Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. C828686
Retired Associate Justice of the Court of Appeal, First District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
David A. Simon appeals from dismissal of this property tax refund action, following an order sustaining defendant’s demurrer without leave to amend. We conclude the demurrer was properly sustained because Simon failed to allege property damage resulting from “misfortune or calamity” within the meaning of section 170, subdivision (a)(2) of the California Revenue and Taxation Code.
All further statutory references are to the Revenue and Taxation Code unless otherwise indicated.
Factual and Procedural Background
In May 1997, Simon filed in the Assessor’s Office for the County of Alameda (“County”) a section 170 application for reassessment of the value of his Oakland home. He claimed the home had been damaged through building subsidence caused by discharge or diversion of underground water by a neighboring 46-unit apartment building. Simon’s application included a contractor’s estimate showing that it would cost $143,864 to repair the foundation of the house. It contained no occurrence date; instead he wrote “continuous.”
The Assessor denied the application by letter, explaining that the application was not filed within “six months of calamity” because Simon had not given an occurrence date. The letter also explained that T.L. Enterprises, Inc. v. County of Los Angeles (1989) 215 Cal.App.3d 876 (T.L. Enterprises), “[r]equires calamity to be sudden and not gradual result of natural forces.”
In August 1997, Simon filed an appeal with the Alameda County Assessment Appeals Board. He repeated the allegations in his original application and stated the value of his home had dropped to zero from its previously assessed value of $139,724. Simon maintained that T.L. Enterprises, supra, 215 Cal.App.3d 876, only excludes as a ground for reassessment those losses which were “ ‘the result of ordinary natural forces.’ ” He pointed out that his losses were caused by his neighbor’s conduct.
Simon and counsel for the County Assessor agreed, as explained in the hearing officer’s decision, that the matter should proceed “as if a demurrer had been filed: the Hearing Officer should treat the facts alleged by [Simon] as true and determine if under that assumption the Application states a basis for relief” pursuant to section 170. After considering post-hearing briefs, the hearing officer denied Simon’s application for reassessment. Instead of relying on T.L. Enterprises, supra, 215 Cal.App.3d 876, the hearing officer decided that Simon had failed to alleged facts demonstrating that the failure of his home’s foundation was caused or accelerated by the excess water coming from the adjoining neighbor’s apartment building. The decision further states, “Because of the nature of this hearing, the decision does not foreclose [Simon] from subsequently alleging additional facts to cure the deficiencies noted….” The February 2000 letter transmitting the hearing officer’s decision informed Simon that, if he so desired, he had six months to initiate an action in superior court.
Simon filed his refund action in superior court in July 2000. After the County’s demurrer was sustained with leave to amend, he filed an amended pleading. The County demurrered to the amended complaint as well, and in January 2001 the court sustained this demurrer, concluding that Simon had failed to exhaust his administrative remedies. The court’s apparent reasoning was that Simon had not amended his complaint to allege new facts demonstrating damage.
At the hearing, the trial court expressed agreement with the County’s interpretation of “misfortune or calamity,” but it did not include that rationale in its written order.
No judgment was entered following the 2001 order sustaining the County’s demurrer to the amended complaint. In June 2006, Simon filed a motion requesting that the trial court enter judgment so that he could appeal. The court granted the motion and entered a judgment of dismissal. This appeal followed.
Discussion
Section 170, subdivision (a), authorizes a county board of supervisors to enact an ordinance providing that a person whose “property was damaged or destroyed without his or her fault, may apply for reassessment of that property. . . . [¶] To be eligible for reassessment the damage or destruction to the property shall have been caused by any of the following: [¶] (1) A major misfortune or calamity, in an area or region subsequently proclaimed by the Governor to be in a state of disaster. . . . [¶] (2) A misfortune or calamity. [¶] (3) A misfortune or calamity that . . . includes a drought condition such as existed in this state in 1976 and 1977.” In 1997, section 170, subdivision (a)(3) read, “[t]he application for reassessment may be filed within the time specified in the ordinance or, if no time is specified, within 60 days of the misfortune or calamity.”
The County ordinance implementing section 170 is section 4.20.020 of the Alameda County Administrative Code. The ordinance does not specify a time for filing a reassessment application, so in 1997 Simon was subject to the 60-day limit in the version of section 170 then in effect. Nevertheless, for some reason the Assessor’s original letter rejecting Simon’s application referred to a six-month time limit. The current version of section 170 contains a twelve-month time limit. (Stats. 2001, c. 407 (S.B.1181).) It is not important to our analysis whether the applicable time limit was 60 days, 6 months, or 12 months.
In T.L. Enterprises, supra, 215 Cal.App.3d 876, 877-879, the owner of an office building sought a refund of property taxes under section 170 due to damage to the building from differential expansion and settling of the underlying bedrock and fill. The court affirmed denial of the owner’s claim because the damage was not the result of “misfortune or calamity” within the meaning of section 170. (Id. at p. 881.) After reviewing dictionary definitions and portions of the legislative history, the court held that “misfortune or calamity” requires “an unusual incident, not a gradually deteriorating condition.” (Id. at pp. 880-881.) The decision also explained that providing tax relief for damage which occurred gradually “would be inconsistent with the short limitations period for filing an application for reassessment . . . . Clearly a condition which develops over years is not of the type anticipated.” (Ibid.)
The court also discussed section 51, subdivision (c), a related statute which provides in relevant part that “[i]f the real property was damaged or destroyed by disaster, misfortune or calamity and the board of supervisors of the county in which the real property is located has adopted an ordinance pursuant to Section 170, the taxable value of the real property shall be its assessed value as computed pursuant to Section 170.” (§ 51, subd. (c).)
Simon contends T.L. Enterprises can be distinguished in that there was no third party responsible for the damage. He highlights language in T. L. Enterprise describing the damage as “the result of ordinary natural forces” and “ ‘the ordinary action of the elements upon a poorly constructed building.’ ” (T.L. Enterprises, supra, 215 Cal.App.3d at pp. 880-881.) Simon reasons that the court found reassessment unavailable because the gradual loss was the result of ordinary natural forces causing the property to deteriorate over time, as opposed to a gradual loss that is caused by a third party’s unlawful conduct. Put another way, it is the cause of the event creating the damage that determines whether it is a “disaster, misfortune, or calamity.” Because the damage to his property was directly and proximately caused by a third party’s tortious conduct, Simon asserts, “it is axiomatic that tort injury is not the result of ‘ordinary natural forces.’ ” His contention distorts the plain language of T. L. Enterprises andignores its reliance on dictionary definitions and the short statute of limitations period.
It is true that in this case the conduct of the owner of the neighboring apartment building allegedly contributed to the subsidence of Simon’s house, and it does not appear third party conduct was involved in T.L. Enterprises, supra, 215 Cal.App.3d at p. 881 (although the court did suggest the building was poorly constructed). Nevertheless, the key to understanding the court’s analysis is to recognize the contrast between damages resulting from a discrete “event,” “instance,” or “incident,” and damages resulting from a “gradually deteriorating condition.” (Id. at pp. 880-881.) The contrast is the same whether or not a third party is responsible for the gradual harm. As respondent aptly points out, a house destroyed by fire would be considered a “disaster, misfortune, or calamity” “regardless of whether the cause of such fire was arson [third party tortious act] or lightning (ordinary natural forces).” Thus, it is not the cause of the damage, but instead the difference between the unusual incident and the gradually deteriorating condition that is the distinction the court makes in T. L. Enterprises.
We note that the State Board of Equalization, in an April 24, 2000 advice letter, relying on T. L. Enterprises, advised that “misfortune or calamity” contains a requirement of “suddenness.” The letter is available on the Board’s website at <www.boe.ca.gov/proptaxes/pdf/360_0030.pdf.> It is summarized at 3 State Board of Equalization, Property Taxes Law Guide, § 360.0030, p. 6008, which states, “ ‘misfortune or calamity’ requires a sudden, distinct occurrence of damage or destruction.” Although not binding, the Board’s interpretation certainly supports the conclusion we reach. (See Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 11-15.)
We grant the County’s request that we take judicial notice of the letter.
To the extent it is inconsistent with T.L. Enterprises, supra, 215 Cal.App.3d 876, we do not follow the earlier Attorney General Opinion relied on by Simon. (58 Ops. Atty. Gen. 327 (1975).)
Simon’s argument includes references to insurance coverage cases that distinguish between “first-party and third-party damage scenarios.” He contends these cases are relevant to an interpretation of section 170, subdivision (a)(2), a property tax statute. The cases are inapposite. They address a different first versus third-party distinction than exists in this appeal. The relevant distinction in these insurance coverage cases is that in first party policies, the insurer promises to pay the insured for losses, while third party liability policies require the carrier to pay judgments the insured becomes legally obligated to pay because of damage caused by the insured. (Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 663.) The various cited insurance coverage cases do not address the definition of “misfortune or calamity,” much less so in the property taxation context. For instance, Montrose Chemical Corp., discusses the allocation of indemnity among insurers in progressive damage cases, concluding that “property damage that is continuous or progressively deteriorating throughout several policy periods is potentially covered by all policies in effect during those periods.” (Id. at p. 655.)
Moreover, we agree with T.L. Enterprises, supra, 215 Cal.App.3d at pp. 880-811, that the short statute of limitations in section 170 supports the conclusion that the Legislature did not intend to authorize reassessment for damages that develop over years. In this case, Simon has not even alleged a date of discovery of the damage; instead, he suggests his application can be filed at any time. He asserts, “every new day represents a new exposure that resets the period . . . [the] period would never expire.” It would be inappropriate to interpret section 170 in a manner that effectively exempts a broad category of damages from the time limits in the statute. (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735 [“An interpretation that renders related provisions nugatory must be avoided”].) This is particularly true in light of the fact that the Legislature recently revised the time limit for filing a reassessment application, extending it from 60 days to twelve months. (§ 170, subd. (a)(3), as amended by Stats. 2001, c. 407 (S.B.1181), p. 3016.) The Legislature could have overruled T.L. Enterprises by simply specifying an accrual date for reassessment applications based on damages that develop gradually over time. It chose not to do so. (See Viking Pools, Inc. v. Maloney (1989) 48 Cal.3d 602, 609 [“The Legislature is deemed to be aware of existing laws and judicial decisions construing the same statute in effect at the time legislation is enacted, and to have enacted and amended statutes ‘ “ ‘in the light of such decisions as have a direct bearing upon them’ ” ’ ”]; accord People ex rel. Dept. of Conservation v. El Dorado County (2005) 36 Cal.4th 971, 994.)
The trial court did not err in sustaining the County’s demurrer without leave to amend.
Because we conclude that the demurrer was properly sustained under T.L. Enterprises, supra, 215 Cal.App.3d 876, we need not consider whether Simon failed to exhaust his statutory remedies or whether the hearing officer properly found that Simon failed to allege facts showing damage to his property. Although the trial court relied on the exhaustion rationale in sustaining the demurrer, we may affirm on another ground. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 72.)
Disposition
The judgment is affirmed.
We concur: SIMONS, ACTING P. J., NEEDHAM, J.