548 P.3d 1002
Cal.2024Background
- At issue is the transfer of two supermarket properties from the family-owned corporation Super A Foods, Inc. to the Amen Family 1990 Revocable Trust, which owned all the corporation’s voting stock but not all nonvoting stock.
- Proposition 13 (Cal. Const. art. XIII A) limits reassessment of property for tax purposes unless there is a “change in ownership.”
- Under California law, a change in ownership triggers reassessment at market value; statutory exclusions exist for certain transactions, including where the proportional beneficial ownership remains unchanged (Rev. & Tax. Code § 62(a)(2)).
- The Los Angeles County Assessor reassessed the properties after the transfer, arguing the nonvoting shareholders’ interests were eliminated—a change in ownership.
- The County Assessment Appeals Board reversed, focusing only on voting stock proportionality; the trial and appellate courts sided with the Assessor, leading to Supreme Court review.
Issues
| Issue | Prang (Assessor) Argument | Amen (Trustees) Argument | Held |
|---|---|---|---|
| Does a transfer from a corporation to a trust that eliminates nonvoting shareholders’ interests constitute a "change in ownership" under § 62(a)(2)? | All stock, not just voting stock, represents beneficial ownership; the reduction of nonvoting shareholders’ interests triggers reassessment. | Only voting stock is relevant; since the trust already held all voting stock, there was no real change in beneficial ownership. | Change in ownership occurred; § 62(a)(2) looks to all stock representing beneficial interests, not just voting stock. |
| Should "stock" in § 62(a)(2) be interpreted to mean "voting stock" (like in § 64)? | No—different statutory provisions serve different purposes, and § 62(a)(2)'s language is unambiguous. | Yes—uniformity with § 64 is required; both should use "voting stock." | No—§ 62(a)(2) uses "stock" broadly, not limited to voting stock. |
| Does BOE guidance or administrative materials require deference on this interpretive issue? | No, BOE’s regulation and examples support the Assessor’s interpretation or are ambiguous; legislative text controls. | Yes, BOE’s materials suggest focus should be on voting stock, and courts should defer. | Relevant BOE regulations do not support trustees’ position; interpretive materials are not persuasive. |
| Is there a policy or administrative reason to prefer a "voting stock only" measure for ownership interests? | No—tracking all beneficial interests prevents tax avoidance and matches statutory purpose; practical to apply. | Yes—easier to administer and promotes uniformity; reduces reassessment complexity. | No—statute’s purpose is best served by including all stock; uniformity concern unfounded. |
Key Cases Cited
- Pacific Southwest Realty Co. v. County of Los Angeles, 1 Cal.4th 155 (Cal. 1991) (lays out the statutory scheme for distinguishing change in ownership under Prop 13)
- Auerbach v. Assessment Appeals Bd. No. 1, 39 Cal.4th 153 (Cal. 2006) (discusses Prop 13’s implementation and legislative history)
- Citizens for Fair REU Rates v. City of Redding, 6 Cal.5th 1 (Cal. 2018) (addresses Prop 13's restrictions and underlying policy)
- MacDermot v. Hayes, 175 Cal. 95 (Cal. 1917) (shareholders as beneficial owners of corporate property)
- Grosset v. Wenaas, 42 Cal.4th 1100 (Cal. 2008) (corporate governance and voting rights)