Charter Communications Properties, LLC v. County of San Luis Obispo
131 Cal. Rptr. 3d 455
Cal. Ct. App.2011Background
- Charter challenges San Luis Obispo County's property tax valuation of eight unexpired cable-franchise possessory interests under Rule 21(d); AAB found mutual understanding that unexpired terms were longer than stated terms.
- Valuation method used: income capitalization with factors including term of possession; dispute centers on term of possession, not economic rent.
- SBE advisory opinion (2005) and Form 10-K statements referenced by the assessor suggested franchises would renew indefinitely; Charter presented evidence to counter this.
- AAB and trial court found clear and convincing evidence of mutual understanding of indefinite duration and used the originally negotiated term as the reasonably anticipated term; trial court remanded economic rent issue for further consideration.
- Charter argues remaining term should be used; court holds Rule 21(d)(2) guidance applies where indefinite terms exist and supports using the mutually understood term; American Airlines distinguishes the case, which is more analogous to Charter.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 21(d)(1) allows a longer term than the stated term based on mutual understanding. | Charter: term = remaining stated years; no mutual understanding. | County: mutual understanding exists; indefinite duration. | Yes; mutual understanding supported by evidence. |
| Whether there was clear and convincing evidence of mutual understanding of indefinite terms. | Charter asserts no mutual understanding, only Charter’s own statements. | AAB properly credited local agencies’ understanding and Charter’s 10-K as evidence. | Substantial evidence supports mutual understanding of indefinite terms. |
| Whether Rule 21(d)(2) factors are applicable to indefinite-term franchises. | Rule 21(d)(1) controls; indefinite terms not applicable to d2. | After indefinite duration, d(2) criteria guide valuation. | Applicable; d(2) factors may be used to determine reasonably anticipated term. |
| Whether American Airlines controls the outcome or supports the county’s approach. | American Airlines requires using remaining term; not applicable here. | Charter’s monopoly context and indefinite-term evidence distinguish American Airlines. | Distinguished; not controlling; county's approach upheld. |
Key Cases Cited
- American Airlines, Inc. v. County of Los Angeles, 65 Cal.App.3d 325 (Cal. App. 1976) (discusses mutual understanding required to depart from stated term (distinguishes from this case))
- Freeport-McMoran Resource Partners v. County of Lake, 12 Cal.App.4th 634 (Cal. App. 1993) (standard for reviewing valuation method vs. application; de novo vs substantial evidence)
- Silveira v. County of Alameda, 139 Cal.App.4th 989 (Cal. App. 2006) (statutory/conceptual context for possessory interest valuation)