Kuperman v. Assessment Appeals Bd. No. 1

• Decision Date: 20 March 2006
• Docket Number: No. D045751.,D045751.
• Citation: 40 Cal.Rptr.3d 703,137 Cal.App.4th 918
• Court: California Court of Appeals Court of Appeals
• Parties: Lawrence C. KUPERMAN, Plaintiff and Appellant, v. ASSESSMENT APPEALS BOARD NO. 1, San Diego County, Defendant; Gregory J. Smith, San Diego County Assessor, Real Party in Interest and Respondent.

40 Cal.Rptr.3d 703

137 Cal.App.4th 918

Lawrence C. KUPERMAN, Plaintiff and Appellant, v. ASSESSMENT APPEALS BOARD NO. 1, San Diego County, Defendant Gregory J. Smith, San Diego County Assessor, Real Party in Interest and Respondent.

No. D045751.

Court of Appeal, Fourth District, Division 1.

March 20, 2006.

Lawrence C. Kuperman, in pro. per., for Plaintiff and Appellant.

John J. Sansone, County Counsel, and Walter J. De Lorrell III, Deputy County Counsel, for Real Party in Interest and Respondent.

McCONNELL, P.J.

Lawrence C. Kuperman appeals the denial of his petition for a writ of administrative mandamus to set aside a decision of the Assessment Appeals Board (the Board) finding the San Diego County Tax Assessor (the Assessor) lacked jurisdiction to consider Kuperman's application for a reduction in the base year value of property because the application was not timely filed. We affirm the judgment.

FACTS

In 1996, Kuperman paid $185,000 to purchase a 50-acre parcel located in the De Luz area of Fallbrook. Angie Fedele, a real estate appraiser in the Assessor's office, valued the property. In 1993, Fedele had valued the property at $300,000 when it changed ownership. By 1996, the enrolled value of the property was $313,076. Fedele initially believed Kuperman's $185,000 purchase price "look[ed] low." However, after considering declines in the real estate market from 1993 to 1996, information about the property contained in the "Multiple Listing Service," comparable sales, and evidence showing the parcel possibly had unexploded military ordnance from Camp Pendleton, she determined the purchase price was within the range of market value for the property.

In September 2002, Kuperman filed an application with the Assessor for a reduction in the base year value of his property on the assessment rolls because he had discovered in August 2001 that San Diego Gas & Electric Company (SDG & E) had an easement over his land. This easement had been recorded in 1972 but had not been disclosed on the exceptions to the title insurance policy issued when Kuperman purchased the property in 1996. At the time he made his application to the Assessor, the enrolled value of the real property on the Assessor's roll was $198,447. Kuperman believed the real property should be valued at $38,242.

The Assessor denied Kuperman's application. Kuperman appealed to the Board. The Board, after holding hearings, denied his appeal on the basis his application to challenge the Assessor's base year value, which had been based on the Assessor's exercise of judgment as to value, was untimely filed because it was filed more than four years after the base year value was determined and the Board lacked jurisdiction to change the base year value.

Kuperman filed a petition for a writ of mandamus in superior court to set aside the Board's decision. The court found Kuperman's application for a reduction in the base year value was untimely and denied the petition.

DISCUSSION

I Timeliness of Application

Kuperman contends the trial court erred in finding the Assessor lacked jurisdiction to revise the base year value. He contends Revenue and Taxation Code¹ section 51.5 authorized the Assessor to correct the base year value in the assessment year after the easement was discovered, not just during the first four years after the base year value was first determined.

Under the California Constitution, article XIII A, section 1, subdivision (a), a county assessor must determine a base year value for property when it changes ownership, that is, the "full cash value" or "fair market value" of the property. (§ 110.1, subd. (b).) "For purposes of determining the `full cash value' or `fair market value' of real property ... `full cash value' or `fair market value' is the purchase price paid in the transaction unless it is established by a preponderance of the evidence that the real property would not have transferred for that purchase price in an open market transaction. The purchase price shall, however, be rebuttably presumed to be the `full cash value' or `fair market value' if the terms of the transaction were negotiated at arms length between a knowledgeable transferor and transferee neither of which could take advantage of the exigencies of the other...." (§ 110, subd. (b).) "[A]fter a property's base year value is determined, subsequent entries onto the assessment rolls [generally] are done pro forma without the need to exercise one's judgment as to value, simply by applying an inflation factor to the previous year's entry." (Montgomery Ward & Co. v. County of Santa Clara (1996) 47 Cal.App.4th 1122, 1137, 55 Cal Rptr.2d 261 (Montgomery Ward); § 51².)

Section 51.5 allows a taxpayer to request the assessor to correct the base year. In relevant part, section 51.5, states:

"(a) Notwithstanding any other provision of the law, any error or omission in the determination of a base year value ..., including the failure to establish that base year value, which does not involve the exercise of an assessor's judgment as to value, shall be corrected in any assessment year in which the error or omission is discovered.

"(b) An error or an omission described in subdivision (a) which involves the exercise of an assessor's judgment as to value may be corrected only if it is placed on the current roll or roll being prepared, or is otherwise corrected, within four years after July 1 of the assessment year for which the base year value was first established."

In enacting section 51.5, the Legislature added a preamble to section 51.5, stating:

"(a) The Legislature finds and declares that fairness and equity require that county assessors have express authority to make corrections to property tax base-year values whenever it is discovered that a base-year value does not reflect applicable constitutional or statutory valuation standards or the base-year value was omitted. Any limitations imposed upon the assessor's authority to correct these errors would result in a system of taxation which, on the one hand, denies the benefits of Article XIII A of the California Constitution to some taxpayers where the barred error or correction would reduce the base-year value and, on the other hand, encourages even the most honest person to engage in deception and concealment in order to delay discovery of changes in ownership or new construction beyond the point where a correction of the base-year value can be made. Further, the failure to place any value on the assessment roll for property which completely escapes taxation because of limitations on the authority to correct errors would violate the constitutional requirement that all property in the state shall be subject to taxation. Nothing in this act violates either the spirit or the letter of Article XIII A of the California Constitution since all corrections permitted by it must be consistent with applicable constitutional and statutory valuation standards.

"(b) The Legislature further finds and declares that the provisions of law relating to escape assessments are in no way inconsistent with Article XIII A of the California Constitution. An escape assessment merely reflects the amount by which the property has been underassessed and is a mechanism which permits the correction of the effects of that underassessment. The amount of the underassessment must be determined, however, in accordance with the applicable statutory valuation standards. Thus, an escape assessment is merely a mechanism for implementing existing property tax law and cannot be in conflict with it. Accordingly, the amendments to Sections 531.2 and 532 of the Revenue and Taxation Code made by this act are necessary to make clear that an escape assessment resulting from the correction of an error in a base-year value may be made within four, six, or eight years, as applicable, after the first day of July of the assessment year, as defined in Section 118 of the Revenue and Taxation Code, in which the property either wholly escaped taxation or was underassessed, as determined by applying the applicable Article XIII A valuation standards." (Stats.1987, ch. 537, § 1(a), (b), p. 1834; Historical and Statutory Notes, 59 West's Ann. Rev. & Tax.Code (1998 ed.) foll. § 51.5., p. 24, italics added.)

Section 51.5 was enacted in response to Dreyer's Grand Ice Cream, Inc. v. County of Alameda (1986) 178 Cal. App.3d 1174, 224 Cal.Rptr. 285 (Dreyer's). (Sea World, Inc. v. County of San Diego (1994) 27 Cal.App.4th 1390, 1399, fn. 13, 33 Cal.Rptr.2d 194 (Sea World).) Dreyer's involved "escape assessments"³ and "whether the four-year statutory bar prescribed for escape assessments begins to run from the time when the base year value of the property was originally determined under Proposition 13 (Cal. Const., art. XIII A, § 2) and its implementing legislation (§ 110.1), or whether it commences to run from the assessment year in which the property, in whole or in part, escaped taxation." (Dreyer's, supra, at p. 1178, 224 Cal.Rptr. 285.) The Dreyer's court concluded there were conflicts between a pre-proposition statute, section 532, and Proposition 13. "To harmonize the two, the court held that (1) the `lien date' (i.e., March 1) should be substituted for the `July 1' date referred to [in] section 532, and (2) `the year when the base value of the property was determined pursuant to' Proposition 13 should be substituted for the term `the assessment year' in section 532." (Montgomery Ward, supra, 47 Cal. App.4th at pp. 1134-1135, 55 Cal.Rptr.2d 261; Dreyer's, at p. 1180, 224 Cal.Rptr. 285.)

Following the Dreyer's decision, the Legislature enacted section 51.5 "`to adopt clear guidelines for the correction of post-1975 base year values and to restore the statutory meaning of the terms used in the escape assessment provisions.'" (Sea World, supra, 27 Cal.App.4th 1390, 1399, fn. 13, 33 Cal.Rptr.2d 194, quoting State Board of Equalization, Analysis of Sen. Bill No. 587 (Aug....