Opinion
A130720
02-14-2012
SFD UNION SQUARE, LLC, Plaintiff and Appellant, v. GEORGE PUTRIS AS TAX ADMINISTRATOR et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 County Super. Ct. No. CPF-09-510062)
Plaintiff SFD Union Square LLC appeals after the trial court sustained, without leave to amend, the demurrer of respondents George Putris, Jose Cisneros, the Office of the Treasurer and Tax Collector (Tax Collector), and the City and County of San Francisco. Plaintiff contends the court erred in concluding its petition for writ of mandate is barred by the six-month statute of limitations set forth in Revenue and Taxation Code section 5141, subdivision (a). We agree and reverse.
This subdivision provides, in part: "An action brought under this article . . . shall be commenced within six months from and after the date that the board of supervisors or city council rejects a claim for refund in whole or in part." All further statutory citations are to the Revenue and Taxation Code unless otherwise noted.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The petition states that plaintiff became the owner of the real property located at 423 Powell Street in the City and County of San Francisco on July 1, 2005. During 2007, plaintiff was assessed supplemental and escape property taxes. Plaintiff alleges that respondents did not send it notices of said assessment and tax bills, though respondents have asserted the relevant notices were sent. Because plaintiff was not aware of these "out-of-cycle" taxes, it did not pay them. In August 2008, plaintiff became aware of the tax liability and paid respondent the tax due, along with related penalties totaling $151,134.93.
On September 30, 2008, plaintiff sent a letter to the Tax Collector requesting the cancellation of the delinquency penalty and related costs associated with the referenced tax bills pursuant to section 4985.2, claiming it had not received notice that the payments were due and therefore "was unable to make payment timely due to reasonable cause and circumstances beyond its control." Section 4985.2, subdivision (a), provides that delinquency penalties may be cancelled by the tax collector under such circumstances, provided the taxpayer did not fail to act with ordinary care.
On October 7, 2008, Putris sent a letter to plaintiff, denying the request for penalty abatement. The letter states, in part: "Section 4985 of the California Revenue and Taxation Code provides the county with an option of canceling the late penalty only if you were not sent a notice or tax bill by the county or if you can demonstrate that the delinquency was due to the county's failure to send a notice or tax bill to an incorrect [sic] mailing address." The letter does not address section 4985.2. Nor does it reference any statute of limitations for appealing the decision.
Section 4985 provides: "Any delinquent penalty, cost, redemption penalty, interest, or redemption fee, heretofore or hereafter attached, shall upon satisfactory proof submitted by the tax collector, the auditor, or the assessor, be canceled by the auditor upon a showing that the delinquent penalty, cost, redemption penalty, interest, or redemption fee has attached because of either of the following: [¶] (a) An error of the tax collector, the auditor, or the assessor. [¶] (b) They were unable to complete valid procedures initiated prior to the delinquency date. The collection shall be made upon the further showing that payment of the corrected or additional amount was made within 30 days from the date that the correction was entered on the roll or abstract record."
On May 13, 2009, plaintiff, acting through its counsel, sent another letter to respondents requesting cancellation of the penalties in the sum of $151,134.93 and a refund thereof as provided for under section 4985.2. The letter requests the procedures respondents have established for cancellation of penalties under section 4985.2. In the alternative, the letter requests a hearing so that plaintiff may present evidence concerning the circumstances of its alleged failure to pay the taxes in a timely manner. Respondents did not reply to this letter. There is no indication that the determination by the Tax Collector denying cancellation of penalties was ever presented to the Board of Supervisors of the City and County of San Francisco (Board of Supervisors).
On December 17, 2009, plaintiff filed its verified petition for writ of mandamus against respondents, seeking to compel compliance with section 4985.2 and requesting a refund of the penalty amount. (Code Civ. Proc., §1085.)
On January 6, 2010, plaintiff filed a summons.
On March 19, 2010, respondents filed a demurrer to the petition for writ of mandamus asserting that the action is barred by the six-month statute of limitations under section 5141, subdivision (a).
On April 27, 2010, plaintiff filed its opposition to the demurrer.
On May 12, 2010, the trial court filed its order sustaining respondent's demurrer without leave to amend. Judgment of dismissal was entered on September 28, 2010. This appeal followed.
DISCUSSION
I. Standard of Review
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; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081; Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) We also accept as true all facts that may be implied or reasonably inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.) We do not assume the truth of " „ "contentions, deductions or conclusions of fact or law." ' " (Evans v. City of Berkeley, supra, at p. 6, citing Blank v. Kirwan, supra, at p. 318.) We review the trial court's action de novo and exercise our own independent judgment whether a cause of action has been stated under any legal theory. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) We review the court's refusal to allow leave to amend under the abuse of discretion standard. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.)
II. The Petition and the Demurrer
Section 4985.2, subdivision (a), provides that any penalty, costs, or other charges resulting from tax delinquency "may" be canceled by the auditor or the tax collector upon a finding that failure to make a timely payment was "due to reasonable cause and circumstances beyond the taxpayer's control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect, provided the principal payment for the proper amount of the tax due is made no later than June 30 of the fourth fiscal year following the fiscal year in which the tax became delinquent."
As noted above, the petition alleges respondents failed to properly consider plaintiff's request for cancellation of the delinquency penalties, and failed to make any findings under section 4985.2. Respondents have also allegedly refused or failed to respond to plaintiff's request or to provide it with the procedures for cancellation of penalties under section 4985.2. The petition alleges the failure to make timely payment of the supplemental and escape taxes was due to reasonable cause and circumstances beyond plaintiff's control, and that plaintiff had exercised ordinary care and was not willfully neglectful. Plaintiff alleged that it is entitled to a review of its request for cancellation.
The petition prays for the issuance of an alternative writ of mandamus commanding respondents: (1) to provide plaintiff with the established practices and procedures for a taxpayer requesting a cancellation of penalties under section 4985.2, (2) to set an evidentiary hearing, (3) to make findings, and (4) to notify plaintiff of its procedural appeal rights. Plaintiff also requested damages in the sum of $151,134.93, as well as a refund of the $151,134.93 paid as a penalty. Respondents demurred solely on the ground that plaintiff failed to comply with the statute of limitations that they claim applies to this action.
III. The Trial Court's Hearing and Ruling
At the hearing on the demurrer, plaintiff argued that the applicable statute of limitations is the four-year "catch-all" period provided for by Code of Civil Procedure section 343. Plaintiff also stated that it could amend its pleadings to allege equitable estoppel based on an earlier oral promise from the Office of the Tax Collector that it would conduct a hearing on the matter. Respondents countered that the applicable statute of limitations is the six-month period set forth in section 5141, and contended that allowing an amendment would be futile as the statute of limitations cannot be subject to equitable estoppel on issues of property taxation.
The trial court deemed plaintiff's action to be a lawsuit challenging a tax assessment. As such, the court found it was untimely filed, citing to section 5141, subdivision (a), County of Sacramento v. Assessment Appeals Bd. No. 2 (1973) 32 Cal.App.3d 654, 662 [mandate proceeding in that case was deemed akin to a tax collection suit, which has a three-year statute of limitations], and Schoenberg v. County of Los Angeles Assessment (2009) 179 Cal.App.4th 1347, 1355 [belated amendment to petition for writ of mandate adding a claim for a tax refund and adding the county as a party was barred by the six-month statute of limitations]. IV Whether Mandamus Is Available
Respondents contend that mandamus is categorically unavailable to order a county tax collector to cancel or refund property tax delinquency penalties under section 4985.2, subdivision (a), because decisions made under this section are discretionary. This issue was not squarely raised below. In their memorandum of points and authorities attached to their demurrer, respondents explicitly assumed arguendo "that traditional mandamus, rather than a suit for refund, is a proper way to seek the cancellation and refund of tax penalties." They did not challenge plaintiff's right to proceed via mandamus. Having elected not to pursue this issue with the trial court, they have arguably forfeited it on appeal. (People ex rel. Dept. of Transportation v. Superior Court (2003) 105 Cal.App.4th 39, 46 [as a general rule, issues not raised in trial court cannot be raised for first time on appeal].)
Even assuming the issue has not been forfeited, respondents' argument is lacking in merit. "Under Code of Civil Procedure section 1085, subdivision (a), the trial court may issue a writ of mandate 'to any . . . person[] to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station, or to compel the admission of a party to the use and enjoyment of a right or office to which the party is entitled, and from which the party is unlawfully precluded by such . . . board, or person.' " (Farahani v. San Diego Community College Dist. (2009) 175 Cal.App.4th 1486, 1491.)
As noted above, section 4985.2, subdivision (a), provides that any penalty, costs, or other charges resulting from tax delinquency "may" be canceled by the auditor or the tax collector upon a finding that failure to make a timely payment was "due to reasonable cause and circumstances beyond the taxpayer's control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect . . . ." Courts have observed that section 4985.2 was "enacted simply to authorize cancellation of penalties under specific circumstances, because prior to its enactment, there was no authority for such cancellation even under the very equitable circumstances addressed in subdivision[] (a) . . . ." (People ex rel. Strumpfer v. Westoaks Investment #27 (2006) 139 Cal.App.4th 1038, 1051 (Strumpfer).)
Although section 4985.2 states that the tax collector "may" cancel a delinquency penalty under the circumstances described in subdivisions (a), the statute has been interpreted as establishing a mandatory duty to cancel a penalty if "the taxpayer establishes the necessary factual predicates: [¶] '[S]ubdivision[] (a) . . . of section 4985.2 [does not] give the . . . tax collector discretion to deny cancellation of penalties if and when the taxpayer's proof has established the factual predicates set out in subdivision[] (a) . . . . If the taxpayer presents such conclusive proof but the official refuses to make the corresponding subdivision (a) . . . finding, or if the corresponding finding is made but the official then refuses to exercise the authority granted by section 4985.2 to cancel the penalties, that would be grounds for a Code of Civil Procedure section 1085 petition for traditional mandamus." (AvalonBay Communities, Inc. v. County of Los Angeles (2011) 197 Cal.App.4th 890, 898-899 (AvalonBay), citing to Strumpfer, supra, 139 Cal.App.4th 1038 at p. 1050, italics added.) We agree with the AvalonBay and Strumpfer opinions and decline respondents' invitation to rule that mandamus is unavailable to address the denial of a taxpayer's request for cancellation of delinquency penalties under section 4985.2.
V. The Six-Month Statute of Limitations Does Not Apply
"A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred." (Marshall v. Gibson, Dunn & Crutcher, supra, 37 Cal.App.4th 1397, 1403.) Respondents assert the action is barred because the six-month period under section 5141 applies and plaintiff filed this action 14 months after receiving Putris's letter denying its claim.
" 'The statute of limitations applicable to a writ of mandamus under Code of Civil Procedure section 1085 depends upon the nature of the obligation sought to be enforced. [Citation.]' [Citation.] 'It is often difficult to decide which statute of limitations governs an action for writ of mandate. The code provisions authorizing this action are silent as to the time within which it must be filed. [Citation.] Accordingly, the courts have developed the rule that the question is to be resolved not by the remedy prayed for but by the nature of the underlying right or obligation that the action seeks to enforce. [Citation.]' [Citation.]" (Branciforte Heights, LLC v. City of Santa Cruz (2006) 138 Cal.App.4th 914, 926, italics added.)
Section 4985.2 does not set forth a statute of limitations and our independent research has not disclosed a reported decision addressing this issue. Respondents assert we must "borrow" the limitations period contained in section 5141, subdivision (a). Again, this subdivision establishes a six-month statute of limitations for an action for a property tax refund, stating that such an action shall be commenced " 'within six months from and after the date that the board of supervisors or city council rejects a claim for refund in whole or in part.' " (Geneva Towers Ltd. Partnership v. City and County of San Francisco (2003) 29 Cal.4th 769, 781 (Geneva Towers), italics added.) "The statute of limitations applicable to claims against cities and counties for property tax refunds is the six-month period set forth in [] section 5141, subdivision (a)." (Id. at p. 782.) Respondents claim this statute of limitations provision applies to the present petition because plaintiff, in essence, seeks a refund of penalties related to property tax.
It is notable that plaintiff has not alleged that it made a claim for a refund with the Board of Supervisors. Furthermore, no allegation is made that the Board of Supervisors made any determination concerning the decision denying the request to cancel the penalties. Instead, it alleges that it asked respondents to conduct a hearing and/or to cancel the penalty amount pursuant to section 4985.2. Plaintiff has also alleged that respondents have refused to comply with section 4985.2. Arguably, the Tax Collector's silence since its letter of October 7, 2008 strongly indicates that it does not intend to reconsider the appropriateness of cancelling penalties for late payment of property taxes.
We believe the petition on its face demonstrates that the statutory conditions triggering the application of section 5141, subdivision (a), have not been met. As noted, courts have stated that this statute begins to run on " 'the date that the board of supervisors or city council rejects a claim for refund in whole or in part." (Geneva Towers, supra, 29 Cal.4th 769, 774, italics added.) As plaintiff has not alleged that it made such a claim to the Board of Supervisors, section 5141, subdivision (a), has no direct application to the present case. And while the desired remedy is the return of the penalty amount, the underlying right plaintiff seeks to enforce is the opportunity to have its claim for cancellation of the penalty determined in the first instance. Finality with the Tax Collector permits the option for review by the Board of Supervisors for purposes of triggering the statute of limitations. (§ 5141, subd. (a); Geneva Towers, supra, 29 Cal.4th at p. 781-782.)
In our view, this aspect distinguishes the present case from Schoenberg, supra, because the plaintiff in that case sought a reduction in valuation of his residential property, and a refund of the excess taxes he believed he had paid. The appellate court found the action was barred by section 5141. (Schoenberg, supra, 179 Cal.App.4th 1347, 1351, 1355.)
Plaintiff contends the relevant statute of limitations period is set forth in either Code of Civil Procedure section 343 or 338. The first of these provisions states: "An action for relief not hereinbefore provided for must be commenced within four years after the cause of action shall have accrued." (Code Civ. Proc., § 343.) This is the catchall provision that provides a statute of limitations in situations where no specific limitations period applies. (Stoll v. Superior Court (1992) 9 Cal.App.4th 1362, 1366.) Code of Civil Procedure section 338 states in part that an action upon a liability created by statute, other than a penalty or forfeiture, has a three-year statute of limitations period. We need not decide which statute applies to the present case as the petition was filed well within the bounds of both statutory limitations periods.
We note that at this stage of the proceedings, we are unable to determine whether plaintiff will be able to present conclusive proof that it qualifies for relief under section 4985.2. The petition alleges that the payment notices were never received. It is reasonable to conclude that the failure of a party to make a timely payment under such circumstances could place that party within the parameters of section 4985.2, subdivision (a), as a failure to receive notice could, depending on the circumstances, qualify as a situation beyond that party's control. Assuming, as we must, that the allegations in the petition are true, we conclude plaintiff has set forth a valid claim for relief.
We also note it is unclear whether plaintiff may affirmatively pray for a "refund" of the penalty in this action, as the Legislature has provided for the procedures by which refunds must be sought, including the prerequisite of filing a claim under section 5097. Section 5097 provides in relevant part, "(a) No order for a refund under this article shall be made, except on a claim: [¶] (1) Verified by the person who paid the tax, his or her guardian, executor, or administrator. [¶] (2) . . . [F]iled within four years after making the payment sought to be refunded . . . ." The timely filing of a refund claim is a statutory prerequisite to a refund action: "No action shall be commenced or maintained under this article . . . unless a claim for refund has first been filed pursuant to Article 1 (commencing with Section 5096)." (§ 5142, subd. (a).) The issue before us today, however, is not whether plaintiff may seek a refund of the delinquency penalty by means of this petition for writ of mandate. The issue is whether the trial court erred in concluding the petition is barred by the statute of limitation as set forth by section 5141, subdivision (a), and denying leave to amend. We conclude it did.
These statutory requirements apply to applications to recover penalties, interest and costs, as well as the taxes themselves. (§ 5107; see IBM Personal Pension Plan v. City and County of San Francisco (2005) 131 Cal.App.4th 1291, 1300-1301.)
We note plaintiff suggested to the trial court that it could amend the petition to delete the prayer for a refund. If plaintiff's request for relief under section 4985.2 is ultimately granted by respondents, there may be no need for it to engage in any further actions to pursue a refund as respondents already have the authority under that section to refund the cancelled penalty on their own initiative. (See § 5097.2, subd. (c).)
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In sum, the petition in the present case does not reflect that a formal claim for a tax refund has been filed under the procedures specified pursuant to section 5096, et seq. Section 5141 applies to actions brought under those provisions, and not to actions brought with respect to section 4985.2. (See, e.g., § 5140 [authorizing actions against a county to recover a tax that the board of supervisors of a county has refused to refund on a claim filed pursuant to Article 1 (commencing with § 5096)].) Accordingly, it does not clearly and affirmatively appear on the face of the petition that the action is barred by the statute of limitations as set forth in section 5141, subdivision (a), and the demurrer should not have been sustained on this ground. It follows that the trial court abused its discretion in denying plaintiff leave to amend.
DISPOSITION
The order sustaining respondents' demurrer without leave to amend to plaintiff's petition for writ of mandate and the judgment of dismissal are reversed.
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Dondero, J.
We concur: ____________
Marchiano, P.J.
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Margulies, J.