On appeal, Seals contends substantial evidence does not support his burglary conviction because the evidence established the price of the phone was less than $950, and the jury could not consider sales tax as part of the phone's value. He also contends substantial evidence does not support his robbery conviction. Seals further asserts the trial court erred in denying his Romero motion,
In July 2014, Seals walked into Hot Spot Wireless, a cellphone store. Seals asked
Flores chased after Seals. When Flores was eight feet away from Seals, he confronted Seals, saying: "[G]ive me the fucking phone." Seals denied having the phone and kept walking, at a faster pace. Flores continued to follow Seals, demanding that he return the phone. Eventually, as Flores closed the gap between the two men to six feet, Seals pulled out a nine-inch knife. Seals held the knife by his side and said: "Get away from me. I don't have your phone."
When Flores saw the knife he was hesitant and "a little bit scared"; after he saw the knife he stopped going after the phone. Flores thought Seals might use the knife. He began to look for something to use to protect himself. Still, he continued following Seals, demanding that he return the phone. Flores testified at trial that he was determined to get the phone back because he had no insurance to cover the loss. In an effort to get closer to Seals, Flores threw a rock at him; Seals responded by throwing rocks at Flores. Eventually, police arrived and arrested Seals. Flores retrieved the phone, which was on the ground near where the men had thrown rocks. The knife was found nearby.
A jury found Seals guilty of second degree robbery and second degree commercial burglary. The trial court thereafter found true the prior conviction allegations as to five of Seals's prior criminal prosecutions. The court sentenced Seals to a total state prison term of 35 years to life.
I. The Jury Properly Included Sales Tax in Determining Whether Seals Entered the Property with Intent to Steal an Item with a Value Greater than $950.
In 2014, the People charged Seals with one count of commercial burglary in violation of section 459. By the time of trial in 2016, the electorate had enacted Proposition 47, which added section 459.5 to the Penal Code, creating a separate offense of "shoplifting." Under section 459.5, "shoplifting is defined as entering a commercial establishment with intent to commit larceny while that establishment is open during regular business hours, where the value of the property that is taken or intended to be taken does not exceed nine hundred fifty dollars ($950). Any other entry into a commercial establishment with intent to commit larceny is burglary." Shoplifting under this provision is a misdemeanor. Further, under section 459.5, subdivision (b), any act of shoplifting must be charged as such and no person charged with the crime may also be charged with burglary or theft of the same property.
In the lower court and on appeal, Seals has argued it was improper for the jury to include sales tax as part of the value of the phone. Although Seals frames this issue as one of sufficiency of the evidence, the threshold question does not involve disputed facts. Instead, whether sales tax could be included in the calculation of value is a legal question, which we review de novo. ( People v. Perkins (2016)
A. Establishing Value in Theft Crimes in California
Under section 484, subdivision (a), which defines theft, "[i]n determining the value of the property obtained, for the purposes of this section, the reasonable and fair market value shall be the test." "[C]ourts have long required section 484's 'reasonable and fair market value' test to be used for theft crimes that contained a value threshold...." ( People v. Romanowski (2017)
California courts have established these general principles for determining the value of property in a theft crime, yet no court has expressly considered whether sales tax may be included in the valuation.
B. Sales Tax and Fair Market Value
To evaluate this issue, we first consider the nature of the sales tax in California.
"The sales tax is imposed on retailers '[f]or the privilege of selling tangible personal property at retail.' [Citation.]" ( Loeffler v. Target Corp. (2014)
"[A]lthough the sales tax falls on retailers and must be paid by them to the state, retailers are permitted but not required to obtain reimbursement for their tax liability from the consumer at the time of sale. [Citations.] Whether a reimbursement amount will be added is purely a matter of contract between the retailer
The Xerox court began its analysis by noting the legal standard of full cash value for assessment under the California Tax Code is "fair market value." In turn, "[f]air market value contemplates a hypothetical transaction between an informed seller, being under no compulsion to sell, and an informed buyer, being under no compulsion to buy." ( Xerox , supra , 66 Cal.App.3d at pp. 752-753.) Xerox contended sales tax was not part of the purchase price the parties would agree upon in a market value approach. ( Id. at p. 756.) The appellate court rejected this argument based on the nature of the sales tax. The court explained:
"The California courts, while consistently holding that the legal incidence of the tax is upon the vendor, have always recognized that the ultimate burden of the sales tax, as in the case of all taxes paid in the course of production, will be shifted to the consumer. It is a part of the cost of marketing the property that is passed on to the consumer. 'It must be conceded that the purchase price ultimately is necessarily the source from which payment of the tax must be made. The consumer still has the right to purchase or not at the asked price which includes the tax. Any quibbling between the parties, in an attempt to differentiate between the purchase price and the tax by reason of the separate statement of the amount intended as tax reimbursement, will not alter the fact that within the purview of the legislative enactment the aggregate of the list price and the amount of tax reimbursement constitutes the actual purchase price of the commodity .' (Italics added.) [Citation.] [¶] Therefore, under the market value concept, where price is the basis of value, the sales tax is an element of value. The ultimate price the informed seller and buyer agree upon includes the amount of tax reimbursement. The retailer, absent exigent circumstances, would not sell for less, and the buyer purchases only if the value of the product to him justifies the total price." ( Xerox , supra , 66 Cal.App.3d at pp. 757-758.)
Xerox also asserted sales tax should not be included since it would result in different valuations of the same property depending on the county. The court rejected this argument: "Fair market value traditionally depends upon
Xerox additionally contended sales tax should not be included in fair market value because the tax amount collected from a hypothetical buyer must be paid over to the state, thus the seller has no interest in the tax. The court rejected this argument as ignoring the market value concept of valuation: "The price at which at which a willing and informed seller will sell, in the absence of some exigent circumstances, will always include his costs of production, materials, overhead, advertising and other costs of doing business. The sales tax is merely another cost of doing business, measured by the gross receipts of that business." ( Xerox, supra,
C. The Jury Properly Considered Sales Tax When Determining the Fair Market Value of the Phone on the Section 459 Charge
Although Xerox arose in a different context from this case we find the court's reasoning relevant and persuasive. In criminal cases, as in Xerox and other civil cases in this state, "fair market value" has been interpreted as what an item "would be sold for in the open market if neither buyer nor seller was under any urgent necessity to either buy or sell" the item. ( Pena, supra,
Given the nature of the sales tax in California, sales tax reimbursement may properly be viewed as part of the price a willing buyer and seller, neither of whom is forced to act, agree upon. A seller is not required to seek sales tax reimbursement from the buyer. As a result, as the Xerox court noted, the sales tax is similar to other factors retailers take into consideration to increase the price of an item, such as overhead and advertising. When the retailer chooses not to absorb the sales tax and instead seeks sales tax reimbursement from the buyer, that is "purely a matter of contract between the retailer and consumer." ( Loeffler , supra ,
Seals relies on several cases from other states to support his argument that the sales tax should not be included in value.
Similarly, in State v. Kluge (Iowa Ct. App. 2003)
Alexander , Kluge, and several courts in other states have also adopted the reasoning of two New York trial courts which concluded sales tax should not be included in the value of property to determine the degree of a criminal offense: People v. Barbuto (N.Y. Sup. Ct. 1980)
However, unlike the sales tax law and administration described in several of the cases from other jurisdictions, California law does not obligate a merchant to collect a sales tax from the customer. (See e.g., Barbuto , supra,
Some states have concluded sales tax should not be included in the value of stolen property because there was no sale to trigger the imposition of the sales tax. (See e.g., Alexander,
We note our conclusion that sales tax reimbursement may be included in determining the fair market value of stolen retail property is consistent with decisions of several federal courts that have also considered the question. For example, in U.S. v. Draves (7th Cir. 1997)
Here, the jury could properly consider the sales tax reimbursement in determining the reasonable and fair market value of the phone Seals stole. While there was no testimony about the exact amount attributable to sales tax reimbursement, Flores testified that he usually sold the phone for an amount that, including tax, was over $950 and close to $1,000. The evidence presented at trial supported the jury's conclusion that the value of the phone exceeded $950.
II.-V.
DISPOSITION
The judgment is modified to reflect an award of 89 days of presentence conduct credit. The trial court is directed to prepare a corrected abstract of judgment reflecting the correct award of presentence
We concur:
FLIER, Acting P.J.
GRIMES, J.
Notes
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
All further undesignated section references are to the Penal Code unless otherwise stated.
People v. Superior Court (Romero) (1996)
On the robbery count, the trial court imposed a sentence of 25 years to life. The court imposed a sentence of six years on the burglary count-three years, doubled pursuant to the Three Strikes law-and stayed pursuant to section 654. The court further imposed a total 10-year determinate sentence based on two five-year priors (§ 667, subd. (a)(1)).
See footnote *, ante.
In his reply brief on appeal, Seals argues there was insufficient evidence of the value of the phone because, in addition to testifying that he sold the phone, with sales tax, for almost $1,000, Flores also testified he bargained on the price of the phone, the "average market value" for the phone at the time was "like 499, 500," and "most people" sold them at that time for "600, 599." However, on appeal, we do not resolve evidentiary conflicts, but instead " 'review the evidence in the light most favorable to the prosecution and presume in support of the judgment the existence of every fact the jury could reasonably have deduced from the evidence.' " (People v. Manibusan (2013)
See footnote *, ante.