19 Cal. App. 5th 741
Cal. Ct. App. 5th2018Background
- Land Partners, LLC and Los Alisos Ranch Co. owned a 68‑acre mobile home park in Orange County and were reassessed by the County Assessor at $60,010,000; they paid taxes and sought a refund alleging a $22+ million overvaluation.
- The parties agreed the income approach and fair market value standard applied, but disputed how to apply Rule 8 and related guidance (types of market data, expense and rent determinations, repair costs, occupancy assumptions).
- After a limited trial, the court found the Assessor’s valuation arbitrary and inconsistent with Rule 8 and Assessors’ Handbook guidance, and entered judgment for Land Partners, remanding to the Assessment Appeals Board for further proceedings.
- Land Partners moved postjudgment for attorney fees under Revenue & Taxation Code § 5152; the trial court denied fees because it found no evidence the Assessor subjectively believed a law or rule was invalid or unconstitutional.
- Land Partners appealed, arguing § 5152 does not require proof of the Assessor’s subjective belief, only a violation of well‑established, unambiguous law; the Court of Appeal affirmed the denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 5152 entitlement requires proof the assessor subjectively believed a law/rule invalid | Land Partners: No subjective‑belief requirement; showing a violation of well‑settled, unambiguous law suffices | County: § 5152 requires proof the assessor subjectively believed the provision was invalid and thus should have used § 538 procedures | Held: § 5152 requires three elements including a finding the assessor subjectively believed the law/rule was invalid; mere misapplication or error is insufficient |
| Whether testimony cited by Land Partners showed an assessor belief the law was invalid | Land Partners: Deposition testimony denying that valuations must reflect “economic reality” demonstrates a belief that the rule/standard was improper | County: The testimony did not identify a specific constitutional provision, statute, or BOE rule the assessor considered invalid; it was not a cognitive decision showing belief in invalidity | Held: Testimony did not show the requisite cognitive decision; it answered a generalized question and was not evidence the assessor thought a specific law was unconstitutional |
| Whether a rebuttable‑presumption or rule based on violation of well‑settled rules should replace subjective‑belief requirement | Land Partners: Proposes presumption that violation of clear law implies belief in invalidity or at least suffices for fee recovery | County: No statutory or precedential support; courts cannot rewrite statutory prerequisites | Held: Rejected; statute’s plain language and case law require an assessor’s subjective belief or equivalent evidence of that belief |
| Whether Phillips/Prudential line of cases permits fee award here | Land Partners: Cases support fee awards when assessors disregard controlling rules | County: Those cases require evidence of the assessor’s belief in invalidity; here no such evidence exists | Held: The precedent supports requiring a cognitive decision showing belief in invalidity; absent that, fees are improper |
Key Cases Cited
- Prudential Ins. Co. v. City and County of San Francisco, 191 Cal.App.3d 1142 (assessor testimony showing belief a BOE rule was invalid supported § 5152 fees)
- Phillips Petroleum Co. v. County of Lake, 15 Cal.App.4th 180 (denial of § 5152 fees where assessor misapplied rule but showed no belief it was unconstitutional)
- Western States Petroleum Assn. v. Board of Equalization, 57 Cal.4th 401 (discussion of "economic reality" in appraisal context; cited for context but not as a § 538 rule determination)