Opinion
F054959.
2-26-2009
BRUCE DONALD HAMMERSTROM, Plaintiff and Appellant, v. COUNTY OF STANISLAUS, Defendant and Respondent.
Bruce Donald Hammerstrom, in pro. per., for Plaintiff and Appellant. Dan Farrar for Defendant and Respondent.
Not to be Published in the Official Reports
Appellant Bruce Donald Hammerstrom filed a lawsuit against respondent County of Stanislaus (County) alleging an intentional mishandling of his December 2003 payment of back property taxes, an ensuing fraud and coverup of the mishandling, and Countys subsequent extortion of a second payment, which caused monetary losses and emotional distress.
County filed a demurrer, contending it was immune from liability under Government Code section 860.2. The superior court sustained the demurrer without leave to amend and entered judgment in favor of County.
All further unlabeled statutory references are to the Government Code.
On appeal, Hammerstrom contends the statutory immunity does not bar his claim because section 860.4 creates an exception to the immunity, which "obviously applied because of the refund nature and allegations of the action."
We conclude section 860.4 applies to a theory of relief included in Hammerstroms factual allegations and further conclude the record does not support Countys assertion that this theory of relief is barred by the doctrine of exhaustion of administrative remedies. Therefore, we will reverse.
FACTS
The facts set forth in this opinion are taken from the allegations of the complaint, which we are required to accept as true. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604 [appellate courts deem allegations true when reviewing an order sustaining a demurrer].)
In 1992, County entered a conspiracy with a rogue attorney and Hammerstroms eldest sibling for the purpose of illegally seizing Hammerstroms house. The conspiracy included a fraudulent change in ownership report that resulted in increased and reassessed property taxes. Eventually, at a meeting involving Hammerstrom and the elected tax assessor, the error was admitted and completely remedied. "A retraction was printed in the local newspaper, the tax rate was reduced to the amount at our fathers death, we were allowed to resume paying our own property taxes, and a full refund was made."
Hammerstrom included the allegations about the problems with County in the 1990s to provide a foundation for Countys motive and demonstrate its previous hostile actions against him and his family.
Hammerstrom also alleged Countys hostility towards him is demonstrated by (1) Countys illegal and improper attempt to garnish the wages of his domestic partner and (2) its January 2007 conspiracy to lure him to a County administration building and have him arrested by Modesto police officers for trespassing in a public building. It appears that Hammerstroms claim for false arrest is the subject of another lawsuit. (See fn. 4, post.)
In April 2001, Hammerstrom was unable to pay the second installment of his property taxes because of financial distress. As a result, the property taxes went into default in July 2001. Hammerstrom did not pay property taxes the next two years and defaults occurred in July 2002 and 2003.
In November 2003, Hammerstrom attempted to determine the amount of back taxes that he owed, but was unable to ascertain the exact amount from the tax collectors office. He estimated the amount owed and obtained a money order for $2,100. His estimate was approximately $147.99 short of the amount needed to pay off all back taxes owed because it did not include interest or redemption penalties for the 2000-2001 tax year.
On December 4, 2003, Hammerstrom delivered the money order to the tax collectors office. The line was long due to people paying taxes for the first installment deadline of December 10th, so he dropped the payment into the offices drop box.
On December 5, 2003, an employee identified as Carol took possession of the money order. It appears that Carol applied $344.25 of the $2,100 money order to the first installment of Hammerstroms 2003-2004 property tax, which was due in five days. Carol did not apply the remaining balance of $1,755.75 to pay any of the back taxes owed. County, nonetheless, collected and spent the full balance of $2,100.
A unsigned letter on the letterhead of Countys treasurer/tax collector Tom Watson was sent to Hammerstrom. The letter was dated December 5, 2003, and accompanied by a one-page document titled "Payment Plan Agreement" and redemption receipt No. 106025.
The Payment Plan Agreement appears to be a form on which Hammerstroms name, a default number, and a parcel number had been written by hand. The Payment Plan Agreement made no reference to the years for which taxes were owed, the amount of tax owed, or the receipt of any payment. It stated in part:
"In order to open an Installment Plan of Redemption and keep it in good standing, it is necessary for you to do the following: [¶] 1. Pay at least 1/5 of the total amount due when the plan is started. [¶] 2. Pay at least 1/5 of the original amount due, plus accrued interest On [sic] the unpaid balance at a rate of 18% per year by April 10th until the total amount is paid in full. [¶] 3. In those cases when no principle [sic] payment is due, you must still pay the accrued interest on the unpaid balance each year by April 10th. [¶] 4. Pay your current taxes each year on or before April 10th." (Boldface omitted.)
The clause "I have read and understand the above conditions" appears immediately before the line for the taxpayers signature and date. The form did not contain a signature line for County.
Redemption receipt No. 106025 was dated December 4, 2003, and included a line that stated "ONE THOUSAND SEVEN HUNDRED FIFTY FIVE AND 75/100 DOLLARS $1755.75." The next line down stated: "1ST INSTALLMENT ON PAYMENT PLAN FOR APN 055-009-021" At the bottom of the receipt, to the left of the signature block, four lines were typed. They were: "CASH EXCHANGE 227353," "DEFAULTED TAX $1755.75," "CURRENTS $344.25," and "TOTAL $2100.00." The right hand margin of the receipt included the words "PAYMENT PLAN" directly above the following:
"BALANCE $507.24 [¶] MINIMUM PAYMENT $452.59 [¶] PLUS INTEREST ACCRUED [¶] AT 1/1/5% PER MONTH [¶] ON UNPAID BALANCE"
Neither Hammerstrom nor his domestic partner understood the letter, the enclosed Payment Plan Agreement, or the redemption receipt. They decided not to sign the Payment Plan Agreement because of their past history with County, the unintelligible nature of the documents, and the absence of an attempt by County to explain the documents.
All of the ensuing problems could have been avoided if County had simply told Hammerstrom that (1) the amount he owed for back taxes was about $150 short and (2) his back taxes and the installment due on December 10th all could have been paid with an additional $507. Alternatively, if the $ 1,755.75 had been refunded to Hammerstrom, he would have been made aware that none of his back taxes had been paid.
Countys failure to apply any of the $1,755.75 to pay back taxes meant that interest continued to accrue on the full amount at a rate of 18 percent. Meanwhile, Hammerstrom received no interest on the $1,755.75 that County did not apply.
Furthermore, if the Payment Plan Agreement had been in effect, it would have gone into default on April 10, 2004, because Hammerstrom did not present County with the specified payment. Despite the lack of a payment, County made no effort to inform Hammerstrom that it considered the Payment Plan Agreement in default.
Hammerstrom elected not to pay the second installment of his 2003-2004 property taxes due on April 10, 2004, and those taxes went into default on July 1, 2004. At the time, Hammerstrom believed his back taxes had been properly paid with the money order and he was only one year delinquent.
In July 2005, Hammerstrom did not pay and thus defaulted on that years property taxes because of nonpayment. In April 2006, Hammerstrom again did not pay his property taxes and believed that he was only three years behind.
In early June 2006, the office of Countys treasurer and tax collector mailed Hammerstrom a letter titled "NOTICE OF IMPENDING TAX COLLECTORS POWER TO SELL." The letter stated that (1) Hammerstroms property would become subject to a power to sell on July 1, 2006, unless the property was redeemed or an installment plan of redemption instituted, (2) the property was tax-defaulted on June 30, 2001, and (3) the estimated amount necessary to redeemed the property was $2,668.39.
Hammerstrom believed that the notice was the result of a mistake because he had paid $2,100 to the tax collector only two and a half years earlier. On June 20, 2006, he went to the tax collectors office to inform them of the apparent mistake. Hammerstrom was informed by a supervisor that (1) County considered him to be on a payment plan, (2) he had defaulted on that plan and therefore was not eligible for another, (3) his only option was to pay the amount demanded ($2,668) within the next 10 days—that is, before July 1, 2006. The supervisor evaded his question regarding his money order and told him the employee responsible for initiating the payment plan no longer worked for County.
When pressed about the $1,700, the supervisor told Hammerstrom that it had been held as a credit and had not been used to pay back taxes. The supervisor also informed Hammerstrom that (1) he actually owed County $4,409, but that the credit reduced the balance to $2,668 and (2) he also would have to pay the currently delinquent 2005-2006 property taxes, which was an additional $797.
Hammerstrom, stunned and emotionally distressed, went home and informed his domestic partner of the events. She also became emotionally distressed, which resulted in Hammerstrom becoming the object of intense ridicule and anger and losing moral support and affection. The events required Hammerstrom and his family to cancel their vacation even though expenditures had been made in advance.
Hammerstrom spoke with various County employees in an attempt to straighten out his situation and avoid having his property become subject to a power of sale. We need not chronicle those various meetings because the details are not relevant to our decision in this case. As a general matter, Hammerstrom alleged that County employees were unhelpful, hostile, defensive, and some actively engaged in a coverup of past mistakes.
On June 29, 2006, Hammerstrom received a letter from the office of the tax collector that did an about face and said he could proceed with a payment plan by submitting a payment of $1,682.79 by June 30, 2006. The sum represented one-fifth for the defaulted taxes and both installments of the 2005-2006 property taxes. The letter stated the failure to make the payment on time would result in loss of eligibility for a payment plan and the entire balance of taxes would need to be paid in full prior to 5:00 p.m. of the day prior to Countys next auction.
Hammerstrom made the payment, but experienced problems in getting a receipt from the tax collectors office. Those problems and the lack of a response from the tax collector after a December 2006 meeting are not significant to the issues upon which this appeal is decided. Therefore, the allegations are not set forth here.
On December 22, 2006, Hammerstrom and his domestic partner each filed a claim against County under section 910 et seq. On the part of the claim form that addressed the circumstances of the occurrence, Hammerstrom listed improper extortion of tax revenue, intentional and negligent infliction of emotional distress, and Countys improper collection actions concerning his property taxes. As a description of his damage or injury, Hammerstrom stated mental and psychological trauma and monetary losses sustained through extortion. He also stated the amount of damage exceeded $10,000.
On January 16, 2007, County mailed Hammerstrom a rejection that stated his claim was rejected because he was employed at the Yosemite Junior College District and was not employed by County. Hammerstrom asserts the blatant error in the rejection was a trick to lure him into Countys office building.
On January 19, 2007, Hammerstrom went to Countys office building and met with a County employee in a conference room. During that meeting, two Modesto police officers barged into the meeting and acted with hostility towards Hammerstrom. In response to the officers inquiry, both Hammerstrom and the County employee stated there was no problem. Hammerstrom then stated that he was leaving and, as he entered a stairwell, he was arrested by the officers.
PROCEEDINGS
Hammerstrom, acting as a self-representing litigant, filed a verified complaint on July 13, 2007. The caption of the complaint lists claims for negligence, misrepresentation/fraud, negligent infliction of emotional distress, and intentional infliction of emotional distress.
County responded to the complaint by filing a demurrer, which asserted the complaint failed to state sufficient facts to constitute a cause of action. County argued Hammerstrom did not, and could not, state a valid claim because of the immunity section 860.2 provides to public entities in the interpretation and application of tax laws. Hammerstrom chose not to file a written opposition to the demurrer. County filed a reply in support of its demurrer, which noted the lack of opposition and asserted that the facts alleged clearly showed that no liability existed under substantive law and, therefore, the demurrer should be sustained without leave to amend.
The superior court issued a tentative ruling that indicated the court would sustain the demurrer without leave to amend.
On October 30, 2007, the superior court held a hearing on Countys demurrer. Hammerstrom appeared at the hearing and represented himself. Defense counsel appeared on behalf of County.
At the hearing, Hammerstrom argued that County did not have blanket immunity because section 860.4 specifically says the immunity created by section 860.2 does not apply to refunds. Hammerstrom also asserted it would be an abuse of discretion to deny him leave to amend the complaint and he was ready to amend. At the end of the hearing, the superior court took the matter under submission, telling the parties that "Ill take a look at 860.4. You will get a ruling in writing."
The superior courts statement that it would issue a written ruling means that the prevailing party was not required to prepare a proposed order under California Rules of Court, rule 3.1312(a). In effect, the court "order[ed] otherwise" by stating it would issue a written ruling. Therefore, Hammerstroms position that the superior court violated rule 3.1312 is not correct.
The next day, the superior court filed a written ruling stating the courts conclusion that section 860.4 was not applicable and sustaining the demurrer without leave to amend on the ground the complaint failed to state a cause of action.
On November 6, 2007, County filed a notice of order relating to the superior courts October 31, 2007, written ruling and served that notice on Hammerstrom by regular mail.
In January 2008, the superior court issued a minute order that granted the courts own motion to dismiss and stated the action was dismissed without prejudice.
In February 2008, Hammerstrom filed a notice of appeal.
DISCUSSION
I. Standard of Review for General Demurrers
The review of a demurrer and the application of a statutory provision to facts assumed to be true present questions of law subject to independent review on appeal. (Cellular Plus, Inc. v. Superior Court (1993) 14 Cal.App.4th 1224, 1231 [demurrer tests only sufficiency of the pleadings, which is a question of law].)
Appellate courts review an order sustaining a general demurrer without leave to amend under the following standard:
"The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. [Citations.] The court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.] The judgment must be affirmed `if any one of the several grounds of demurrer is well taken. [Citations.] [Citation.] However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. [Citation.] And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment. [Citation.]" (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)
"[O]ur [review of a general demurrer] ends and reversal is required once we determine a complaint has stated a cause of action under any legal theory." (Genesis Environmental Services v. San Joaquin Valley Unified Air Pollution Control Dist. (2003) 113 Cal.App.4th 597, 603.) The "any possible legal theory" threshold was explained by our Supreme Court as follows:
"If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer. `[Courts] are not limited to plaintiffs theory of recovery in testing the sufficiency of their complaint against a demurrer, but instead must determine if the factual allegations of the complaint are adequate to state a cause of action under any legal theory. The courts of this state have . . . long since departed from holding a plaintiff strictly to the "form of action" he has pleaded and instead have adopted the more flexible approach of examining the facts alleged to determine if a demurrer should be sustained. [Citations.]" (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38-39.)
Under this principle, courts must examine the substance of a complaint and ignore erroneous and confusing labels used by an inept pleader. (Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908.)
II. Immunity Relating to the Assessment and Collection of Taxes
A. Statutory Provisions
County relied on a statutory immunity granted to public entities and their employees for action taken in connection with the administration of tax laws. Section 860.2 provides in full:
"Neither a public entity nor a public employee is liable for an injury caused by: [¶] (a) Instituting any judicial or administrative proceeding or action for or incidental to the assessment or collection of a tax. [¶] (b) An act or omission in the interpretation or application of any law relating to a tax."
The immunity provided by section 860.2 is subject to the limitation set forth in section 860.4, which provides in full: "Nothing in this chapter affects any law relating to refund, rebate, exemption, cancellation, amendment or adjustment of taxes."
The Senate Legislative Committee comment to section 860 provides the following background information regarding the enactment of the foregoing provisions:
"This chapter[, which consists of sections 860, 860.2 and 860.4,] confers immunity upon public employees and public entities for their discretionary acts in the administration of tax laws. It is likely that the courts would confer an immunity for these acts under the general provisions of Section 820.2; but it appears desirable to make the immunity explicit in order to obviate the necessity for test cases to determine whether the discretionary immunity extends this far." (Sen. Com. com., reprinted at 32 Wests Ann. Gov. Code (1995 ed.) foll. § 860, p. 499.)
B. Contentions of the Parties
Hammerstrom contends the immunity set forth in section 860.2 does not apply because the exception set forth in section 860.4 applies in this case. Specifically, Hammerstroms reply brief asserts that section 860.4 "obviously applied because of the refund nature and allegations of the action."
County contends that the immunity of section 860.2, not the exception in section 860.4, applies to the allegations in Hammerstroms complaint. County argues that, under a reasonable interpretation of the complaint, Hammerstrom is seeking compensation for mental and emotional injuries and not a refund. Also, County makes the factual assertion that Hammerstrom "has not complied with the statutory scheme by which taxpayers can claim and obtain refunds of overpayment of property taxes." County contends Hammerstroms failure to use the procedures for the recovery of overpayment of taxes precludes him from converting this action into a tax refund action.
Hammerstroms reply brief counters Countys argument on a number of grounds. First, Hammerstrom argues that the defense of failure to exhaust administrative remedies is a defense that necessarily involves a question of fact, not a question of law. Second, Hammerstrom argues that his challenges to the validity of Countys "unwritten policies" cannot be raised in the administrative process established by the Revenue and Taxation Code. Third, he contends an exception to the exhaustion requirement applies because Countys decision on such an administrative challenge would be obvious and therefore the procedure is ineffective. Hammerstrom asserts that Countys unyielding position rendered an administrative challenge futile.
Hammerstroms reference to Countys "policies" may be related to his contention that he could amend the complaint to state a cause of action against County for a deprivation of his constitutional rights under section 1983 of title 42 of the United States Code. (See Monell v. New York City Dept. of Social Services (1978) 436 U.S. 658 [a local government entity is liable for the acts of its employees when the execution of the entitys policy or custom by the employee inflicts the unconstitutional injury].)
C. Interpretation of the Complaint
The first issue raised by the contentions of the parties is whether the complaint can be interpreted reasonably to assert a claim for a refund or rebate of taxes.
The prayer for relief on page 29 of the complaint seeks the recovery of damages for severe emotional distress, mental anguish and mental suffering. Less specific portions of the prayer seek the recovery of "general damages according to proof" and "special damages according to proof." These provisions in the prayer are broad enough to cover a refund of taxes paid or an adjustment of the balance of property taxes owed by Hammerstrom. Consequently, we examine the factual allegations in the complaint to determine whether Hammerstrom alleged County took more money from him for taxes and interest than he was required to pay.
Paragraph 16 of the complaint alleges that Hammerstrom "suffered a large monetary loss" and that Countys failure to allocate the $1,755.75 of his $2,100 December 2003 payment to unpaid back taxes enabled County to "collect large amounts of interest on these back unpaid taxes." Paragraph 16 ends with the allegation that "[t]he motive here is absolute greed."
Paragraph 17 of the complaint alleges that County, in essence, borrowed over $1,700 from Hammerstrom without paying him interest and continued to accrue interest at the rate of 18 percent on a corresponding amount of back taxes. In effect, Hammerstrom is alleging that he would have been charged less interest if the County had applied the over $1,700 to his back taxes.
Paragraph 18 of the complaint alleges that County kept the $ 2,100 payment and spent the money as if it had paid taxes.
Paragraph 46 of the complaint alleges that the acts and omissions of the employees and office of the tax collector "caused a large monetary loss to the plaintiff." Paragraph 47 further alleges (1) this monetary loss cannot be easily ascertained or computed, (2) Hammerstrom has not yet determined the amount, and (3) he will request leave to amend the complaint to specify the amount of his losses and injuries once they have been ascertained.
Based on the foregoing allegations, we conclude that the complaints allegations support a claim for recovery of a monetary loss caused by Countys mishandling of Hammerstroms $2,100 payment. That loss includes the interest charged by County on a portion of Hammerstroms back taxes that should have been treated as paid upon Countys receipt of the $2,100 payment.
Accordingly, we reject Countys argument that the complaint cannot be interpreted reasonably to include a claim for a refund or rebate of taxes paid. Therefore, we conclude that the complaint alleges facts sufficient to state a claim for relief that falls within the scope of section 860.4.
D. Exhaustion of Administrative Remedies
1. Facts concerning administrative remedies
Page 9 of Countys respondents brief includes the factual assertion that Hammerstrom "has not complied with the statutory scheme by which taxpayers can claim and obtain refunds of overpayment of property taxes." County did not support this factual assertion with a citation to the record.
Rule 8.204(a)(1)(C) of the California Rules of Court provides that each appellate brief must "[s]upport any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears." This court has interpreted this rule to mean that the assertions of fact set forth in an appellate brief must be supported by a citation to the part of the record where that fact appears. (See Brewer v. Murphy (2008) 161 Cal.App.4th 928, 936, fn. 4 [defendants assertion of fact not supported by citation to record].)
Therefore, we cannot accept Countys unsupported version of the facts, conclude that Hammerstrom failed to exhaust his administrative remedies relating to overcharges of taxes or interest, and use the failure to exhaust as a ground for upholding the order sustaining Countys demurrer.
Furthermore, our review of Countys demurrer and its points and authorities supporting its demurrer showed that County did not include the failure to exhaust administrative remedies as a ground for its demurrer. (See TracFone Wireless, Inc. v. County of Los Angeles (2008) 163 Cal.App.4th 1359, 1363, fn. 2 [order sustaining demurrer overturned; issue of exhaustion of remedies not a ground of respondents demurrer and record not developed].)
2. Futility
Hammerstrom also argues that Countys argument regarding exhaustion is defective in this appeal because of the futility exception to exhaustion requirement, a question which cannot be resolved against him in the context of an appeal from an order sustaining a demurrer.
The doctrine of exhaustion of administrative remedies has several exceptions, one of which is that pursuit of the remedy would be futile. (People ex rel. State Pub. Wks. Bd. v. Superior Court (1979) 91 Cal.App.3d 95, 102.) Whether pursuit of an administrative remedy would have been futile normally is a question of fact. (Ibid.) It may be determined as a question of law if the facts are undisputed and permit only one reasonable inference. (Ibid.)
We conclude the facts alleged in the complaint support different inferences, one of which is that it would have been futile for Hammerstrom to pursue an administrative claim to seek an adjustment or refund of the amount of taxes and interest that he paid. Hammerstrom alleged, among other things, that (1) he has had poor relations with the County since 1992, (2) he made a number of attempts to clarify his property tax situation with County employees without results, (3) he attended a meeting with the elected tax collector at which County counsel would not allow the tax collector to admit that there had been a mistake in handling his property taxes and, despite his requests, the tax collector did not reconvene that matter to resolve his grievance, (4) he submitted a claim form to County that referenced Countys extortion of tax revenue and the claim was rejected, and (5) as part of Countys conspiracy against him, he was subject to a false arrest for trespassing in a public building while leaving Countys risk management office after going there to get information about his claim.
A statement on page 16 of Hammerstroms appellants reply brief indicates that he has a current lawsuit against County for the false arrest. Consequently, we have not analyzed whether the facts alleged in the complaint are sufficient to state a cause of action for (1) a false arrest under California law or (2) a deprivation of a constitutionally protected liberty interest in violation of section 1983 of title 42 of the United States Code. (See Asgari v. City of Los Angeles (1997) 15 Cal.4th 744, 755, fn. 9 [differences between federal law and California law regarding liability and immunity for false arrest, false imprisonment, and malicious prosecution].)
These and other allegations in the complaint reasonably support an inference that it would have been futile for Hammerstrom to pursue an administrative claim for a tax refund or adjustment. Accordingly, the futility exception presents a second ground that precludes our reliance on the doctrine of exhaustion of administrative remedies as a basis for sustaining Countys demurrer.
E. Other Legal Theories of Hammerstrom
In Genesis Environmental Services v. San Joaquin Valley Unified Air Pollution Control Dist., supra, 113 Cal.App.4th 597, this court stated that when reviewing an order sustaining a general demurrer, "our inquiry ends and reversal is required once we determine a complaint has stated a cause of action under any legal theory." (Id. at p. 603.)
Based on this principle and our determination that the complaint states a cause of action under a legal theory permitted by section 860.4, we end our inquiry without considering the additional legal theories advanced by Hammerstrom on appeal. Similarly, we will not address the various ways in which Hammerstrom contends he could cure the complaint by amendment.
DISPOSITION
The judgment is reversed and the superior court is directed to vacate its order sustaining the demurrer and to enter a new order overruling the demurrer. Appellant shall recover his costs on appeal.
WE CONCUR:
CORNELL, Acting P.J.
KANE, J.