Fielder v. City of Los Angeles

• Decision Date: 26 February 1993
• Docket Number: No. B068533,B068533
• Citation: 14 Cal.App.4th 137,17 Cal.Rptr.2d 630
• Court: California Court of Appeals Court of Appeals
• Parties: Raymond FIELDER et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, Defendant and Respondent.

Page 630

17 Cal.Rptr.2d 630

14 Cal.App.4th 137

Raymond FIELDER et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, Defendant and Respondent.

No. B068533.

Court of Appeal, Second District, Division 1, California.

Feb. 26, 1993.

Review Denied May 27, 1993.

Ronald A. Zumbrun, Anthony T. Caso and Alan W. Foutz, Sacramento, for plaintiffs and appellants.

Lillick & Charles and Lawrence N. Minch, San Francisco, as amici curiae on behalf of plaintiffs and appellants.

James K. Hahn, City Atty., Richard A. Dawson, Asst. City Atty., and Michael L. Klekner, Deputy City Atty., for defendant and respondent.

SPENCER, Presiding Justice.

INTRODUCTION

Plaintiffs Raymond Fielder and others appeal from a summary judgment entered in favor of defendant City of Los Angeles.

FACTUAL BACKGROUND

On May 31, 1991, defendant's city council enacted ordinance No. 166976. The ordinance imposes upon each deed or instrument in writing that transfers or conveys real property to a purchaser a tax of $2.25 for each $500 or fractional part thereof of the value of the property, as determined from the purchase price. The individual plaintiffs were assessed and required to pay this tax upon selling their residences. ¹ In initiating the instant action, plaintiffs sought a declaration that the transfer tax imposed pursuant to ordinance No. 166976 violates article XIII A, section 4, of the California Constitution and is preempted by Government Code section 53725, subdivision (a).

CONTENTIONS

I

Plaintiffs contend ordinance No. 166976 violates article XIII A, section 4, of the California Constitution.

II

Plaintiffs further contend ordinance No. 166976 is preempted by Government Code section 53725, subdivision (a).

DISCUSSION

I

Plaintiffs contend ordinance No. 166976 violates article XIII A, section 4, of the California Constitution. The contention lacks merit.

Article XIII A was added to the state Constitution by an initiative measure known as Proposition 13 on June 6, 1978. While plaintiffs argue the applicability only of section 4 to this case, article XIII A is best analyzed as a whole.

Section 1 of article XIII A establishes a ceiling on the amount of any ad valorem tax on real property of one percent of the cash value of the property, subject to specific exceptions. The ceiling may be exceeded to pay the interest and redemption charges either on preexisting voter-approved indebtedness or on future voter-approved indebtedness incurred for the acquisition or improvement of real property. In the latter case, the bonded indebtedness must be approved by a two-thirds majority of the votes cast.

Recognizing that there had been several years of runaway inflation in the value of California real property and a concomitant inflation in the value at which such property was assessed for tax purposes, section 2 of article XIII A contains a "value roll-back" provision. Full cash value is defined as the assessed valuation shown on the 1975-1976 tax bill except when property is purchased, newly constructed or changes hands after that assessment. Essential reconstruction (that occasioned by a disaster or necessary for compliance with seismic safety ordinances) is excluded from the definition of "newly constructed" property. The full cash value base of the property may be increased no more than two percent per year to reflect the rate of inflation.

Section 3 of article XIII A limits the ability of the state Legislature to enact increased state taxes. It provides: "From and after the effective date of this article, any changes in State taxes enacted for the purpose of increasing revenues collected pursuant thereto whether by increased rates or changes in methods of computation must be imposed by an Act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature, except that no new ad valorem taxes on real property, or sales or transaction taxes on the sales of real property may be imposed." Section 3 limits the taxing authority of the state Legislature and expresses "an absolute ban on new ad valorem taxes on real property"; in this respect, it is a mere restatement of section 1. (Kennedy Wholesale, Inc. v. State Bd. of Equalization (1991) 53 Cal.3d 245, 253, 279 Cal.Rptr. 325, 806 P.2d 1360.)

Section 4 imposes limits on the ability of local governmental entities to enact new taxes. It provides: "Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district, except ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property within such City, County or special district."

In City and County of San Francisco v. Farrell (1982) 32 Cal.3d 47, 184 Cal.Rptr. 713, 648 P.2d 935, the California Supreme Court first construed the meaning of section 4 and, specifically, of the phrase "special taxes." Noting the fundamentally undemocratic nature of a supermajority requirement (32 Cal.3d at p. 52, 184 Cal.Rptr. 713, 648 P.2d 935), the court rejected the taxpayer's argument that "special taxes" means all additional or supplemental taxes other than those specifically excepted. Constitutional provisions must be construed together, avoiding surplusage and giving significance to every part. (Id. at p. 54, 184 Cal.Rptr. 713, 648 P.2d 935.) The drafters of article XIII A had demonstrated in section 3 that they knew how to say "any taxes" when they meant it; they did not use comparable language in section 4. (Farrell, supra, at p. 56, 184 Cal.Rptr. 713, 648 P.2d 935.) Accordingly, the court holds, the phrase "special taxes" means taxes levied for a specific purpose rather than a general fund levy. (Id. at p. 57, 184 Cal.Rptr. 713, 684 P.2d 935; accord, Heckendorn v. City of San Marino (1986) 42 Cal.3d 481, 489, 229 Cal.Rptr. 324, 723 P.2d 64.)

Recognizing the essential meaning of Farrell, Cohn v. City of Oakland (1990) 223 Cal.App.3d 261, 272 Cal.Rptr. 714 interprets the excepting clause, at issue here, as prohibiting the imposition of ad valorem real property taxes and real property sale or transfer taxes which are special taxes. (At p. 263, 272 Cal.Rptr. 714; see also Heckendorn v. City of San Marino, supra, 42 Cal.3d at p. 486, 229 Cal.Rptr. 324, 723 P.2d 64.) Plaintiffs argue Cohn is wrongly decided.

It is a settled principle of statutory construction that the subject of an exception ordinarily is the same as that to which the exception applies. (Los Angeles County Transportation Com. v. Richmond (1982) 31 Cal.3d 197, 205, 182 Cal.Rptr. 324, 643 P.2d 941.) In section 4 of article XIII A, the clause reading "except ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property" is separated from the preceding clause by a comma. The subject of the preceding clause clearly is "special taxes," not any taxes. Any common sense reading of the excepting clause thus leads ineluctably to the conclusion that the subject of that clause also is "special taxes," not "any" taxes. To give the excepting clause the meaning for which plaintiffs argue, this court would have to rewrite it entirely. We may not do that. " 'Where the electorate has demonstrated the ability to make [its] intent clear, it is not the province of [an appellate] court to imply an intent left unexpressed.' [Citation.]" (Kennedy Wholesale, Inc. v. State Bd. of Equalization, supra, 53 Cal.3d at p. 252, 279 Cal.Rptr. 325, 806 P.2d 1360.) Accordingly, we adopt the holding of Cohn v. City of Oakland, supra, 223 Cal.App.3d at page 263, 272 Cal.Rptr. 714, that the enactment of or increase in a transfer tax is not prohibited by article XIII A when the transfer tax is a general, rather than a specific, tax.

II

Plaintiffs further contend ordinance No. 166976 is preempted by Government Code section 53725, subdivision (a). We disagree.

Government Code section 53725 was enacted on November 4, 1986, as part of the initiative measure known as Proposition 62, which sought to place all taxing power in the hands of the voters. ² Subdivision (a) of section 53725 provides: "Except as permitted in Section 1 of Article XIII A of the California Constitution, no local government ... may impose any ad valorem taxes on real property. No local government ... may impose any transaction tax or sales tax on the sale of real property within the city, county or district."

Since charter cities such as defendant have sovereign power over municipal affairs (Cal.Const., art. XI, § 5), subdivision (a) of Government Code section 53725 does not necessarily restrict the power of a charter city to impose a transaction tax such as that enacted by ordinance No. 166976. The Legislature may preempt such conflicting charter city legislation only where the matter addressed is one of such statewide concern as to warrant the Legislature's action. (California Fed. Savings & Loan Assn. v. City of Los Angeles (1991) 54 Cal.3d 1, 7, 283 Cal.Rptr. 569, 812 P.2d 916.) "In the event of a true conflict between a state statute reasonably tailored to the resolution of a subject of statewide concern and a charter city tax measure, the latter ceases to be a 'municipal affair' to the extent of the conflict and must yield." (Ibid.)

The determination of whether an activity is a municipal affair or one of statewide concern "is an ad hoc inquiry; ... 'the constitutional concept of municipal affairs is not a fixed or static quantity.' " Rather, it poses a question which " 'must be answered in light of the facts and circumstances surrounding each case.' " (California Fed. Savings & Loan Assn. v. City of Los Angeles, supra, 54 Cal.3d at p. 16, 283 Cal.Rptr. 569, 812 P.2d 916.) Initially, "a court asked to resolve a putative conflict between a state statute and a charter city measure ... must satisfy itself that the case presents an actual conflict between the two." (Ibid.) That element is present here; there is a clear, unmistakable conflict between subdivision (a)...