54 Cal.App.5th 1
Cal. Ct. App.2020Background
- The Downey Landing shopping center owner (Downey Landing LLC) merged into Downey Landing SPE, LLC in May 2006; the merger constituted a change in ownership that could trigger reassessment.
- Downey SPE recorded a Delaware Certificate of Merger with the Los Angeles County Recorder a few days after the merger but did not file a change-in-ownership statement with the State Board of Equalization under Rev. & Tax. Code § 480.1 within 90 days.
- The County Assessor reassessed the property in 2015 and issued Notices demanding escape assessments back to the 2007–2008 fiscal year (total ≈ $16,014,000). Downey (the taxpayer/real party) appealed, arguing the assessor was limited to four years of escape assessments.
- The Los Angeles County Assessment Appeals Board sided with Downey, but the superior court granted the assessor’s petition for writ of administrative mandate and allowed full reachback under § 532(b)(3).
- The Court of Appeal affirmed: § 532(b)(3) authorizes escape assessments back to the year of the change in ownership where no § 480.1 statement was filed with the State Board, and taxpayers must strictly comply with § 480.1’s informational and filing-location requirements.
Issues
| Issue | Plaintiff's Argument (Assessor) | Defendant's Argument (Downey SPE) | Held |
|---|---|---|---|
| Whether an assessor may levy escape assessments back to the year of a corporate change in ownership when the acquirer recorded a Certificate of Merger with the county recorder but did not file a § 480.1 statement with the State Board | § 532(b)(3) applies because no § 480.1 statement was filed with the State Board; assessor entitled/obligated to full reachback | County recording of the Certificate satisfied notice obligations; assessor limited by four‑year cap | Held for assessor: § 532(b)(3) applies; county recorder filing did not satisfy § 480.1, so unlimited reachback allowed |
| Whether § 480.1 requires strict compliance (informational content and filing with State Board) or whether substantial/actual notice suffices | Strict compliance is required as to the information and the State Board filing; statutory scheme makes State Board the centralized repository and expert reviewer | Substantial compliance or actual notice to local assessor should suffice to serve § 480.1’s purpose | Held: strict compliance required for the information disclosed and the requirement that the statement be filed with the State Board; local notice alone is insufficient |
| Whether § 532(b)(3)’s unlimited reachback is precluded by prior case law (Dreyer’s) or limited to only certain exceptions | § 532(b)(3) plainly authorizes reachback to the year of escape notwithstanding other subdivisions; legislature superseded Dreyer’s concerns | Dreyer’s held an unlimited reachback is absurd/unfair and thus limits application | Held for assessor: legislative amendments and § 51.5 overrule Dreyer’s; § 532(b)(3)’s plain language controls |
| Procedural/defensive arguments (standing, laches) — whether assessor lacked standing or relief barred by laches | Assessor has beneficial interest and standing to defend/seek writ; laches inapplicable because it would undermine public taxation policy and taxpayer had unclean hands | Assessor lacked standing (only State Board implicated); laches should bar late assessments | Held: assessor has standing; laches not available here (too fact‑specific and would conflict with statutory/constitutional duty to tax uniformly) |
Key Cases Cited
- Trailer Train Co. v. State Bd. of Equalization, 180 Cal.App.3d 565 (Cal. Ct. App. 1986) (assessor duty to levy escape assessments where property escaped assessment)
- American Airlines, Inc. v. County of San Mateo, 12 Cal.4th 1110 (Cal. 1996) (constitutional and statutory duty to levy retroactive assessments for escaped property)
- Title Ins. & Trust Co. v. County of Riverside, 48 Cal.3d 84 (Cal. 1989) (legislative purpose to prevent corporate transactions from defeating reassessment parity)
- Montgomery Ward & Co. v. County of Santa Clara, 47 Cal.App.4th 1122 (Cal. Ct. App. 1996) (limitations on reassessment and effect of § 51.5)
- Dreyer’s Grand Ice Cream, Inc. v. County of Alameda, 178 Cal.App.3d 1174 (Cal. Ct. App. 1986) (criticized for disfavoring open-ended reachback; later legislative changes addressed its limitations)
- Kuperman v. San Diego County Assessment Appeals Bd. No. 1, 137 Cal.App.4th 918 (Cal. Ct. App. 2006) (failure to set new base year value on change of ownership is correctable at any time)
- 926 North Ardmore Ave. LLC v. County of Los Angeles, 3 Cal.5th 319 (Cal. 2017) (change in ownership triggers reappraisal and reassessment)