Opinion
A144104
12-08-2017
CP III RINCON TOWERS, INC., Plaintiff and Respondent, v. ASSESSMENT APPEALS BOARD OF THE CITY AND COUNTY OF SAN FRANCISCO, Defendant and Appellant; RINCON EV REALTY LLC et al., Real Parties in Interest and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco City & County Super. Ct. No. CPF14513493)
Rincon EV Realty LLC and Rincon ET Realty LLC (collectively, Rincon), along with a third entity, purchased a San Francisco apartment complex (the Property) in 2007, financing the purchase in part with a $110 million loan. In October 2010, after changes in the ownership of the loan, CP III Rincon Towers, Inc. (CP III) purchased the Property at a nonjudicial foreclosure sale. Between February 2009 and September 2010 (i.e., prior to the foreclosure sale), Rincon filed four applications with the Assessment Appeals Board of the City and County of San Francisco (the Board), challenging certain assessments of the Property. Beginning in 2011, CP III sought to be substituted as the applicant in connection with the four assessment appeals. The Board denied CP III's request, but ruled it could participate with Rincon in one of the assessment appeals.
The background of this transaction and other litigation related to the Property is set forth in this court's opinion in Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (2017) 8 Cal.App.5th 1, 5-7 (Rincon I).
CP III filed a writ petition in the trial court, which granted the requested relief, ruling the Board had a duty to permit CP III to participate along with Rincon in all four assessment appeals. Rincon and the Board both appealed, challenging different aspects of the court's order. CP III argues the challenged order is not appealable and is correct in any event. We conclude the order is appealable. On the merits, we conclude the Board's decision not to permit CP III to participate in the three remaining assessment appeals was based on a reasonable interpretation of the governing statutory and regulatory provisions. We defer to that interpretation, and we therefore reverse the trial court's order directing the Board to allow CP III to participate.
I. BACKGROUND
A. The Property and the Related Litigation Between the Parties
In June 2007, Rincon purchased the Property for approximately $143 million, financing the purchase in part with a $110 million loan. (See Rincon I, supra, 8 Cal.App.5th at p. 5.) CP III acquired the loan in April 2010, commenced nonjudicial foreclosure proceedings in June 2010, and purchased the Property at a nonjudicial foreclosure sale in October 2010. (See id. at pp. 6-7.)
Rincon sued CP III and other entities who were involved in administering the loan, unsuccessful workout negotiations, and the eventual foreclosure sale. (See Rincon I, supra, 8 Cal.App.5th at pp. 5, 7.) In April 2013, after a bench trial, the trial court (Hon. Marla J. Miller) entered judgment for the defendants on all of Rincon's causes of action, including legal claims (breach of contract, fraud, slander of title, trade secret misappropriation) and equitable claims (unfair competition, to set aside the foreclosure sale, and for an accounting). (See ibid.) In Rincon's separate appeal of that judgment (No. A138463), we reversed the judgment as to Rincon's legal claims (based on the trial court's erroneous striking of Rincon's demand for a jury trial as to those claims); we affirmed the judgment as to Rincon's equitable claims. (Id. at pp. 5, 22.) We remanded for further proceedings as to the legal claims. (Ibid.)
Another appellate proceeding comprising two consolidated appeals (Nos. A139933 and A140036) involved Rincon's challenges to the trial court's post-trial award of attorney fees and costs to the defendants. We decided that matter in an unpublished opinion filed on November 28, 2017.
B. The Tax Assessment Appeals and the Board Proceedings
In 2009 and 2010, Rincon filed with the Board four timely applications challenging assessments of the Property: (1) application No. 2008-2206 (filed on February 27, 2009) challenged a notice of supplemental assessment issued on December 30, 2008 (for the 2007-2008 roll year); (2) application No. 2008-2288 (filed on April 7, 2009) challenged a notice of enrollment of escape assessment that the assessor had issued on February 9, 2009 (for the 2008-2009 roll year); (3) application No. 2009-2865 (filed on September 11, 2009) challenged the regular assessment of the Property for the 2009-2010 roll year (with an assessment lien date of January 1, 2009); and (4) application No. 2010-5170 (filed on September 15, 2010) challenged the regular assessment of the Property for the 2010-2011 roll year (with an assessment lien date of January 1, 2010). According to statements made by the Board's administrator at a Board hearing on the standing issue, Rincon checked a box on each of the first three applications (Nos. 2008-2206, 2008-2288, and 2009-2865, covering, respectively, the 2007-2008 supplemental assessment, the 2008-2009 escape assessment, and the 2009-2010 regular assessment) stating it was not designating the application as a claim for refund of taxes. On the fourth application (No. 2010-5170, covering the 2010-2011 regular assessment), Rincon checked a box stating it was designating the application as a claim for refund.
The documents initiating the four assessment appeals are not in the appellate record.
As discussed further below, an applicant for reassessment of property may choose whether to designate the application as a claim for refund. (Rev. & Tax. Code, §§ 1604, subd. (b)(1), 5097, subds. (a)(3), (b); see Cal. Code Regs., tit. 18, § 305, subd. (f).) All undesignated statutory references are to the Revenue and Taxation Code.
For the first assessment at issue (the 2007-2008 supplemental assessment), Rincon paid at least some of the property taxes, and CP III did not pay any of the taxes. Rincon also paid the property taxes for the second and third assessments at issue (the 2008-2009 escape assessment and the 2009-2010 regular assessment). CP III paid the property taxes for the fourth challenged assessment (the 2010-2011 regular assessment), which were due after CP III had purchased the Property at the foreclosure sale.
The Board found that property tax payments totaling $1,005,138.44 were made on July 31, 2009, for the 2007-2008 supplemental assessment. The Board found $300,000 came directly from Rincon and $705,138.44 came from the Maiden Lane Trust (the lender at the time). CP III and Rincon disputed whether the funds from the Maiden Lane Trust consisted of "Rincon monies" or "Maiden Lane Trust monies" or "a combination of the two."
In March and April 2011, CP III sent letters to the Board stating it had purchased the Property in October 2010, and asking to be substituted for Rincon as the sole applicant in all four assessment appeals. CP III stated that, as part of its purchase at the foreclosure sale, it had acquired the right to pursue the assessment appeals. Rincon opposed the request, contending it had legal authority to pursue the appeals and CP III lacked standing to do so. The Board apparently deferred action on the issue in light of the pending litigation between the parties.
In May 2013, after the trial court had entered judgment in the principal litigation between the parties, the Board requested briefing addressing which party had standing to pursue the assessment appeals. The parties then submitted briefs and supporting documents, including supplemental information requested by the Board, and the Board held hearings on the standing question in June 2013 and November 2013.
The Board denied CP III's request to be substituted as the applicant in place of Rincon in the four assessment appeals, but ruled CP III could participate, along with Rincon, in the appeal concerning the 2010-2011 regular assessment period, for which CP III had paid the taxes. On November 20, 2013, the Board issued its decision in a one-page letter; on February 19, 2014, the Board issued a detailed statement of decision explaining its ruling and setting forth findings of fact and conclusions of law. The Board, citing statutory and regulatory provisions governing assessment appeals, concluded that although some transaction documents relating to the foreclosure referred to property taxes, these "transaction documents among private parties" did not provide CP III with legal standing to pursue the assessment appeals. The Board found, however, that because CP III paid the property taxes for the 2010-2011 regular assessment period, it became an " 'affected party' " in connection with, and could participate in, the assessment appeal for that period, along with Rincon.
C. Writ Proceedings in the Trial Court
On February 11, 2014, CP III filed a petition for a writ of mandate and/or a writ of administrative mandamus. The court (Hon. Ernest H. Goldsmith) denied the petition without prejudice on May 20, 2014, and CP III filed an amended petition on May 22, 2014. In the amended petition, CP III alleged the Board had "a clear, present, mandatory, nondiscretionary, and ministerial duty . . . to approve CP III's request for substitution" as the applicant in the assessment appeals, and "prejudicially abused its discretion" by denying the request. In its prayer for relief, CP III asked that the court direct the Board to "permit CP III's substitution as applicant . . . in the place of or, alternatively, alongside, Rincon" in the assessment appeals.
CP III's amended petition did not ask the court to make any order as to the disposition of any refunds that might be owing based on a reassessment of the Property. Indeed, in its briefing in support of the petition, CP III characterized any question of the distribution of refunds as merely "a potential downstream issue" that was irrelevant to the question whether CP III had standing to participate in the assessment appeals. CP III stated the mechanism for payment of refunds "may need to be resolved in the future; that is not at issue in this Petition and need not be resolved at this time, nor is it relevant to CP III's standing to pursue this Writ of Mandate." Finally, CP III noted that three of the four assessment appeals "sought only reassessment of the property tax at this time, and not tax refunds."
At a hearing on CP III's original petition, CP III's counsel stated to the court: "[W]e believe the relief that we're seeking is at this point not payment of any refunds, but simply the ability to conduct or participate in the conduct of a hearing [on the assessment appeals]." At the subsequent hearing on CP III's amended petition, however, CP III's counsel suggested including in the court's order a provision addressing the disposition of refunds. Counsel noted three of the four pending applications did not seek refunds; they sought only reassessment, and "[t]he refund portion will come later." Counsel suggested, however, that the court could "craft an order that allows us to participate in the four pending proceedings to reassess the property, and that there not be any refunds paid out until there's further resolution of the issue, either as a result of a consensual arrangement or some other proceeding. Refunds that are paid could be deposited in an escrow account. They could be deposited with the court."
After receiving the parties' briefing, the court issued a tentative ruling denying the petition. At the September 30, 2014 hearing on the amended petition, however, the court took the matter under submission and asked CP III to prepare a proposed order granting the petition. (Rincon also submitted a proposed order.) After the parties filed additional briefs, the court signed CP III's proposed order on November 21, 2014.
In the order (entitled "Order Granting in Part [CP III's] Amended Verified Petition for Writ of Mandate"), the court found (1) the Board had a duty to permit CP III to appear and present arguments and evidence in the four assessment appeals because CP III was "a real party in interest and person affected with respect to" the assessment appeals; (2) CP III had a beneficial interest in compelling performance of that duty because CP III "acquired and owns the rights to" the assessment appeals and any resulting tax refunds; (3) CP III had no adequate remedy at law; (4) the Board's refusal to permit CP III to participate in the appeals was unreasonable and arbitrary because CP III was "the real party in interest;" and (5) no prejudice to Rincon would result from CP III's appearance in the appeals. Based on these findings, the court directed the Board to permit CP III to appear and present arguments and evidence in the four assessment appeals. The order states it does not prevent Rincon from also appearing and presenting arguments and evidence in the assessment appeals.
In addition, the court, going beyond the relief requested in CP III's petition, directed the Board to "interplead with the Court, pursuant to this action, any refunds resulting from" the assessment appeals. The court's order states: "The Court will distribute the proceeds to either Rincon or CP III pursuant to instructions contained in (a) a written agreement signed by Rincon and CP III; or (b) further order of this Court."
Rincon appealed, and the Board cross-appealed.
As noted, the Board set forth its determination on the question of CP III's standing in its written statement of decision. In the trial court, the Board stated it would take "no further or additional substantive position" on this issue, instead allowing CP III and Rincon to litigate it. Similarly, in its briefs in this court, the Board takes no position on the standing question. Instead, the Board challenges one aspect of the relief the trial court ordered based on its finding that CP III was entitled to participate in the assessment appeals, specifically the portion of the court's order directing the Board to interplead any refunds resulting from the assessment appeals. The Board states that, as a quasi-judicial body, it has no authority to pay or direct the payment of any tax refunds; under governing law, only the city's tax collector can do so. As we discuss below, we conclude the Board's decision not to allow CP III to participate in the assessment appeals is entitled to deference, and we therefore reverse the court's order and direct the court to enter a new order denying CP III's petition. We thus do not address the Board's challenge to the scope of the relief the court ordered after concluding CP III was entitled to participate in the assessment appeals.
II. DISCUSSION
A. Appealability
CP III contends the court's order is not an appealable final judgment because it contemplates (1) further administrative proceedings by the Board (i.e., conducting the assessment appeals with CP III's participation); and (2) further trial court proceedings (i.e., disposition of any refunds resulting from the assessment appeals).
"[A] judgment is final, and therefore appealable, ' " 'when it terminates the litigation between the parties on the merits of the case and leaves nothing to be done but to enforce by execution what has been determined.' " ' [Citation.] ' "It is not the form of the decree but the substance and effect of the adjudication which is determinative. As a general test, which must be adapted to the particular circumstances of the individual case, it may be said that where no issue is left for future consideration except the fact of compliance or noncompliance with the terms of the first decree, that decree is final, but where anything further in the nature of judicial action on the part of the court is essential to a final determination of the rights of the parties, the decree is interlocutory." ' [Citations.] 'We long have recognized a "well-established policy, based upon the remedial character of the right of appeal, of according that right in doubtful cases 'when such can be accomplished without doing violence to applicable rules.' " ' " (Dhillon v. John Muir Health (2017) 2 Cal.5th 1109, 1115 (Dhillon).)
Our Supreme Court has stated that the proper application of these principles (including in connection with trial court orders remanding for further administrative proceedings) "depends, to a certain degree, on the circumstances of the case." (Dhillon, supra, 2 Cal.5th at p. 1116.) In Dhillon (which was decided after the completion of briefing in this appeal), our Supreme Court noted that, in the context of petitions for writs of administrative mandamus, there was "a long-standing conflict" among the Courts of Appeal as to the appealability of a trial court order "remanding the matter for further proceedings before the administrative body." (Id. at p. 1113; see id. at p. 1114.) After considering the question, the Supreme Court rejected a categorical rule that a trial court's remand order is never appealable. (Id. at p. 1116 & fn. 2.) Instead, to determine appealability, it is necessary to "focus[ ] on the nature of the particular remand order" at issue. (Id. at p. 1116.)
In Dhillon, a surgeon's clinical privileges at two hospitals were suspended, and when he requested a hearing before the hospitals' judicial review committee (JRC), the hospitals responded he was not entitled to such a hearing. (Dhillon, supra, 2 Cal.5th at p. 1112.) The surgeon petitioned for administrative mandamus in the trial court, which granted the petition in part, ordering the hospitals to grant the surgeon a hearing before the JRC or other appropriate body. (Id. at p. 1113.) The hospitals appealed; the Court of Appeal dismissed for lack of jurisdiction; and the Supreme Court reversed. (Id. at pp. 1113-1114, 1120.) In holding the order was an appealable final judgment, the Supreme Court noted the trial court had granted or denied each of the surgeon's claims. (Id. at p. 1116.) The trial court also "did not reserve jurisdiction to consider any issues." (Id. at p. 1117.) Finally, the Supreme Court concluded that unless the hospitals had a right of immediate appeal, the trial court's interpretation of the hospitals' bylaws as requiring an administrative hearing "may effectively evade review." (Ibid.) The Supreme Court stated: "If [the surgeon] prevails at the JRC hearing, the bylaws provide for an internal appellate process whereby [the surgeon] or [the hospitals] may seek review of the JRC's decision. But [the hospitals'] internal appeal board cannot overturn the superior court's determination that [the surgeon] was entitled to the JRC hearing in the first place. If the administrative proceedings are again ultimately resolved adversely to [the surgeon], [the hospitals] would have no basis for seeking review of the decision. Thus, if [the surgeon] chose not to seek mandamus review, that would be the end of the matter." (Id. at pp. 1117-1118.)
In light of Dhillon's admonition that the appealability of a remand order depends on the circumstances of the case and the nature of the particular order at issue (Dhillon, supra, 2 Cal.5th at p. 1116), we reject CP III's contention that "[t]he fact that the case is being remanded to an administrative board is itself enough to conclude that the Order is not appealable." Turning to the more fact-specific inquiry employed in Dhillon, we note that, similar to the order at issue in that case, the trial court's order here disposed of all claims and requests for relief in CP III's amended petition. (See ibid.) The amended petition included two causes of action (for ordinary mandate and for administrative mandate), both of which challenged the Board's decision not to permit CP III to participate in the assessment appeals. The prayer for relief asked that the court direct the Board to permit CP III to participate in the assessment appeals "in the place of or, alternatively, alongside, Rincon." The court granted this relief, directing that the Board permit CP III to participate in all four assessment appeals. The court left no portion of the petition unadjudicated.
Here, however, in contrast to Dhillon, the language of the court's order suggests it did contemplate conducting future proceedings to address one issue (see Dhillon, supra, 2 Cal.5th at p. 1117), namely the disposition of any refunds resulting from the assessment appeals (an issue CP III had not raised in its petition and had dismissed as irrelevant in its supporting briefs). The court ordered that the Board "interplead with the Court, pursuant to this action, any refunds resulting from the" assessment appeals. The court stated it would "distribute the proceeds to either Rincon or CP III pursuant to instructions contained in (a) a written agreement signed by Rincon and CP III; or (b) further order of this Court." CP III contends the court's granting of this additional relief renders its order unappealable. We disagree.
First, as noted, CP III's petition did not seek an order addressing the disposition of any refunds resulting from the reassessment of the Property (and three of the assessment appeals did not seek refunds), and the parties did not squarely contest that issue in the trial court. Instead, CP III inserted the provisions pertaining to refunds in its proposed order submitted after the conclusion of the hearing on the amended petition. In our view, this tacked-on language addressing the ancillary and unbriefed question of the future disposition of possible refunds (a subject that was distinct from the standing issue raised in CP III's petition and fully resolved by the trial court) is not analogous to a trial court's retention of jurisdiction to revisit the issues actually raised in a writ petition and litigated by the parties. (Cf. City of Los Angeles v. Superior Court (2015) 234 Cal.App.4th 275, 278-280 [tenant filed writ petition raising question whether he was a " 'qualified tenant' " entitled to enhanced relocation assistance benefits; trial court entered judgment directing issuance of writ but stating tenant's application for writ relief was " 'held in abeyance' " while city conducted an additional administrative hearing to determine whether tenant was a " 'qualified tenant' "]; Ng v. State Personnel Bd. (1977) 68 Cal.App.3d 600, 604 [trial court remanded matter to State Personnel Board for reconsideration but retained "continuing jurisdiction to review the personnel board's final decision rendered after compliance with the interlocutory order"]; see Dhillon, supra, 2 Cal.5th at p. 1117 [citing City of Los Angeles v. Superior Court and Ng v. State Personnel Bd. as examples of situations in which a trial court's order is not final because it has reserved jurisdiction over certain issues].)
Second, it is far from clear that the question of payment or distribution of possible refunds was a matter that CP III properly could have raised in its writ petition seeking relief against the Board. A taxpayer seeking a refund of taxes paid must file a refund action against the city or county that collected the tax, rather than against the local assessment appeals board. "A tax refund action must be brought against the county or city that collected the tax. (§ 5140 ['The person who paid the tax . . . may bring an action only in the superior court . . . against a county or a city to recover a tax which the board of supervisors of the county or the city council of the city has refused to refund on a claim . . . .'].) A tax refund action may not be maintained against the local assessment appeals board because it 'is a separate and distinct constitutional entity from the [c]ounty [or city that collected the tax].' " (William Jefferson & Co., Inc. v. Orange County Assessment Appeals Bd. No. 2 (2014) 228 Cal.App.4th 1, 11.)
In these circumstances, we conclude that the inclusion of language purporting to address the disposition of refunds did not convert the court's order fully disposing of CP III's petition into an interlocutory, nonappealable order. (See Dhillon, supra, 2 Cal.5th at p. 1116 [appealability "depends, to a certain degree, on the circumstances of the case"].) We therefore will address the merits of the appeal.
B. Legal Standards
In its petition in the trial court, CP III requested both a writ of mandate (Code Civ. Proc., § 1085) and a writ of administrative mandamus (Code Civ. Proc., § 1094.5) compelling the Board to permit CP III's substitution as applicant (either "in the place of" or "alongside" Rincon) in the assessment appeals.
1. Ordinary Mandate (Code of Civil Procedure Section 1085)
" 'To obtain writ relief under Code of Civil Procedure section 1085, the petitioner must show there is no other plain, speedy, and adequate remedy; the respondent has a clear, present, and ministerial duty to act in a particular way; and the petitioner has a clear, present and beneficial right to performance of that duty. [Citation.] A ministerial duty is one that is required to be performed in a prescribed manner under the mandate of legal authority without the exercise of discretion or judgment.' [Citation.] [¶] The standard of review is settled. 'In reviewing a judgment granting a writ of mandate, we apply the substantial evidence standard of review to the court's factual findings, but independently review its findings on legal issues.' " (James v. State of California (2014) 229 Cal.App.4th 130, 136.)
2. Administrative Mandate (Code of Civil Procedure Section 1094.5)
"Code of Civil Procedure section 1094.5 governs judicial review of a final decision by an administrative agency if the law required a hearing, the taking of evidence, and the discretionary determination of facts by the agency. (Id., subd. (a).) The petitioner must show that the agency acted without or in excess of jurisdiction, failed to afford a fair trial, or prejudicially abused its discretion. (Id., subd. (b).) An abuse of discretion is shown if the agency failed to proceed in the manner required by law, the decision is not supported by the findings, or the findings are not supported by the evidence. (Ibid.)" (Schafer v. City of Los Angeles (2015) 237 Cal.App.4th 1250, 1260.) In a case not involving a fundamental vested right, the trial court "reviews the administrative record to determine whether substantial evidence in the record supports the agency's factual findings. The court also determines whether the findings support the agency's decision and whether the agency committed any legal error. (Code Civ. Proc., § 1094.5, subd. (b); [Citation.].) An appellate court in a case not involving a fundamental vested right reviews the agency's decision, rather than the trial court's decision, applying the same standard of review applicable in the trial court." (Id. at pp. 1260-1261.) An appellate court reviews questions of law de novo. (Antelope Valley Press v. Poizner (2008) 162 Cal.App.4th 839, 851.)
Here, the parties disagree as to which type of writ relief the trial court granted: Rincon argues the court granted a writ of administrative mandamus; CP III asserts the court granted a writ of ordinary mandate. The court's order recites the elements of ordinary mandate, but regardless of which method of review was most appropriate here, the dispositive issue—whether CP III is entitled, under the governing statutes and regulations, to participate in the assessment appeals—is one of law, which we review de novo. (James v. State of California, supra, 229 Cal.App.4th at p. 136; Antelope Valley Press v. Poizner, supra, 162 Cal.App.4th at p. 851.) As we shall explain, we conclude the trial court erred in its resolution of this issue, and we therefore reverse.
C. The Trial Court Erred by Granting Writ Relief
In a county that has created an assessment appeals board, the board serves as the county's board of equalization and equalizes the assessed value of property for the purpose of taxation. (Cal. Const., art. XIII, § 16; Rev. & Tax. Code, § 1620; Cal. Code Regs., tit. 18, §§ 301, subds. (d), (k), 302, subd. (a); Hunt-Wesson Foods, Inc. v. County of Alameda (1974) 41 Cal.App.3d 163, 168-169; County of Sacramento v. Assessment Appeals Board No. 2 (1973) 32 Cal.App.3d 654, 663.) An assessment appeals board "is a constitutional agency exercising quasi-judicial powers delegated to it by the California Constitution." (Maples v. Kern County Assessment Appeals Bd. (2002) 96 Cal.App.4th 1007, 1013.) Equalization procedure before the county board is governed by statute, by rules and regulations promulgated by the State Board of Equalization (the SBE), and in some instances by local rules promulgated by the county's board of supervisors or its assessment appeals board. (Cal. Const., art. XIII, § 16; Rev. & Tax. Code, § 1601 et seq.; Gov. Code, § 15606, subd. (c); Cal. Code Regs., tit. 18, § 301 et seq.; 9 Witkin, Summary of Cal. Law (11th ed. 2017) Taxation, § 252, p. 377.)
The Revenue and Taxation Code provides specific administrative remedies for those seeking reductions in property value assessments and related tax refunds. Section 1603 provides that "the party affected or his or her agent" may file an application for reassessment with the county appeals board. (§ 1603, subd. (a); see id., subds. (b)-(c) [specifying deadlines for filing applications]; id., subd. (f); Cal. Code Regs., tit. 18, § 305, subds. (a)-(b), (d); see also SBE, Assessment Appeals Manual, May 2003, Reprinted Jan. 2015 (SBE Appeals Manual), <http://www.boe.ca.gov/proptaxes/pdf/aam2003final.pdf> [as of Dec. 7, 2017], at p. 48 ["An appeals board has no jurisdiction to hear an assessment appeal if all application filing requirements have not been complied with."].) Under California Code of Regulations, title 18, section 301, subdivision (g) (an implementing regulation promulgated by the SBE), " 'Person affected' or 'party affected' is any person or entity having a direct economic interest in the payment of property taxes on the property for the valuation date that is the subject of the proceedings under this subchapter, including the property owner, a lessee required by the property lease to pay the property taxes, and a property owner who acquires an ownership interest after the lien date if the new owner is also responsible for payment of property taxes for the lien date that is the subject of the application." (Cal. Code Regs., tit. 18, § 301, subd. (g), italics added; see Gov. Code, § 15606 [requiring SBE to promulgate regulations to govern local boards of equalization].)
The SBE's rules provide that once an application for reassessment has been filed, the applicant or the applicant's agent may amend the application under specified circumstances. (Cal. Code Regs., tit. 18, § 305, subd. (e); see Helene Curtis, Inc. v. Assessment Appeals Bd. (1999) 76 Cal.App.4th 124, 129-130.) In relevant part, the applicable SBE rule—California Code of Regulations, title 18, section 305, subdivision (e)—permits "the applicant or the applicant's agent" to amend an application (1) prior to the deadline for filing the application and (2) after the filing deadline if the amendment requests no relief beyond that requested in the initial application, unless the Board consents to an amendment seeking additional relief. (Cal. Code Regs., tit. 18, § 305, subds. (e)(1), (2)(B)-(C); see SBE Appeals Manual, at p. 34 ["[Cal. Code Regs., tit. 18, § 305, subd. (e)] provides the parameters for correcting and amending an application"].) The governing statutes and rules do not provide for amendments not initiated by the applicant or the applicant's agent.
California Code of Regulations, title 18, section 305, subdivision (e) (entitled "Amendments and Corrections") provides:
"(1) An applicant or an applicant's agent may amend an application until 5:00 p.m. on the last day upon which the application might have been timely filed.
"(2) After the filing period has expired:
"(A) An invalid application may be corrected in accordance with subsection (c)(4) of this regulation.
"(B) The applicant or the applicant's agent may amend an application provided that the effect of the amendment is not to request relief additional to or different in nature from that originally requested.
"(C)(i) Upon request of the applicant or the applicant's agent, the board, in its discretion, may allow the applicant or the applicant's agent to make amendments to the application in addition to those specified in subdivisions (A) and (B) to state additional facts claimed to require a reduction of the assessment that is the subject of the application.
"(ii) The applicant or the applicant's agent shall state the reasons for the request, which shall be made in writing and filed with the clerk of the board prior to any scheduled hearing, or may be made orally at the hearing. If made in writing, the clerk shall provide a copy to the assessor upon receipt of the request.
"(iii) As a condition to granting a request to amend an application, the board may require the applicant to sign a written agreement extending the two-year period provided in section 1604 of the Revenue and Taxation Code.
"(iv) If a request to amend is granted, and upon the request of the assessor, the hearing on the matter shall be continued by the board for no less than 45 days, unless the parties mutually agree to a different period of time.
"(3) An applicant or an applicant's agent shall be permitted to present testimony and other evidence at the hearing to support a full value that may be different from the opinion of value stated on the application. The presentation of such testimony or other evidence shall not be considered a request to amend or an amendment to the application." (Italics added.)
An applicant for reassessment may designate the application as a claim for refund under section 5097. (§ 5097, subds. (a)(1), (b); see § 1604, subd. (b)(1); Cal. Code Regs., tit. 18, § 305, subd. (f); see also § 5096 [grounds for refunds].) (As noted, for the first three of the four assessment appeals at issue here, Rincon did not designate its applications as refund claims; for the fourth assessment appeal, Rincon did designate its application as a claim for refund.) In addition, section 5097.2 provides that "within four years after the date of payment," "the county tax collector or the county auditor" may refund excess taxes "[n]otwithstanding Sections 5096 and 5097" when a refund is due as a result of an assessment appeals board decision or for other specified reasons. Any refund may be paid to a subsequent property owner, rather than to the person who paid the tax, only "if both of the following conditions are met: [¶] (a) There has been no transfer of the property during or since the fiscal year for which the taxes subject to refund were levied. (b) The amount of the refund is less than five thousand dollars ($5,000)." (§ 5104.)
Here, in its statement of decision addressing CP III's request to be substituted as the applicant in the assessment appeals filed by Rincon, the Board discussed applicable provisions of the Revenue and Taxation Code and the SBE's regulations pertaining to assessment appeals (summarized above), as well as other guidance from the SBE, including its assessment appeals manual and two opinion letters addressing whether a subsequent owner of property may take over or pursue an assessment appeal. Based on these authorities, the Board concluded CP III did not have standing to be substituted for Rincon in the four assessment appeals.
Crucial to the Board's holding on this point was its conclusion that CP III's purchase of the loan and the Property did not make it an " 'affected party' " within the meaning of section 1603 and California Code of Regulations, title 18, section 301, subdivision (g). The Board concluded, however, that, by paying the property taxes for the fourth assessment period at issue (the 2010-2011 regular assessment period), CP III did become an " 'affected party' " with respect to the assessment appeal for that period (No. 2010-5170), and CP III therefore could participate with Rincon in that appeal (but not in the other three appeals). The Board thus concluded in effect that (1) the right to participate in an assessment appeal is limited to "affected" persons or parties within the meaning of section 1603 and California Code of Regulations, title 18, section 301, subdivision (g); and (2) CP III, which did not file a timely reassessment application for any of the periods at issue (and thus was not an applicant) and did not pay the taxes for the first three periods, was not a person or party "affected" for those three periods.
As noted, the Board ruled CP III could participate in the assessment appeal that covered a period for which CP III paid the property taxes (No. 2010-5170, covering the 2010-2011 regular assessment). Neither Rincon nor the Board challenged that ruling in the trial court, and we do not address any claim that the Board lacked authority to permit CP III's participation in that assessment appeal.
CP III challenges both aspects of the Board's ruling. First, CP III argues the statutory and regulatory provisions relied on by the Board only address which parties may file reassessment applications and when a filing party may amend its application, but place no restriction on the ability of a different entity (whether or not it qualifies as a "party affected" under the provisions relied on by the Board) to substitute in as, or participate along with, the applicant. In the absence of an express "prohibit[ion]" on such substitution or participation, CP III asserts, it is entitled to participate pursuant to other legal doctrines or principles. Second, CP III suggested very briefly in its appellate brief, and contended more fully at oral argument, that it is entitled to participate in the assessment appeals because it is a "party affected" within the meaning of California Code of Regulations, title 18, section 301, subdivision (g), because it has "a direct economic interest in the payment of property taxes on the property." CP III contends that it now owns the right to collect any tax refunds and that therefore it alone has the incentive to litigate the assessment appeals aggressively, seeking the lowest possible assessed value for the Property and the highest possible refund.
In part, CP III contends the foreclosure sale transferred to it the right to seek and recover tax refunds in connection with the Property (even though it did not pay the property taxes for three of the four assessment periods at issue). The trustee's deed issued in connection with the foreclosure sale states it conveys to CP III the Property along with certain personal property, including: "(k) Tax Certiorari. All refunds, rebates or credits in connection with reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction;" and "(m) Rights. The right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property[.]"
While there is some force to CP III's argument that it may be prejudiced if it cannot participate in the assessment appeals since Rincon may lack an incentive to litigate the appeals aggressively, we conclude it is appropriate to defer to the Board's interpretation of the applicable statutes and regulations as prohibiting CP III's participation in the three assessment appeals at issue (an interpretation reached in reliance on the SBE's interpretive guidance).
Addressing the weight to be given to the SBE's interpretation of a statute, our Supreme Court has explained: " 'An agency interpretation of the meaning and legal effect of a statute is entitled to consideration and respect by the courts . . . .' (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7 [citation] (Yamaha).) Such deference is warranted because 'the agency will often be interpreting a statute within its administrative jurisdiction . . . [and] may possess special familiarity with satellite legal and regulatory issues.' (Id. at p. 11.) The degree to which 'judicial deference to an agency's interpretation is appropriate . . . is . . . fundamentally situational' and will depend on the extent to which the agency's expertise will provide it with a ' "comparative interpretative advantage over the courts" ' and the degree to which it appears that the agency has carefully considered the issue. (Id. at p. 12; [citation].)" (Holland v. Assessment Appeals Bd. No. 1 (2014) 58 Cal.4th 482, 494, italics omitted (Holland).)
In addition, where, as here, a local assessment appeals board relies on the SBE's guidance in interpreting statutory or regulatory provisions addressing property assessment and taxation issues, the local board's interpretation is "entitled to considerable deference." (Auerbach v. Los Angeles County Assessment Appeals Bd. No. 2 (2008) 167 Cal.App.4th 1428, 1442 (Auerbach).) In Auerbach, the appellate court held a local assessment appeals board's interpretation of a disputed property tax exemption should be upheld unless it " ' "lacks a reasonable foundation." ' " (Ibid.) The appellate court concluded that, because the appeals board had reasonably adopted the SBE's consistent interpretation of the exemption, the appeals board's determination did not lack a reasonable foundation and was entitled to deference. (Ibid.; cf. Holland, supra, 58 Cal.4th at pp. 494-495 [rejecting local assessment appeals board's interpretation of statute, which was contrary to SBE's consistent interpretation].)
Here, a number of factors support deferring to the SBE's and the Board's interpretations of the statutory and regulatory provisions governing participation in administrative reassessment appeals, i.e., section 1603 and California Code of Regulations, title 18, sections 301 and 305. Both the SBE and the Board have expertise in property tax matters. (Holland, supra, 58 Cal.4th at p. 494 ["The SBE undoubtedly has expertise in property tax matters."]; see Auerbach, supra, 167 Cal.App.4th at p. 1442 [deference to appeals board on property tax exemption issue was appropriate].) Moreover, the statutory and regulatory provisions at issue govern the procedures to be used in handling administrative reassessment appeals, a matter at the heart of the SBE's and the Board's administrative competence and discretion. (Yamaha, supra, 19 Cal.4th at p. 12 [courts are more likely to defer to agency interpretation where " 'the legal text to be interpreted is technical, obscure, complex, open-ended, or entwined with issues of fact, policy, and discretion' "], italics added; New Cingular Wireless PCS, LLC v. Public Utilities Com. (2016) 246 Cal.App.4th 784, 812 (New Cingular).) And as to the regulatory provisions at issue, deference to the SBE's interpretation is appropriate for the additional reason that the SBE itself (pursuant to a legislative mandate) promulgated the regulations. (Yamaha, supra, 19 Cal.4th at p. 12 [" 'agency is likely to be intimately familiar with regulations it authored and sensitive to the practical implications of one interpretation over another' "]; New Cingular, supra, 246 Cal.App.4th at p. 812; see Gov. Code, § 15606.)
As noted, the Revenue and Taxation Code and the SBE's regulations specify which parties may file reassessment applications, when they may do so, and when and how such applications may be amended. (§ 1603, subds. (a), (b)-(c), (f); Cal. Code Regs., tit. 18, §§ 301, subd. (g), 305, subds. (a)-(b), (d)-(e).) The SBE has interpreted these provisions as imposing jurisdictional prerequisites to the consideration of an assessment appeal. The SBE's assessment appeals manual specifies: "An appeals board has no jurisdiction to hear an assessment appeal if all application filing requirements have not been complied with." (SBE Appeals Manual, at p. 48.) The SBE also states in the appeals manual that California Code of Regulations, title 18, section 305, subdivision (e) (which permits an applicant or its agent to amend an application in specified circumstances) "provides the parameters for correcting and amending an application." (SBE Appeals Manual, at p. 34.)
In addition to relying on the applicable statutory and regulatory provisions and the SBE's appeals manual, the Board cited advisory letters issued by the SBE's tax counsel in 1996 and 1999, addressing whether a subsequent owner of property is entitled to take over an assessment appeal filed by the former owner, or to initiate an assessment appeal for an assessment period prior to its ownership of the property. (See State Bd. of Equalization, Letter Opn. dated Nov. 8, 1996, Property Tax Annot. No. 180.0099 (1996 Letter); State Bd. of Equalization, Letter Opn. dated Jan. 13, 1999, Property Tax Annot. No. 180.0033 (1999 Letter).)
In the 1996 letter, the SBE concluded the subsequent owner (a foreclosing bank) was not entitled to take over an assessment appeal filed by the prior owner. The letter states "any disputes between non-governmental parties . . . are of no consequence to the assessment appeals board. For purposes of this appeal, the board is legally constrained with minor exception by the application which was on file at the close of filing for the 1995-96 tax year. For the 1995-96 tax year only the corporate owner and not the bank had standing to file the appeal. . . . There is no provision in the statutes or the rules that would a permit a non-filing, subsequent owner to assert the status of 'party affected' in the face of an otherwise valid application wherein the designated agent is prepared to conduct the hearing." (1996 Letter, at pp. 1-2.) In the 1999 letter, where the prior owner had not filed reassessment applications for certain assessment periods that predated the foreclosure, the SBE determined the foreclosing entity could not challenge those assessments, even when it had assumed responsibility for payment of delinquent taxes resulting from the assessments, because it had not filed timely assessment applications for those periods. (1999 Letter, at pp. 2-3.) Like the foreclosing entities in the matters addressed in the SBE's letters, CP III did not file timely assessment applications for any of the assessment periods at issue.
While both of the SBE's letters state they are not binding, they are entitled to some deference. (See Holland, supra, 58 Cal.4th at p. 494 ["we owe a degree of deference to the SBE's interpretation of the statute, even though that interpretation is embodied only in an informal advice letter to the county assessors"]; see also Yamaha, supra, 19 Cal.4th at p. 13 [one factor affecting appropriateness of deference to agency's interpretation is whether the interpretation is " 'long-standing' "].) It was reasonable for the Board to consider the letters in reaching its conclusion that CP III lacked standing to participate in the assessment appeals. (See Auerbach, supra, 167 Cal.App.4th at p. 1441 [appeals board properly relied on SBE opinion letters].) CP III's contention that the facts discussed in the opinion letters are distinguishable from the facts of the present case does not establish the Board was obligated to depart from the guidance contained in the SBE's letters.
For the foregoing reasons, we conclude the Board acted reasonably in determining the governing statutory and regulatory scheme did not authorize CP III to participate in the three assessment appeals at issue, given that CP III was not the applicant, was not Rincon's agent, and did not pay the taxes for the three assessment periods. The Board was not obligated to adopt CP III's contrary interpretation, i.e., that once a "party affected" files a timely reassessment application, that applicant can only amend the application under specified circumstances, but a non-applicant third party is not bound by any such restrictions and can later join the assessment appeal if that appears appropriate under general principles of contract law or civil procedure.
The Board also was not obligated to accept CP III's alternative contention that it is entitled to participate in the three assessment appeals because it is a "party affected" within the meaning of California Code of Regulations, title 18, section 301, subdivision (g). As noted, that provision states: " 'Person affected' or 'party affected' is any person or entity having a direct economic interest in the payment of property taxes on the property for the valuation date that is the subject of the proceedings under this subchapter, including the property owner, a lessee required by the property lease to pay the property taxes, and a property owner who acquires an ownership interest after the lien date if the new owner is also responsible for payment of property taxes for the lien date that is the subject of the application." (Cal. Code Regs., tit. 18, § 301, subd. (g), italics added.)
CP III relies on the first portion of this definition, arguing that the foreclosure documents give it a right to seek and recover any tax refunds and that therefore it has "a direct economic interest" in the matter. Even assuming a "party affected" who does not file a timely assessment appeal can join a pending appeal filed by someone else, the Board reasonably concluded CP III was not a "party affected." As the italicized language above makes clear, California Code of Regulations, title 18, section 301, subdivision (g), requires not a showing of any economic interest, but a direct economic interest "for the valuation date" at issue in a given assessment appeal. (Cal. Code Regs., tit. 18, § 301, subd. (g).) And the regulation's list of examples of parties who satisfy this standard includes "a property owner who acquires an ownership interest after the lien date if the new owner is also responsible for payment of property taxes for the lien date that is the subject of the application." (Ibid., italics added.) The inclusion of this example supports a conclusion that a property owner who acquires an ownership interest after the lien date that is the subject of a given assessment appeal, but who is not responsible for payment of property taxes for that lien date, does not have the requisite "direct economic interest" to qualify as a "party affected" with standing to pursue the assessment appeal. The Board's conclusion that CP III was not a "party affected" for the three assessment periods for which it did not pay taxes represents a reasonable interpretation of the regulation, and we will defer to it.
III. DISPOSITION
The trial court's order granting in part CP III's petition for mandate and/or administrative mandamus is reversed. The court is directed to enter a new order denying CP III's petition. Rincon and the Board shall recover their costs on appeal.
/s/_________
Streeter, J. We concur: /s/_________
Kennedy, J. /s/_________
Rivera, Acting P.J.
Judge of the Superior Court of California, County of Contra Costa, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.