tax satisfied section 5566's uniformity requirement. Finally, the district court did not abuse its discretion by denying leave to amend the complaint. View "Dondlinger v. L.A. County Regional Park and Open Space District" on Justia Law

Posted in: Tax Law
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After the County refunded taxes Harmony overpaid beginning in the year Harmony first challenged the erroneous base value, Harmony sought to recover tax overpayments for those prior years. The Court of Appeal affirmed the trial court's decision to sustain a demurrer without leave to amend and to dismiss the complaint. The court held that Taxation Code section 80 barred Harmony's tax refund claim, and section 80's prospective assessment limit barred refund of the pre-2011 taxes Harmony's complaint sought to recover. The court also held that the prospective assessment limit in section 80, subdivision (a)(5) is constitutional and bars the tax refund claim alleged in Harmony's complaint. Furthermore, the trial court did not abuse its discretion by denying Harmony's request for leave to amend, and the court rejected Harmony's declaratory relief and writ requests. View "Harmony Gold U.S.A., Inc. v. County of Los Angeles" on Justia Law

Posted in: Tax Law