Opinion
A167081
04-23-2024
RICHARD SCHRAM, Plaintiff and Appellant, v. COUNTY OF SONOMA, et al. Defendants and Respondents.
NOT TO BE PUBLISHED
(Sonoma County Super. Ct. No. SCV270069)
RODRÍGUEZ, J.
Richard Schram sued the County of Sonoma (the County) and the Sonoma County Water Agency (Agency; collectively, defendants), alleging they overcharged him for sewer service during fiscal years 1995 through 2015. The trial court sustained defendants' demurrer and entered judgment after concluding the claims were barred under Revenue and Taxation Code section 5097, subdivision (a)(2) (Section 5097(a)(2)). (Undesignated statutory references are to this code.) Schram appeals, and we affirm.
The following facts are based on the allegations in the operative complaint because this appeal follows a ruling on a demurrer. (Doe v. Google, Inc. (2020) 54 Cal.App.5th 948, 952.)
The Agency provides sewage services in the County - including to properties owned by Schram - and it collects sewage fees via assessments included on property tax bills. Before 1995, fees were calculated using a parcel's square footage and assessed value. In 1995, the methodology changed - taxes now were calculated based on "the sewage released from the parcels." As a result, the new rates were based on the volume and strength of the wastewater and better reflected the cost of treating the sewage. The Agency, however, continued to use the superseded method to calculate fees on Schram's properties through fiscal year 2019. Its failure to use the new method caused the County to overcharge Schram $375,295.00 in property taxes, inclusive of fiscal years 1995 through 2019.
In January 2020, Schram submitted refund claims to the Sonoma County Board of Supervisors. In August, the Agency denied his requests for fiscal years 1995 through 2015 - concluding the claims were barred under section 5097(a)(2) - and reimbursed him for fiscal years 2016 through 2020. His attorney subsequently demanded the remaining $334,109.05, but the Agency again rejected the claims as barred.
In January 2022, Schram sued defendants, alleging they owed him a refund for fiscal years 1995 through 2015. Defendants demurred, arguing the claims were barred and the trial court lacked jurisdiction. Schram filed a first amended complaint and alleged, on information and belief, the County knew of his overpayments but did not send him notice as required by section 2635. Defendants again demurred on the same grounds. The court sustained the demurrer without leave to amend, and entered judgment of dismissal.
DISCUSSION
On appeal, Schram argues the trial court erroneously sustained the demurrer with respect to his tax refund cause of action. Relying on Bunker v. County of Orange (2002) 103 Cal.App.4th 542 (Bunker), he contends his refund claims for fiscal years 1995 through 2015 are not barred by section 5097(a)(2) because the County allegedly knew about the overpayments and failed to send him notice of such as required by section 2635. For their part, defendants argue the claims are barred. We conclude the County has the better argument.
Schram does not challenge the demurrer with respect to his unjust enrichment cause of action, nor does he request leave to amend his complaint.
When reviewing a ruling on a demurrer, we independently examine whether the complaint alleges facts sufficient to state a cause of action. (Regents of University of California v. Superior Court (2013) 220 Cal.App.4th 549, 558.) We assume the truth of properly pled factual allegations and facts that can reasonably be inferred therefrom. (Ibid.) But we do not assume the truth of "contentions, deductions or conclusions of fact or law." (Freeman v. San Diego Assn. of Realtors (1999) 77 Cal.App.4th 171, 178, fn. 3.) The plaintiff "must show the complaint alleges facts sufficient to establish every element of each cause of action" and that the trial court erroneously sustained the demurrer. (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 43.)
"The California Constitution expressly provides that actions for tax refunds must be brought in the manner prescribed by the Legislature." (Woosley v. State of California (1992) 3 Cal.4th 758, 789.) Section 5096 allows refunds for taxes paid erroneously or illegally collected, assessed, or levied. (Hanjin Internat. Corp. v. Los Angeles County Metropolitan Transportation Authority (2003) 110 Cal.App.4th 1109, 1112.) Section 5097 provides a procedure for filing refund claims. (California State University, Fresno Assn., Inc. v. County of Fresno (2017) 9 Cal.App.5th 250, 270.) Because the Legislature has plenary control over the manner in which refunds are sought, the claims procedure is jurisdictional and must be" 'strictly enforced.'" (Ibid.)
Section 5097(a)(2) provides a tax refund shall be made only on a claim filed "within four years after making the payment sought to be refunded, or within one year after the mailing of notice as prescribed in Section 2635 . . . whichever is later." In turn, section 2635 states, "[w]hen the amount of taxes paid exceeds the amount due by more than twenty dollars ($20), the tax collector shall send notice . . . to the taxpayer. The notice shall be mailed . . . and shall state the amount of overpayment and that a refund claim may be filed ...."
" 'Our fundamental task in interpreting a statute is to determine the Legislature's intent so as to effectuate the law's purpose.'" (Lopez v. Friant &Associates, LLC (2017) 15 Cal.App.5th 773, 779.) "We start with the words of the statute, giving them their plain and ordinary meaning." (Ibid.) "Where the words of the statute are clear, we may not add to or alter them to accomplish a purpose that does not appear on the face of the statute or from its legislative history." (Burden v. Snowden (1992) 2 Cal.4th 556, 562.)" 'If the statutory language permits more than one reasonable interpretation, courts may consider other aids, such as the statute's purpose, legislative history, and public policy.'" (Lopez, at p. 779.)
Schram's refund claims for fiscal years 1995 through 2015 are barred by section 5097(a)(2), and the trial court lacked jurisdiction to consider them. (California State University, Fresno Assn., Inc. v. County of Fresno, supra, 9 Cal.App.5th at p. 270.) As relevant here, section 5097(a)(2) sets forth two different time periods governing when a taxpayer may file a refund claim. The first - relied on by the county and the court - requires a claim be filed "within four years after making the payment." (See JPMorgan Chase Bank, N.A. v. City and County of San Francisco (2009) 174 Cal.App.4th 1201, 1210.) The second allows a claim to be filed within one year "after the mailing of notice as prescribed in Section 2635." (Mission Housing Development Co. v. City and County of San Francisco (1997) 59 Cal.App.4th 55, 65.) But no section 2635 notice was mailed here, and that time period is thus inapplicable. Only the first time period remains, and Schram's claims for fiscal years 1995 through 2015 are thus barred because his claims were filed more than four years after the alleged overpayments were made. (JPMorgan Chase Bank, N.A., at p. 1210.)
Schram's reliance on Bunker is misplaced. That case did not address the claims timing requirement in section 5097. Instead, it determined the plaintiffs were not taxpayers seeking a refund but were instead seeking to compel notice under sections 1604 and 2635. (Bunker, supra, 103 Cal.App.4th at pp. 544, 551.) In dicta, the court briefly remarked without analysis that, if "a section 2635 notice is never mailed, the statute of limitations on making a refund claim never runs." (Id. at p. 554.) But dicta is not authority, and Bunker does not support Schram's effort at an end-around of an unequivocal statutory claims process to sue for decades-old tax refunds. (People v. Fontenot (2019) 8 Cal.5th 57, 73 [cases are not authority for propositions not considered]; California State University, Fresno Assn., Inc. v. County of Fresno, supra, 9 Cal.App.5th at p. 270.)
The Legislature has since clarified the interplay between refund claims under section 5097 and taxpayer applications to reduce assessments under sections 1603 and 1604. (Assem. Bill No. 2411 (2007-2008 Reg. Sess.); Stats. 2008, ch. 329, § 2.) Moreover, the Legislature was aware of Bunker when it enacted this legislation (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 2411 (2007-2008 Reg. Sess.) as amended Aug. 14, 2008, p. 2), and analyses of earlier versions of the bill expressed concern about taxpayers reviving "long dormant" refund claims by seeking to compel the mailing of section 2635 notices (e.g., Assem. Rev. & Tax. Com., 3d reading analysis of Assem. Bill No. 2411 (2007-2008 Reg. Sess.) as amended Apr. 16, 2008, p. 2.).
In any event, Bunker is distinguishable. Schram does not seek to compel the County to provide notice under sections 1604 and 2635, rather he wants a refund. (Bunker, supra, 103 Cal.App.4th at pp. 544, 551; see Bishop, McIntosh &McIntosh v. Molmen (1981) 116 Cal.App.3d 278, 282-283 [§ 2635 duty not triggered when only evidence of error is taxpayer's allegation of overpayment].) But actions for "tax refunds must be brought in the manner prescribed by the Legislature." (Woosley v. State of California, supra, 3 Cal.4th at p. 789.) In refund actions, we do not have jurisdiction to deviate from legislative mandates, and section 5097(a)(2) provides a refund claim must be filed within four years unless section 2635 notice has been mailed to the taxpayer. (California State University, Fresno Assn., Inc. v. County of Fresno, supra, 9 Cal.App.5th at pp. 270-271; JPMorgan Chase Bank, N.A. v. City and County of San Francisco, supra, 174 Cal.App.4th at p. 1210.) These time limits rest "on the premise that strict legislative control over the manner in which tax refunds may be sought is necessary so that governmental entities may engage in fiscal planning based on expected tax revenues." (State of California ex rel. Dept. of Motor Vehicles v. Superior Court (1998) 66 Cal.App.4th 421, 426.)
DISPOSITION
The judgment is affirmed. Defendants shall recover their costs on appeal.
WE CONCUR: TUCHER, P. J., FUJISAKI, J.