SHIMMON v. Franchise Tax Board, 117 Cal. Rptr. 3d 430

Three couples filed income tax refund suits against the Franchise Tax Board seeking refunds of interest suspended under Rev. & Tax. Code § 19116 for periods during which interest was improperly charged.
The Shimmons and Dus chose California VCI option 1, waiving refunds on amounts paid in connection with abusive tax avoidance transactions, in exchange for waivers of penalties by the FTB.
The Mickelsens chose VCI option 2, retaining the right to seek a refund for interest, and later filed amended returns claiming a § 19116 refund.
The FTB demurred or moved for judgment on the pleadings in all three actions and obtained dismissal in each, prompting appeals by all six plaintiffs.
The trial court held that the Dus and Shimmons’ complaints were barred under their VCI option 1 election, and granted judgment on the pleadings for the Mickelsens, which the Mickelsens challenged on appeal.
We review de novo the propriety of demurrers and judgments on the pleadings and examine whether amendment could cure defects.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether VCI option 1 bars Du and Shimmon claims	Du/Shimmon: option 1 does not bar refund claims	FTB option 1 waiver covers all refunds related to abusive transactions	Yes; option 1 bars refunds, so Du/Shimmon claims are dismissed
Whether Mickelsen action should have been dismissed or denied without prejudice	Mickelsen could pursue refund claim under § 19116	FTB right to judgment on pleadings defeats claim as pleaded	No; judgment on pleadings should have been denied without prejudice to amend

Schifando v. City of Los Angeles, 31 Cal.4th 1074 (2003) (demurrer standard and cureability on appeal)
Pang v. Beverly Hospital, Inc., 79 Cal.App.4th 986 (2000) (standard for reviewing judgments on the pleadings without leave to amend)
Campos v. Anderson, 57 Cal.App.4th 784 (1997) (good cause requirement for failing to raise arguments)