Opinion
B295601
02-28-2020
LEE LEWIS, TRUSTEE OF THE MORTON AND RUTH LEWIS LIVING TRUST/MARITAL TRUST, Plaintiff and Appellant, v. COUNTY OF LOS ANGELES, Defendant and Respondent.
FitzGerald Yap Kreditor, Eoin L. Kreditor and George Vausher, for Plaintiff and Appellant. Office of the County Counsel, Mary C. Wickham, County Counsel, Nicole Davis Tinkham, Assistant County Counsel, Richard E. Girgado, Senior Deputy County Counsel, and Drew M. Taylor, Deputy County Counsel, for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC713993) APPEAL from a judgment of the Superior Court of Los Angeles County, Malcolm Mackey, Judge. Affirmed. FitzGerald Yap Kreditor, Eoin L. Kreditor and George Vausher, for Plaintiff and Appellant. Office of the County Counsel, Mary C. Wickham, County Counsel, Nicole Davis Tinkham, Assistant County Counsel, Richard E. Girgado, Senior Deputy County Counsel, and Drew M. Taylor, Deputy County Counsel, for Defendant and Respondent.
The value of real property in California is reassessed upon a change in ownership, which usually leads to a higher property tax bill. But the Revenue and Taxation Code makes an exception to this reassessment rule for property inherited from a parent; in such cases, no reassessment will be undertaken if (as relevant here) the son or daughter inheriting the property submits an exemption claim within six months after the assessor mails a notice of supplemental assessment. (Rev. & Tax. Code, § 63.1, subd. (e)(1)(C).) Lee Lewis, trustee of the Morton and Ruth Lewis Living Trust/Marital Trust, (plaintiff) submitted exemption claims after the six-month deadline but argues they should be deemed timely because he alleges he never received the notices of supplemental assessment mailed by the Los Angeles County assessor. We hold to the contrary.
Undesignated statutory references that follow are to the Revenue and Taxation Code.
I. BACKGROUND
This appeal is taken from a demurrer sustained without leave to amend. Our recitation of the pertinent background is therefore drawn from plaintiff's complaint and the findings of the Los Angeles County Assessment Appeals Board (the Board), attached as an exhibit thereto.
Plaintiff filed the notice of appeal after the trial court issued its order sustaining the demurrer but before the trial court entered the judgment of dismissal. We will treat the premature notice of appeal as having been filed immediately after the ensuing judgment. (Cal. Rules of Court, rule 8.308(c); see also San Diego Unified School Dist. v. Yee (2018) 30 Cal.App.5th 723, 730, fn. 5.)
The Morton and Ruth Lewis Living Trust/Marital Trust is the former owner of three commercial buildings in Huntington Park, California. Plaintiff alleges that when Morton Lewis died in 2002, "his interest in [these] properties passed to his spouse, Ruth Lewis, in trust, with their son, Lee Lewis, granted a remainder interest." Ruth Lewis died in May 2011, and plaintiff did not submit a property reassessment exemption claim in the three years following her death. The commercial buildings were sold to third parties in 2015.
Plaintiff alleges that, "[t]o the best of [his] knowledge, information and belief, [he] did not receive any Notice of Supplemental Assessment regarding additional assessments" for the three commercial properties. But he acknowledges receipt of what he contends were excessive tax bills in January 2016. He filed his claim for exemption from reassessment the next month and, after paying $62,360 under protest, filed assessment appeal applications with the Board.
The Board found that although plaintiff was required to notify the Los Angeles County Assessor of a change in ownership within 150 days of his mother's death in 2011, he did not do so until days before the properties were sold in March 2015. The Board further found supplemental assessment notices were mailed soon thereafter, on May 14, 2015, and May 28, 2015. The Board rejected plaintiff's contention that his claims for exemption should be deemed timely even though he submitted them more than six months after the County mailed notices of supplemental assessment. The Board concluded nothing in the statutory text, legislative history, or case law suggested the six-month grace period should be measured from the date a notice is received by a taxpayer rather than the date the notice is mailed.
Section 480, subdivision (b) provides, in pertinent part, that in "cases in which an interest in real property is transferred by reason of death, including a transfer through the medium of a trust, the change in ownership statement or statements shall be filed by the trustee (if the property was held in trust) or the transferee with the county recorder or assessor in each county in which the decedent owned an interest in real property within 150 days after the date of death."
After the Board denied plaintiff's assessment appeal applications, he filed a complaint for refund of property taxes against the County. The County demurred, arguing plaintiff's claims for exemption from reassessment were not timely filed. In his opposition to the demurrer, plaintiff contended the legislative history of section 63.1, subdivision (e)(1)(C) suggests "non-receipt of the notice is a material fact that must be considered by the court when reviewing the case for purposes of granting relief from default." The trial court sustained the County's demurrer without leave to amend, finding no support for plaintiff's contention that the statutory six-month grace period does not begin to run if a mailed notice is not received.
Plaintiff did not contend the complaint stated a cause of action on the theory that notices of supplemental assessment were never mailed.
II. DISCUSSION
Plaintiff contends we can interpret section 63.1, subdivision (e)(1)(C) to start the six-month grace period on the date he received "actual notice or something like it" or, failing that, craft an equitable exception to the statutory language that turns on mailing, not receipt, of a supplemental assessment notice. He is wrong on both counts. The statute clearly provides the six-month grace period runs from the date the County mails a notice of supplemental assessment, and we need do no interpretive analysis beyond that. Moreover, if we had reason to review the legislative history, it still does not aid plaintiff: The fact that lawmakers created the six-month grace period out of concern about a "tax trap" does not prove they favored a "receipt" rule over a "mailing" rule. In addition, plaintiff was not entitled to "relief from default" under Code of Civil Procedure section 473 or the trial court's inherent equitable powers.
A. Plaintiff's Exemption Claim Is Untimely Under the Unambiguous Language of Section 63 .1
Proposition 13, approved in 1978, "set the assessed value of real property as the 'full cash value' on the owner's 1975-1976 tax bill, limited increases in the assessed value to 2 percent per year unless there was a change in ownership, and limited the rate of taxation on real property to 1 percent of its assessed value. (Cal. Const., art. XIII A, §§ 1, 2.)" (Jacks v. City of Santa Barbara (2017) 3 Cal.5th 248, 258.) Proposition 58, approved eight years later, further amended the Constitution to provide that a "change of ownership" does not occur when, among other things, certain real property is transferred from a parent to a child. (Cal. Const., art. XIII A, § 2, subd. (h)(1); Strong v. State Bd. of Equalization (2007) 155 Cal.App.4th 1182, 1187.)
More specifically, no change in ownership occurs when there is a "purchase or transfer of the principal residence of the transferor in the case of a purchase or transfer between parents and their children, as defined by the Legislature, and the purchase or transfer of the first one million dollars ($1,000,000) of the full cash value of all other real property between parents and their children, as defined by the Legislature." (Cal. Const., art. XIII A, § 2, subd. (h)(1).)
The exemption from reassessment established by Proposition 58, like other exemptions which have the effect of reducing otherwise due property taxes, is not automatic; it is waived if not claimed. (See Cal. Const., art. XIII, § 6.) Section 63.1, subdivision (e)(1) sets forth the requirements for claiming the parent-child transfer exemption. "For transfers of real property between parents and their children occurring on or after September 30, 1990," a claim for exemption from reassessment must be filed "within three years after the date of the purchase or transfer of real property for which the claim is filed, or prior to transfer of the real property to a third party, whichever is earlier." (§ 63.1, subd. (e)(1)(B).) A claim filed after this deadline, however, will still "be deemed timely filed if it is filed within six months after the date of mailing of a notice of supplemental or escape assessment, issued as a result of the purchase or transfer of real property for which the claim is filed." (§ 63.1, subd. (e)(1)(C).)
There is no dispute that plaintiff missed the deadlines imposed by section 63.1, subdivision (e)(1)(B): He claimed exemption from reassessment more than three years after his mother's death, and after the properties were sold to third parties. The sole issue in this appeal is whether his claims for exemption should be deemed timely under section 63.1, subdivision (e)(1)(C), notwithstanding the fact that they were submitted more than six months after notices of supplemental assessment were mailed, because he alleges he did not receive the notices.
"We begin with the statute's plain language, as the words the Legislature chose to enact are the most reliable indicator of its intent. [Citation.]" (In re Corrine W. (2009) 45 Cal.4th 522, 529.) We turn to other interpretive sources, including legislative history, only if the text does not clearly manifest the Legislature's intention. (Ibid.; John v. Superior Court (2016) 63 Cal.4th 91, 95-96.)
The statutory language here is clear: a taxpayer's exemption claim will be deemed timely if submitted within six months from the date a supplemental notice was mailed—not received. It is undisputed that the supplemental notices to plaintiff were mailed, and mailed more than six months before plaintiff submitted an exemption claim. That is the end of the matter. (People v. Superior Court (Sanchez-Flores) (2015) 242 Cal.App.4th 692, 699 ["Because the best evidence of the Legislature's intent is the statutory text itself, that is where our inquiry begins; if the text is unambiguous, that is also where our inquiry ordinarily ends"].)
Were it necessary to look to legislative history, the signing statement plaintiff chiefly relies on still does not help him. When section 63.1 was amended, then-Governor Pete Wilson prepared a signing statement that reads, in relevant part: "[I]n many cases[,] taxpayers are unaware that they need to apply for the exemption until a supplemental assessment is levied, which doesn't happen until after the three year window has expired. This bill addresses this 'tax trap' by allowing a claim to be filed within six months of mailing of the supplemental assessment." (Governor's signature message to Sen. on Sen. Bill No. 675 (Oct. 1, 1993) 2 Sen. J. (1993-1994 Reg. Sess.) p. 3503.) According to plaintiff, it is "evident" from this statement "that when the statute refers to the mailing of the notice it is also requiring that the notice actually be received by the taxpayer."
At most, the signing statement suggests the Governor understood the date of mailing was the operative event and believed, quite correctly, that a notice mailed would almost always be a notice received. That does not mean, however, a different rule can or should obtain in the rare case where a mailed notice is not seen by the recipient (as compared to the many cases where nothing goes awry).
The Legislature's decision to start the six-month grace period on the date the notice of supplemental assessment is mailed rather than the date it is received may produce harsh results on rare occasion, but that does not justify disregarding the plain meaning of section 63.1, subdivision (e)(1)(C). The statutory language, particularly when compared with the state of the law before the section 63.1, subdivision (e)(1)(C) amendment, is consistent with a legislative intention to provide some relief to unwary taxpayers (in the form of a six-month grace period) while refraining from adopting a receipt-based method of calculating deadlines that is less certain, more administratively cumbersome, and significantly vulnerable to abuse.
Notably, section 63.1, subdivision (e)(1)(C) is not the only provision of the Revenue and Taxation Code that uses the date on which a notice is mailed as the starting point from which a property tax deadline runs. Section 170, subdivision (c)(2) provides a taxpayer may appeal the amount of a proposed reassessment of damaged or destroyed property "within six months of the date of [the assessor] mailing the notice." Section 534, subdivision (c)(2) provides certain appeals must be filed "within 60 days of the date of mailing printed on the notice [of assessment] or the postmarked date therefor, whichever is later." Section 1605, subdivision (b)(1) provides certain applications for reduction in assessment must be filed "no later than 60 days after the date of mailing printed on the notice of assessment, or the postmark therefor, whichever is later."
Plaintiff also urges us to depart from a literal reading of the statute because it subjects him to a "penalty" that serves "no legitimate purpose" and deprives him of due process. This too is unconvincing. Plaintiff's observation that the purpose of a tax penalty "is to put pressure on the delinquent [taxpayer] to pay its taxes" (Timberline v. Jaisinghani (1997) 54 Cal.App.4th 1361, 1366) has no bearing on this case. The reassessment was never meant to induce plaintiff to do anything—it was an ordinary function of the County Assessor's office from which plaintiff failed to claim an available exemption. In addition, plaintiff contends he "has been denied a meaningful hearing," but does not identify any material issues on which he has a right to be heard.
B. Plaintiff Does Not Identify Any Other Grounds for Evading Section 63 .1's Clear Deadlines
Plaintiff contends that, under Code of Civil Procedure section 473, subdivision (b), the trial court was either required to rule, or had discretion to rule, that his late-filed claims for exemption from reassessment were timely. Code of Civil Procedure section 473, subdivision (b) permits courts, "upon any terms as may be just, [to] relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect." Plaintiff's failure to timely claim exemption is not, of course, "a judgment, dismissal, order, or other proceeding taken against him." And even if it were, the closest comparison to the facts here would be failure to comply with a statute of limitations, for which Code of Civil Procedure section 473, subdivision (b) provides no relief. (Jackson v. Doe (2011) 192 Cal.App.4th 742, 755.)
Plaintiff's more general appeal to courts' inherent equitable powers also cannot be reconciled with section 63.1's unambiguous deadlines. "[E]quitable principles are not applicable when the relevant statutory scheme is unambiguous and comprehensive. [Citation.] Further, equity cannot accomplish indirectly that which the law or its clear policy prohibits directly. [Citation.]" (Foster v. Snyder (1999) 76 Cal.App.4th 264, 267; see also Jiagbogu v. Mercedes-Benz USA (2004) 118 Cal.App.4th 1235, 1244 [equitable principles cannot "be used to avoid a statutory mandate"]; Westbrook v. Fairchild (1992) 7 Cal.App.4th 889, 897 [finding no inherent equitable power to award post-judgment compound interest because this would "exceed[ ] the constitutional and statutory provisions for the payment of 10 percent simple interest"].)
DISPOSITION
The judgment is affirmed. The County of Los Angeles shall recover its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
BAKER, J. We concur:
RUBIN, P. J.
KIM, J.