Justia California Court of Appeals Opinion Summaries

In 2009, 731 Market leased the ground floor of its commercial building to CVS for a term of 45 years. Once the lease was recorded with the City and County of San Francisco, a “Real Property Transfer Tax” was paid under the San Francisco Business and Tax Regulations Code, based on the value of the stream of rental payments due over the lease’s life. In 2015, 731 Market sold the building, which included the CVS lease. All terms of the original lease remained unchanged with a remaining term of more than 35 years. 731 Market paid a documentary transfer tax, then unsuccessfully sought a refund of the amount of tax it paid based on the value of the remaining stream of payments due over CVS’s lease.The trial court and court of appeal agreed with 731 Market that the 2015 transaction did not trigger the tax as to the leasehold interest because the transaction did not result in any “realty sold” under the ordinance. San Francisco impermissibly collected a “double tax” on the property. View "731 Market Street Owner, LLC v. City and County of San Francisco" on Justia Law

A taxpayer cannot avoid Article XIII, section 32 of the California Constitution's "pay first" rule by alleging, in a claim for declaratory relief invoking Government Code section 11350, that the tax regulation giving rise to his unpaid tax assessment is invalid.The Court of Appeal held that this is the result dictated by the canons of statutory construction; the purpose underlying section 11350 does not justify exempting declaratory relief otherwise subject to section 32's "pay first" rule from its auspices; and the California Supreme Court has already strongly suggested that section 11350 must not be read as an exemption from section 32's "pay first" rule. To the extent language in Pacific Motor Transport Co. v. State Bd. of Equalization (1972) 28 Cal.App.3d 230 can be read to suggest a contrary answer, the court respectfully disagreed with Pacific Motor. Accordingly, the court granted the writ petition challenging the trial court's order overruling the demurrer in this case, and directed the trial court to enter a new and different order sustaining the demurrer without leave to amend. View "California Department of Tax and Fee Administration v. Superior Court" on Justia Law

Inmates in county jails in nine California counties challenged the exorbitant commissions paid by telecommunications companies to the nine counties under contracts giving the telecommunications companies the exclusive right to provide telephone service for the inmates. The inmates contend that the fees are unlawful taxes under Proposition 26.The Court of Appeal affirmed the trial court's decision sustaining a demurrer by the counties without leave to amend, because the inmates do not have standing to contend the commissions are an unconstitutional tax. The court explained that no precedents support the inmates' claim that a consumer who pays charges to a third party vendor—including one that has inflated its prices to recover the cost of a tax it pays to a local government—has standing to seek a refund of those charges from the taxing authority. Finally, the court rejected the inmates' claims under Government Code section 11135 and the Bane Act. View "County Inmate Telephone Service Cases" on Justia Law

Oakland requested proposals for franchise contracts regarding garbage and residential recycling services. Following a lawsuit, a settlement provided that WMAC would receive garbage and mixed materials and organics contracts; CWS would receive the residential recycling contract. WMAC and CWS agreed to pay franchise fees to the city, which redesignated part of WMAC’s franchise fee as a fee to compensate the city for the cost of implementing the Alameda County Waste Management Plan, under Public Resource Code 41901. Plaintiffs challenged the fees as improperly imposed taxes under the California Constitution, article XIIIC.The court of appeal affirmed the dismissal of claims concerning the Redesignated Fee as not ripe for adjudication but reversed dismissal as to the franchise fees. A franchise fee, arguably subject to an article XIIIC, section 1(e) exemption, must still be reasonably related to the value of the franchise to be exempt from the “tax” definition. The court cited Proposition 26: To qualify as a nontax ‘fee’ under article XIII C, as amended, a charge must satisfy both the requirement that it be fixed in an amount that is ‘no more than necessary to cover the reasonable costs of the governmental activity,’ and the requirement that ‘the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. View "Zolly v. City of Oakland" on Justia Law

Plaintiffs filed suit against the Assessor and others, seeking a refund of property taxes and special assessments, and for declaratory relief. The Court of Appeal found no support in statutory or case law for plaintiffs' claim that a nonprofit charter school should be treated as a public school district for purposes of applying the implied exemption, which plaintiffs contend exempts public schools from having to pay both taxes and special assessments.The court explained that the Legislature has specified precisely how, and to what extent, and under which statutory provisions charter schools are deemed to be part of the system of public schools, or deemed to be a school district. Notably absent is any suggestion that charters schools are to be treated like school districts for taxation purposes. The court rejected plaintiffs' claims to the contrary. View "Los Angeles Leadership Academy, Inc. v. Prang" on Justia Law

HGST bought manufacturing fixtures, machinery, and equipment for $2.4 billion in 2002. The Santa Clara County Assessor annually imposed escape assessments (corrections to assessed value on the local property tax roll) on the property, 2003-2008. HGST challenged the assessor’s findings. The Assessment Appeals Board (AAB) issued findings in 2012 largely adopting the assessor’s findings. HGST filed an unsuccessful claim for a refund of $15 million with the Board of Supervisors. In 2014, HGST filed suit, seeking a refund. The court ruled in favor of the county.The court of appeal affirmed in part, rejecting arguments that the trial court: erred by reviewing the entire case in blanket fashion under a substantial evidence standard rather than examining each individual claim to determine which standard of review should apply; erroneously failed to review certain legal challenges to the valuation methodology applied by the AAB; and erred by upholding the AAB’s decision not to apply the “purchase price presumption” set forth in Revenue and Taxation Code section 110. The court reversed in part. The trial court erred by upholding the imposition of interest on the escape assessments under section 531.4; it made no findings on what portion of the property was reported accurately or to what extent the escape assessments were caused by HGST’s purported failure to report the property accurately. View "HGST, Inc. v. County of Santa Clara" on Justia Law

At issue before the Court of Appeal was whether Riverside County, California could impose a tax on possessory interests in federally owned land set aside for the Agua Caliente Band of Cahuilla Indians or its members. In 1971, Court held that it could, holding in part that federal law did not preempt the tax. The tax was also upheld that year by the Ninth Circuit. Since then, the United States Supreme Court articulated a new preemption framework in considering whether states may tax Indian interests, and the Department of the Interior promulgated new Indian leasing regulations, the preamble of which stated that state taxation was precluded. Nevertheless, the Court of Appeal concluded, as it did in 1971, this possessory interest tax was valid. View "Herpel v. County of Riverside" on Justia Law

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

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

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