Opinion
A146410
03-01-2017
RICHARD S. WRIGHT et al., Plaintiffs and Appellants, v. COUNTY OF SAN MATEO, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 Mateo County Super. Ct. No. CIV531406)
I.
INTRODUCTION
Appellants Richard S. Wright and Susan M. Hansch attempted to transfer the base year value of their residence to a replacement property pursuant to Revenue and Taxation Code section 69.5 and the County of San Mateo (the County) denied the transfer request. Appellants filed a petition for a writ of mandamus. The trial court found the mandamus petition to be an improper action and concluded appellants' later complaint for a refund was untimely. We reverse. Appellants' mandamus action was reasonable under the circumstances of this case and filed in good faith. For these reasons, the statute of limitations for filing of the proper action for a refund was tolled until their claim for a refund was filed.
All further statutory references are to the Revenue and Taxation Code unless otherwise identified.
II.
FACTUAL AND PROCEDURAL BACKGROUND
The facts are drawn from the "Written Findings of Fact" from the County's Assessment Appeals Board (the Board) decision. In September 2011, appellants sold their home in Belmont for $1.175 million. Prior to that sale, appellants purchased a lot in Half Moon Bay for $675,000. Appellants did not purchase the lot in their own names, but instead created a limited liability company at the behest of their lender. The lender would not issue a construction loan unless appellants created a limited liability company to hold title until construction was completed. After completion of a home on the property, appellants transferred the property to their own names in February 2012.
Appellants filed a request to transfer the base year value of the original property to the replacement property, and the request was denied by the County under section 69.5, subdivision (a). Under section 69.5, a homeowner who is over age 55 may transfer the base year value of their original property to a replacement property as long as the new property is of "equal or lesser value," is located in the same county, and is purchased by the person within two years of sale of the original property.
The sole issue before the Board was whether, given appellants' creation of the limited liability company, they qualified as a "person" under the statute. The County found that the definition of a person under section 69.5 specifically excludes "any firm, partnership, association, corporation, company, or other legal entity or organization of any kind." (§ 69.5 subd. (g)(11).)
The Board's written findings, issued on October 2, 2014, stated the requirements for judicial review: "Except as provided in Property Tax Rule 326, administrative mandamus is the sole and exclusive procedure used to obtain judicial review of adjudicatory decisions of the Assessment Appeals Board." The findings stated that under Code of Civil Procedure section 1094.5, appellants must seek a petition for a writ of mandate.
On November 20, 2014, appellants filed a petition for a writ of administrative mandamus pursuant to Code of Civil Procedure section 1094.5. The petition stated that appellants had no adequate remedy at law because they must continue to pay the increased property tax assessment unless the decision was vacated. On January 22, 2015, appellants filed a first amended petition that clarified the County was named a defendant along with the Board.
On Friday, March 27, 2015, the County filed a demurrer, arguing appellants' petition was improper and they were not entitled to a transfer under section 69.5. For the first time, the County took the position that a mandate action was not appropriate procedurally because appellants sought to overturn the merits of the decision. Instead, appellants had an adequate remedy at law, namely an action for a refund. Appellants' writ petition did not state that the Board acted in excess of jurisdiction or failed to afford appellants a fair hearing.
The court sustained the County's demurrer with leave to amend in an order filed on May 15, 2015. On May 18, 2015, appellants filed a second amended complaint (SAC). It alleged appellants were entitled to a refund for the property taxes they had paid in excess of the base year value of the original property.
The County filed a demurrer to the SAC. The County argued that it explained in its demurrer to the first amended petition that appellants had filed an incorrect action, and instead should have filed an action for refund. Rather than amending their complaint, appellants opposed the County's demurrer. After the County prevailed on its demurrer to the first amended petition, appellants then filed the SAC, but by that time the statute of limitations had run on an action seeking a refund. The Board's decision was issued on October 2, 2014, and any action had to be filed within six months, or by April 2, 2015.
The court sustained the County's demurrer; this time without leave to amend. The court held appellants' action was time-barred under section 5141, subdivisions (a) and (c), and Schoenberg v. County of Los Angeles Assessment Appeals Bd. (2009) 179 Cal.App.4th 1347 (Schoenberg). The complaint for a refund of property taxes did not relate back to the petition for writ of mandamus under Code of Civil Procedure section 1094.5.
III.
DISCUSSION
We apply a de novo standard of review to an order sustaining a demurrer. (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 391.) It is a question of law whether a case is barred by the statute of limitations. (Arcadia Development Co. v. City of Morgan Hill (2008) 169 Cal.App.4th 253, 261.) On appeal from a judgment of dismissal after a demurrer is sustained without leave to amend, the reviewing court assumes the truth of all facts properly pleaded by the plaintiff. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.)
A. Appellants Erred in Filing a Petition for Writ of Mandamus
" 'The mechanism for judicial review of decisions by a county assessment appeals board is significantly different from that of other administrative agency decisions. Ordinarily the aggrieved taxpayer's remedy is not to seek administrative mandate pursuant to Code of Civil Procedure section 1094.5, but to pay the tax and file suit in superior court for a refund. [Citations.]' [Citation.]" (Little v. Los Angeles County Assessment Appeals Bds. (2007) 155 Cal.App.4th 915, 923 (Little).) "Because a tax refund action provides property owners with an adequate remedy at law, equitable actions for mandamus, injunctive, and declaratory relief generally are unavailable to obtain judicial review of a local assessment appeals board decision. [Citations.]" (William Jefferson & Co., Inc. v. Orange County Assessment Appeals Board No 2 (2014) 228 Cal.App.4th 1, 11 (William Jefferson).)
The limitation on taxpayer actions challenging local assessment board decisions derives from both the California Constitution and the Revenue and Taxation Code. (William Jefferson, supra, 228 Cal.App.4th at p. 11.) Article XIII, section 32 of the California Constitution provides that no legal or equitable process shall issue in any proceeding in any court to prevent or enjoin the collection of any tax. After payment of the allegedly illegal tax, the party can maintain an action to recover the taxes paid. (Cal. Const., art. XIII, § 32.) The Revenue and Taxation Code provides in part: "No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action, or proceeding in any court against any county, municipality, or district, or any officer thereof, to prevent or enjoin the collection of property taxes sought to be collected." (§ 4807.)
The primary case relied upon by both parties is Schoenberg. In Schoenberg, Schoenberg's parents transferred property to him triggering a reassessment of the property taxes. (Schoenberg, supra, 179 Cal.App.4th at p. 1350.) Schoenberg appealed the assessment to the appeals board, arguing the county had overestimated the value of the property. The appeals board denied Schoenberg's application. (Id. at pp. 1350-1351.) Schoenberg filed a petition for a writ of mandate. (Ibid.) The trial court concluded a petition for a writ of mandamus was "not an available remedy." (Id. at p. 1351.) Schoenberg filed a second amended petition for writ of mandate and a complaint for refund of his taxes adding the county as a defendant. (Ibid.) The county demurred on statute of limitations grounds. The court rejected the statute of limitations argument "on the ground that it was barred by estoppels," but sustained the demurrer because Schoenberg failed to state of cause of action. (Ibid.)
The Second District Court of Appeal held that a petition for a writ of mandate was improper because mandate is only available when there is no adequate remedy at law. (Schoenberg, supra, 179 Cal.App.4th at p. 1355.) Schoenberg had a remedy at law in the form of tax refund action. (Ibid.) "Mandate is simply not available as a device for judicial review of an appeals board's assessment decision on the merits[.]" (Ibid.)
"Schoenberg's belated amendment adding a claim for a tax refund and adding the [c]ounty as a party is unavailing because it was too late to do so. His action is barred by the six-month statute of limitations." (Schoenberg, supra, 179 Cal.App.4th at p. 1355, original italics.) Schoenberg argued the statute of limitations was tolled on his refund action while he pursued the writ of mandate. (Id. at p. 1356.) The court rejected this argument because Schoenberg had only one valid legal remedy, a refund action, and he failed to pursue it within the statute of limitations. (Ibid.) It is "well settled" that an action in mandamus is not a proper method for a taxpayer to seek review of the merits of a tax assessment decision. (Ibid.) Further, the county had advised Schoenberg that his sole remedy was a refund action a year before he filed the action that added the county as a defendant. (Ibid.)
Similarly, in Little, the court held a tax refund action, rather than a mandate petition, is the exclusive remedy for challenging a property tax assessment on the merits. (Little, supra, 155 Cal.App.4th at p. 917.) A writ of mandamus only issues where there is " 'no speedy or adequate remedy at law,' " but a suit for a refund is an adequate remedy. (Id. at p. 923, citing County of Sacramento v. Assessment Appeals Bd. No. 2 (1973) 32 Cal.App.3d 654, 672.)
However, where a homeowner does not have an adequate remedy at law, the homeowner can seek writ relief. Under Code of Civil Procedure section 1094.5 a party may seek writ relief: "The inquiry in such a case shall extend to the questions whether the respondent has proceeded without, or in excess of, jurisdiction; whether there was a fair trial; and whether there was any prejudicial abuse of discretion. Abuse of discretion is established if the respondent has not proceeded in the manner required by law, the order or decision is not supported by the findings, or the findings are not supported by the evidence." (Code Civ. Proc., § 1094.5, subd. (b).)
An "administrative mandate under this section will lie only to challenge the validity of a final administrative adjudication vested in an inferior administrative tribunal as the result of a proceeding when (1) a hearing is required, (2) evidence is required to be taken, and (3) discretion in the determination of the facts is vested in an administrative agency." (Sunrise Retirement Villa v. Dear (1997) 58 Cal.App.4th 948, 954-955 (Sunrise), original italics, citing Code Civ. Proc., § 1094.5, subd. (a).) The Sunrise court noted that a tax refund action is generally the exclusive means for challenging an appeals board decision, but mandamus was appropriate to compel the board to provide a hearing. Mandamus is appropriate to compel an agency to perform its statutory duties, but not to control the agency's discretion in performing its duties. (Sunrise, at pp. 960-961.)
Unlike the appeals board in Sunrise, here the Board performed its statutory duties: it held a hearing, evaluated the evidence, and exercised its discretion in denying appellants' request for a reassessment. (See Little, supra, 155 Cal.App.4th at p. 925 [where the assessment board conducts an evidentiary hearing and makes a ruling on the merits, "Sunrise is not authority for the proposition that the [b]oard's adverse decision with respect to the base year value is reviewable by way of a petition for writ of mandate].) Appellants' proper remedy was to file an action for a tax refund, as they did in their SAC.
Appellants erred by filing a petition for a writ of mandamus. The issue then becomes whether this error tolled the statute of limitations for the filing of the proper action for a tax refund.
B. Appellants' Petition for Writ of Mandamus Tolled the Statute of Limitations for Their Refund Action
The statute of limitations for a refund action under section 5141, subdivisions (a) and (c) is six months. (§ 5141 (a), (c).) The Board rendered its decision on October 2, 2014. The six-month statute of limitations expired on April 2, 2015. While appellants filed their petition for writ of mandamus and their first amended petition within that six-month timeframe, appellants filed their SAC seeking a refund on May 18, 2015, after the statute of limitations had expired. Therefore, we must determine if appellants' first amended petition for a writ of mandamus, which was timely filed, tolled the statute of limitations period for the filing of the action for a refund.
The County argues that under Schoenberg the statute of limitations is not tolled by the mandamus petition. Like appellants here, Schoenberg argued his improper action for a writ of mandamus was filed in good faith and tolled the statute of limitations on his refund action. (Schoenberg, supra, 179 Cal.App.4th at p. 1356.) The court rejected this argument because the only valid legal remedy was a refund action and the mandate action was "unreasonable." (Ibid.) Schoenberg could not argue estoppel because the county had advised him that his sole remedy was a refund action during the applicable statute of limitations period. (Ibid.) The court held the doctrine of equitable tolling was inapplicable and the refund action was therefore not timely filed. (Ibid.)
Schoenberg is distinguishable in two ways. First, in Schoenberg, the amended complaint seeking a refund action added a new defendant, the county. (Schoenberg, supra, 179 Cal.App.4th at pp. 1355-1356.) Here, appellants had named the County in their first amended petition filed on January 22, 2015. Appellants cite authority that an amended complaint that adds a new defendant does not relate back to the date of filing of the original complaint and the statute of limitations is applied to the date of the amended complaint. (See Woo v. Superior Court (1999) 75 Cal.App.4th 169, 176.) They argue this bar does not apply to them because the SAC did not add any new defendants. Amendments to complaints "alleging a new theory of liability against the defendant have been found to relate back to the original complaint, so long as the new cause of action is based on the same set facts previously alleged. [Citations.]" (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1199-1200.)
Under the "relation back" doctrine, it is "the sameness of the facts rather than the rights or obligations arising from those facts that is determinative. [Citation.]" (Lamont v. Wolfe (1983) 142 Cal.App.3d 375, 378.) The court looks to whether the amended pleading arose out of the same conduct or transaction as the original pleading and if it did, the relation back doctrine applies. (Id. at p. 379.). Here, although the first amended petition was a writ and the second amended pleading was an action for a refund, both are based on the same alleged set of facts and arose out of the County's denial of appellants' transfer request. Because the two actions were based on the same set of facts and named the same defendants, the relation back doctrine should apply. " '[W]hen a defendant has had notice from the beginning that the plaintiff sets up and is trying to enforce a claim against it because of specified conduct, the reasons for the statute of limitations do not exist . . . .' " (Id. at p. 381, quoting N.Y. Cent. R.R. v. Kinney (1922) 260 U.S. 340, 346.)
The second key difference between the present case and Schoenberg is that the doctrine of equitable tolling applies here. Unlike Schoenberg, the County here expressly advised appellants to file an administrative writ. As noted, the Board's written findings of fact, issued on October 2, 2014, stated the requirements for judicial review: "[A]dministrative mandamus is the sole and exclusive procedure used to obtain judicial review of adjudicatory decisions of the Assessment Appeals Board." The findings stated that under Code of Civil Procedure section 1094.5, appellants must seek a petition for a writ of mandate. It was not until the County filed its demurrer to the first amended petition on Friday, March 27, 2015, that it took the position for the first time that a writ of mandamus was not the proper action and they needed to seek a refund. This change in position occurred a mere three business days before the six-month limitations period for filing a refund action expired on Thursday, April 2, 2015.
On our own motion we take judicial notice that March 27, 2015, was a Friday, and that Tuesday, March 31, 2015, was an official state holiday (Cesar Chavez Day). (Evid. Code, §§ 459, 452, subd. (h).)
Under the circumstances, we do not conclude that appellants' action in initially seeking a writ of mandamus was "unreasonable," because they reasonably relied on the County's direction that they "must seek" mandamus as the "sole and exclusive procedure" to contest the County's denial of their transfer request. (Schoenberg, supra, 179 Cal.App.4th at p. 1356.)
Our Supreme Court long has recognized a policy of allowing a party who " ' "has seasonably filed a cause of action, to try it upon its merits, notwithstanding defects in the form or substance of pleadings, [or] error in the remedy sought . . . ." ' [Citation.]" (Tarkington v. California Unemployment Ins. Appeals Bd. (2009) 172 Cal.App.4th 1494, 1507 (Tarkington), quoting Friends of Mammoth v. Board of Supervisors (1972) 8 Cal.3d 247, 269.) To this end, the doctrine of equitable tolling was created " 'to toll statutes of limitations when defendants would not be prejudiced and plaintiffs, who had several legal remedies, pursued one such remedy reasonably and in good faith.' (Downs v. Department of Water & Power (1997) 58 Cal.App.4th 1093, 1100 . . . .) It 'is a judge-made doctrine "which operates independently of the literal wording of the Code of Civil Procedure" to suspend or extend a statute of limitations as necessary to ensure fundamental practicality and fairness.' (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 370 . . . .) The doctrine of equitable tolling works 'to prevent the unjust technical forfeiture of causes of action, where the defendant would suffer no prejudice.' (Ibid.)" (Tarkington, supra, 172 Cal.App.4th at p. 1503.)
The County has not demonstrated any prejudice from appellants filing their initial claim in the form of a petition rather than a complaint for refund. As the County concedes, the SAC "re-states the same facts" as the writ petition. The primary difference is the prayer for relief. The writ petition seeks to compel the County to set aside its decision and grant the transfer request. The SAC seeks a refund of the amount of property taxes paid in excess of what appellants believe to be the correct base year value. The County argues that an action for writ of mandamus seeks equitable relief, whereas a refund action seeks monetary compensation, and therefore, the County is required to present different defenses. While this may be true, the basic claim is the same: the County allegedly incorrectly calculated the base year value of the property by finding that section 69.5 did not apply.
We conclude that appellants' original and first amended writ petitions were filed in good faith, and they reasonably believed it was the proper method to obtain judicial review of the County's decision, based upon the County's unequivocal statement to that effect. "[I]f the defendant is not prejudiced thereby, the running of the limitations period is tolled '[w]hen an injured person has several legal remedies and, reasonably and in good faith, pursues one.' [Citations.]" (Elkins v. Derby (1974) 12 Cal.3d 410, 414.
Accordingly, appellants' filing of the first amended petition naming the County as a defendant within the statute of limitations period tolled the running of the statute of limitations for the SAC. We therefore conclude that the trial court erred in granting the County's demurrer.
The County argues that this court should affirm the trial court's dismissal of the SAC without leave to amend because appellants cannot prevail on the merits. The merits of appellants' refund action are not properly before us, and we decline to consider the issue.
IV.
DISPOSITION
The judgment is reversed.
/s/_________
RUVOLO, P. J. We concur: /s/_________
REARDON, J. /s/_________
STREETER, J.