31 Cal. App. 5th 820
Cal. Ct. App. 5th2019Background
- Harmony Gold owned property reassessed in 2006 after the assessor erroneously found a change in ownership, raising its base-year value and taxes.
- Harmony discovered the error in 2011 and filed an application for changed assessment with the LA County Assessment Appeals Board (AAB); the AAB found a nonjudgmental error under Revenue & Taxation Code §51.5(a) and ordered the roll restored to the 2006-2007 base year with inflation adjustments.
- The assessor/auditor-controller corrected assessment rolls and refunded taxes beginning in 2011 (the year Harmony filed its AAB application) but refused refunds for 2006–2010 overpayments and declined to correct earlier rolls.
- Harmony filed a refund suit and sought declarations and a writ to compel correction of all affected rolls; the trial court sustained the County’s demurrer without leave to amend and dismissed the complaint.
- On appeal, the Court of Appeal affirmed, holding §80(a)(5)’s prospective-only rule bars refunds for years prior to the year the AAB application was filed, and that §80 is constitutional and the demurrer dismissal was proper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §51.5(a) (no time limit for correcting nonjudgmental base-year errors) permits refunds for all prior years and thus overrides §80(a)(5)’s prospective-only application | §51.5(a) allows unlimited correction of nonjudgmental errors, so refunds for erroneously collected taxes should similarly be available for all years the error existed | §80(a)(5) limits any reduction from an application to the assessment year in which the appeal is taken and prospectively; §51.5(a) governs correction only and does not override §80’s refund/assessment-year limits | Held: §51.5(a) does not trump §80(a)(5); refunds are limited prospectively to the year the application was filed and thereafter; pre-2011 refunds are barred |
| Constitutionality of §80 under Cal. Const. art. II, §10(c) (legislature cannot amend initiative statutes like Prop 13) | §80’s time limits and prospective-only relief unlawfully amend or undermine Proposition 13’s limits on property tax | §80 regulates administrative procedures for reassessment/refunds and does not amend Prop 13; it is a valid legislative exercise | Held: §80 is constitutional and does not impermissibly amend Proposition 13 |
| Whether trial court abused discretion by denying leave to amend to allege a constitutional claim | Harmony argued it should be allowed to amend to raise constitutional challenge | County argued Harmony failed to identify facts to cure pleading defects or specify proposed amendments | Held: No abuse of discretion; Harmony did not show what additional facts would cure deficiencies or a reasonable possibility of stating a claim |
| Whether declaratory relief or writ compelling correction of pre-2011 rolls was warranted or practical | Harmony sought declarations that refunds based on nonjudgmental error have no time limits and that assessor must correct the 2006 roll entries; sought writ to correct historical rolls | County argued declarations/writ would not alter refund entitlement and Harmony had no demonstrated need or prejudice from denial | Held: Denied; the requested general declaration is incorrect as a matter of law and any roll-correction declaration would have no practical effect on Harmony’s refund rights, so dismissal proper |
Key Cases Cited
- Osco Drug, Inc. v. County of Orange, 221 Cal.App.3d 189 (Cal. Ct. App. 1990) (distinguishes correction of base-year value from refund entitlement and explains prospective effect of reductions on refunds)
- Metropolitan Culinary Servs., Inc. v. County of Los Angeles, 61 Cal.App.4th 935 (Cal. Ct. App. 1998) (refunds from assessment reductions apply prospectively to year of appeal and thereafter)
- Sunrise Retirement Villa v. Dear, 58 Cal.App.4th 948 (Cal. Ct. App. 1997) (§51.5(a) removes time limits for correcting nonjudgmental errors but correction does not automatically entitle taxpayer to refunds)
- Sea World, Inc. v. County of San Diego, 27 Cal.App.4th 1390 (Cal. Ct. App. 1994) (prospective-only application of assessment reductions under §80 to refund claims)
- Montgomery Ward & Co. v. County of Santa Clara, 47 Cal.App.4th 1122 (Cal. Ct. App. 1996) (§51.5(a) correction authority does not abrogate other statutory time limits governing escape assessments)
- Ellis v. County of Calaveras, 245 Cal.App.4th 64 (Cal. Ct. App. 2016) (affirming that reduced assessment for refund purposes applies only to year of application and thereafter)
- Mission Housing Dev. Co. v. City & County of San Francisco, 81 Cal.App.4th 522 (Cal. Ct. App. 2000) (refund claim narrows issues to those asserted administratively; administrative exhaustion prerequisites)
- Kuperman v. San Diego County Assessment Appeals Bd. No. 1, 137 Cal.App.4th 918 (Cal. Ct. App. 2006) (role of correcting base-year values to ensure accurate assessment rolls)