Williams & Fickett v. Cnty. of Fresno
| Decision Date | 05 June 2017 |
| Docket Number | S224476 |
| Citation | 2 Cal.5th 1258,395 P.3d 247,218 Cal.Rptr.3d 362 |
| Court | California Supreme Court |
| Parties | WILLIAMS & FICKETT, Plaintiff and Appellant, v. COUNTY OF FRESNO, Defendant and Respondent. |
Dowling Aaron Incorporated, Lynne Thaxter Brown and Ronald A. Henderson, Fresno, for Plaintiff and Appellant.
Daniel C. Cederborg, County Counsel, Michal R. Linden and Peter Wall, Deputy County Counsel, for Defendant and Respondent.
Mary C. Wickham, Interim County Counsel (Los Angeles) and Albert Ramseyer, Principal Deputy County Counsel, for California State Association of Counties as Amicus Curiae on behalf of Defendant and Respondent.
As a general rule, a party must exhaust available administrative remedies as a prerequisite to seeking relief in the courts. "In the property tax context, application of the exhaustion principle means that a taxpayer ordinarily may not file or pursue a court action for a tax refund without first applying to the local board of equalization for assessment reduction under [Revenue and Taxation Code] section 1603 and filing an administrative tax refund claim under section 5097."1 (Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, 1308, 104 Cal.Rptr.3d 195, 223 P.3d 57, italics omitted (Steinhart ).) Our case law has recognized an exception to this general rubric where a tax assessment is "a nullity as a matter of law." (Stenocord v. San Francisco (1970) 2 Cal.3d 984, 987, 88 Cal.Rptr. 166, 471 P.2d 966 (Stenocord ).) This case presents the question of whether the nullity exception applies, so that a timely assessment appeal is not required as a first step in the exhaustion process, when an assessment on nonexempt property is challenged on the ground that the taxpayer does not own the property involved.
We conclude that in this scenario, the taxpayer must seek an assessment reduction through the assessment appeal process before the county board of equalization or a county assessment appeals board (county board), or obtain a stipulation under section 5142, subdivision (b) that such proceedings are unnecessary, in order to maintain a postpayment superior court action under section 5140 that seeks reduction of the tax. To the extent that our decision in Parr-Richmond Industrial Corp. v. Boyd (1954) 43 Cal.2d 157, 272 P.2d 16 (Parr-Richmond ) provides otherwise, we conclude that it has been overtaken by intervening developments in the law, and overrule it. However, because plaintiff and others in its position could reasonably have relied on Parr-Richmond in opting not to pursue timely assessment appeal proceedings under section 1603, we give our ruling prospective effect only. We therefore affirm the judgment of the Court of Appeal.
This is a tax refund action brought by plaintiff Williams & Fickett against defendant County of Fresno (County). Because this case is before us after the trial court sustained defendant's demurrer without leave to amend, we take the facts as stated in the operative complaint and its attachments to be true. (Steinhart , supra , 47 Cal.4th at p. 1304, fn. 1, 104 Cal.Rptr.3d 195, 223 P.3d 57.) Plaintiff is a general partnership engaged in the business of farming in Fresno County. In 1997, the County's Office of the Assessor-Recorder conducted an audit of plaintiff. That audit eventually led to escape assessments2 for the tax years 1994 through 1997 and assessments for the tax years 1996 through 2001, based on the assertion that plaintiff owned certain farming equipment that was not reported, or was incorrectly reported, on its personal property statements. In 1997, when the County first gave notice of the escape assessments, it informed plaintiff that if plaintiff wished to challenge the assessments, it had 60 days from the date of the notice to apply to the County's assessment appeals board for assessment reductions under section 1603. On the relevant lien dates, however, plaintiff did not own the farm equipment that was the subject of the assessments, and plaintiff neither paid the assessed taxes nor applied for assessment reductions under section 1603 within the 60-day period. The County then recorded certificates of delinquency related to the unpaid tax assessments, resulting in liens on plaintiff's real and personal property.
In 2003, the County audited plaintiff's property tax declaration for the 2001 tax year. At that time, the County found an overassessment and gave plaintiff a refund for the 2001 tax year. The County declined, however, to grant refunds for previous tax years. In 2006, the County again audited plaintiff, and it again found an overassessment, giving plaintiff refunds for the tax years 2002 through 2005.
Shortly after the 2006 audit, plaintiff hoped to refinance certain property, and it sought to clear the tax liens that encumbered that property. Plaintiff's attorney wrote to the County's auditor-controller, explaining: The County declined to reduce the liens.
On June 13, 2007, plaintiff attempted to apply to the assessment appeals board for cancellation of the disputed assessments. These applications were submitted to the clerk of the board of supervisors using the County's printed form for applying for assessment reductions under section 1603.3 That form includes a catchall option stating: Plaintiff's attorney checked that catchall option on each of the applications and attached a statement saying, "This application is based upon Revenue and Taxation Code § 4986."4 The attachment further explained that as of the lien date, plaintiff was not the owner of most of the property being taxed. The County returned the applications unfiled, taking the view that they were untimely applications for assessment reductions under section 1603.
About three years later, on November 24, 2010, plaintiff filed a complaint for declaratory relief against the County, asserting that the farm equipment in question had been "sold or returned to secured creditors," and therefore that the assessments related to the equipment should be cancelled. The trial court sustained a demurrer to the complaint, concluding that the complaint sought to enjoin the collection of property taxes, which is prohibited by both the state Constitution and state law (see Cal. Const., art. XIII, § 32 ; see also § 4807).
In 2012, plaintiff paid the disputed taxes, including interest and penalties, and it then filed administrative refund claims under section 5097. The County denied those claims.
Finally, in 2013, plaintiff initiated this action under section 5140, seeking to recover the taxes that it had paid. The superior court sustained the County's demurrer on the ground that plaintiff had failed to exhaust its administrative remedies by not filing timely applications for reduction of the challenged assessments under section 1603, subdivision (a). The Court of Appeal reversed, concluding that "where, as here, the taxpayer claims [an] assessment is void because the taxpayer does not own the [assessed] property, the taxpayer is not required to apply for an assessment reduction under section 1603, subdivision (a), to exhaust its administrative remedies." We granted review.
According to plaintiff, a taxpayer that asserts it does not own nonexempt assessed property need not first file and prosecute an assessment appeal under section 1603 et seq. in order to later pursue a refund action (see § 5140) after filing an administrative tax refund claim (see § 5097). As we will explain, against a backdrop of the general rule that requires the exhaustion of adequate administrative remedies, the statutory scheme for assessment appeals evinces the Legislature's intent that disputes such as the one at bar be presented, in the first instance, to a county board through the assessment appeal process. When a taxpayer seeks a reduction in an assessment on the local roll on the ground that it does not own the assessed property, the assessor and county board may agree with the taxpayer that the matter involves only a nonvaluation question; by statute, a stipulation to this effect will satisfy the exhaustion requirement of an assessment appeal. Otherwise, an assessment appeal must be pursued to resolution before the county board to preserve the taxpayer's right to later bring a refund action after payment of the tax. This design advances the salutary purposes served by the exhaustion requirement, while also allowing for expedited presentation of disputes to the courts in situations where, to all involved, a matter does not implicate the core of a county board's expertise.
The rule requiring exhaustion of administrative remedies is well settled.
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...established reasonable or justified reliance on prior California case law. (E.g., Williams & Fickett v. County of Fresno (2017) 2 Cal.5th 1258, 1282, 218 Cal.Rptr.3d 362, 395 P.3d 247 [language in prior California Supreme Court decision "was unequivocal, lending itself to reasonable relianc......