Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, Super. Ct. No. 03CC01531 Gregory H. Lewis and David A. Thompson, Judges. Affirmed.
William A. Kent for Plaintiff and Appellant.
Benjamin P. de Mayo, County Counsel, and Mark D. Servino, Deputy County Counsel, for Defendant and Respondent.
OPINION
ARONSON, J.
Plaintiff William Jefferson & Co., Inc., appeals a judgment entered after the trial court sustained demurrers to its first amended complaint without leave to amend. Plaintiff contends it should have been allowed to pursue a petition for administrative mandate and declaratory relief challenging the actions of defendant Orange County Assessment Appeal Board No. 3 (Board) in refusing to reset the base year valuation of his property in accord with transactions in 1993 and 1996, and in failing to make factual findings.
We conclude the plaintiff failed to fairly and fully present the base year valuation issue to the Board in its assessment appeal and therefore is barred from raising the issue in court. We also conclude plaintiff abandoned its claim that the Board failed to make findings by not addressing the issue to the Board before filing suit and waiting almost four years to raise the issue in its pleadings. Accordingly.
I
Factual and Procedural Background
A. The Assessment Appeal and Original Complaint
Plaintiff, the owner of a single family residence in Irvine, received notice its property was being assessed at $357,993 for the tax year 2002-2003. Disagreeing with this figure, plaintiff filed an Application for Changed Assessment in August 2002, seeking to appeal the regular 2002 property tax assessment. The Board heard plaintiff’s appeal on November 7, 2002, and reaffirmed the assessment, noting: “Based upon the testimony and evidence received on this matter, the Board denied your application and sustained the Assessor’s enrolled value of $357,993.”
Plaintiff filed a verified complaint in January 2003 against the Board, the County of Orange (County), the Orange County Tax Assessor (Assessor), and the Orange County Tax Collector (Tax Collector). Plaintiff alleged it owned the property at all relevant times, and purchased the property in January 1990 for $305,000. Plaintiff alleged that the Assessor assessed the property at $267,000 for the 2000-2001 tax year and $330,000 in the 2001-2002 tax year. The complaint asserted that when the Assessor placed a value lower than the original purchase price, it was required to use the lower value when computing the maximum two percent annual increases in succeeding years, as specified under the California Constitution, article XIII A, section 2, subdivision (b). In other words, plaintiff alleged the assessor could not lawfully “recapture” the annual two percent increases it lost in the years values declined by raising assessment by more than two percent annually when values subsequently increased. Plaintiff also alleged the Board had adopted the Assessor’s position and would not consider any appeals challenging that position unless an appellate court ruled otherwise. Plaintiff further alleged the Board abused its discretion by not granting a reduction in assessed value to the extent it exceeded two percent of the previous year’s valuation. Plaintiff sought for itself and a proposed class a writ of mandate and injunction preventing future collection of illegal taxes, declaratory relief, and tax refunds.
Plaintiff made the identical allegation in an October 14, 2002 proposed complaint in intervention, alleging “[t]he original purchase price of said property was $305,000.00 purchased on January 16, 1990.”
California Constitution, article XIII A, section 2, subdivision (b), provides: “The full cash value base may reflect from year to year the inflationary rate not to exceed 2 percent for any given year or reduction as shown in the consumer price index or comparable data for the area under taxing jurisdiction, or may be reduced to reflect substantial damage, destruction or other factors causing a decline in value.”
At the time plaintiff filed its complaint, the two percent recapture issue was pending before us in County of Orange v. Bezaire (2004) 117 Cal.App.4th 121 (Bezaire). Anticipating our decision in Bezaire, the trial court stayed all proceedings in the present case. We decided Bezaire in March 2004, and agreed with the Assessor and the Board that Proposition 13’s two percent annual cap refers to a long-term cap, not a year-to-year cap. (Bezaire, at p. 131.) Thereafter, the County, Assessor, and Tax Collector renewed demurrers previously filed in the instant case. After the trial court requested amended points and authorities addressing the effect of Bezaire, plaintiff filed its first amended complaint, prompting the withdrawal of the pending demurrers.
B. The First Amended Complaint
Plaintiff filed its first amended complaint in November 2006. Contrary to the implications in the original complaint, the amended complaint alleged that plaintiff’s attorney, William A. Kent, purchased the property in 1990. The amended complaint alleged, for the first time, that in 1992, a Michael Kim sold the property to Gopal Productions, Inc. (Gopal) for $271,000, and that in 1993 Gopal transferred the property to plaintiff. The amended complaint further alleged that in 1996, plaintiff agreed to sell the property to a Dr. Philip Megdal for $250,000. The pleading sought a writ of mandate and declaratory relief, asserting the defendants erred in using the $305,000 purchase price from 1990 as the full cash value upon which to base the two percent limit, and instead should have used $271,000 beginning in 1993, and $250,000 beginning in 1996.
The first amended complaint does not explain how or when Michael Kim came to own the property.
The County, Assessor, and Tax Collector demurred to the first amended complaint, arguing in part that plaintiff failed to exhaust its administrative remedy because it never raised the 1993 and 1996 transactions when it appealed the tax assessment to the Board. The trial court sustained the demurrers without leave to amend and granted judgment in favor of the demurring defendants. Plaintiff did not appeal that judgment and it is now final.
The Board then demurred, also arguing exhaustion. In addition to opposing the demurrer, plaintiff filed a motion to amend, and served a proposed second amended complaint. The second amended complaint asserted, for the first time, that the Board failed to make written findings of fact as requested by plaintiff and required by statute. The trial court sustained the demurrers and denied leave to amend. The court entered judgment for the Board. Plaintiff now appeals.
II
Discussion
A. The Trial Court Did Not Err in Hearing the Board’s Demurrer, Even if Untimely
Plaintiff contends the trial erred in sustaining the Board’s demurrers because they were not filed within the time set by Code of Civil Procedure section 430.40, subdivision (a), which provides, “A person against whom a complaint or cross-complaint has been filed may, within 30 days after service of the complaint or cross-complaint, demur to the complaint or cross-complaint.” We disagree.
“‘There is no absolute right to have a pleading stricken for lack of timeliness in filing where no question of jurisdiction is involved, and where . . . the late filing was a mere irregularity [citation]; the granting or denial of the motion is a matter which lies within the discretion of the court.’ [Citations.] [¶] As provided by statute: ‘The court may, in furtherance of justice, and on any terms as may be proper, . . . enlarge the time for answer or demurrer.’ [Citation.] The trial court may exercise this discretion so long as its action does ‘not affect the substantial rights of the parties.’ [Citations.]” (McAllister v. County of Monterey (2007) 147 Cal.App.4th 253, 281-282 [holding plaintiff not prejudiced by procedurally defective demurrer because claims were barred by failure to exhaust administrative remedies]; see also Johnson v. Sun Realty Co. (1934) 138 Cal.App. 296, 299 [court had discretion to hear demurrer brought in violation of procedural rules].)
Here, plaintiff has not explained how its substantial rights were adversely affected when the trial court heard the Board’s demurrer beyond the time set by statute. Indeed, we cannot conceive how plaintiff would have fared any better if the Board’s demurrer had been filed concurrently with that of the other defendants. Accordingly, we reject plaintiff’s argument regarding the timeliness of the Board’s demurrer.
B. The Trial Court Did Not Err in Granting the Board’s Demurrer to Plaintiff’s First Amended Complaint
“Local boards of equalization (either a county assessment appeals board or the board of supervisors) are established by the California Constitution to hear appeals from decisions of the tax assessor. [Citations.] [¶] The appeals process is commenced by filing a written application for changed assessment with the local board. [Citation.] The board then sets the matter for hearing at which it receives evidence. [Citation.] This appeals process is essential to filing a subsequent claim for a refund in superior court, and skipping this step will usually result in the dismissal of the suit for failure to exhaust an available administrative remedy.” (Sunrise Retirement Villa v. Dear (1997) 58 Cal.App.4th 948, 958, italics added (Sunrise); see also C.H.B. Foods, Inc. v. County of Los Angeles (1987) 195 Cal.App.3d 821 [appeal to board necessary even where contested issue is one of law].)
“The code also contemplates that disputes between the assessor and the taxpayer regarding ownership change reassessments be resolved by the local appeals board before resort is made to the courts. Section 1605.5, subdivision (a)(1) states: ‘The county board shall hear applications for a reduction in an assessment in cases in which the issue is whether or not the property has been subject to a change in ownership . . . .’” (Sunrise, supra, 58 Cal.App.4th at p. 958.) Thus, the dispute at issue in the first amended complaint requires exhaustion by appealing to the Board. Here, plaintiff failed to satisfy this requirement.
Plaintiff contends it raised the base year valuation issue when it filled out the form application for changed assessment. Section 6 of the application is entitled “The Facts That I Rely Upon To Support The Requested Changes In Value Are As Follows.” Under this heading, plaintiff checked the box for the following: “A. DECLINE IN VALUE. The Assessor’s roll value exceeds the market value as of January 1 of the current year.” Under the next subheading, entitled, “B. CHANGE IN OWNERSHIP,” plaintiff checked only the following box: “B1. No change in ownership or other reassessable event occurred on the date of Jan. 1, 2002.” Plaintiff, however, did not check the box on the next item, but nonetheless inserted a reference to the year 1993, so it read as follows: “B2. Base year value for the change in ownership established on the date of 1993 is incorrect.” In addition, plaintiff checked the box for the following item: “CLASSIFICATION. Assessor’s classification and/or allocation of property is incorrect.” Plaintiff also included the following explanation: “2% rule is violated. Last legal assessment $267,000.00 for 1999 . . . .”
By failing to check the box on item B2 concerning whether the base year value for a change in ownership is incorrect, but inserting the year 1993 in the space provided, plaintiff created ambiguity as to whether it intended to raise with the Board the base year valuation issues included in his complaint. Even if the box for this item had been checked, however, to raise the issue plaintiff must argue the matter before the Board and present evidence in support of its position.
“A taxpayer, questioning the correctness of assessed valuation, must fairly and fully present his showing to the Board as a prerequisite to a judicial attack upon the Board’s determination. ‘Were the rule otherwise, the taxpayer could make a perfunctory showing before the board and reserve his real showing for a subsequent appeal to the courts. This is not permissible . . .’ [Citation.] That principle precludes the presentation before a reviewing court of evidence which with reasonable diligence could have been produced before the administrative agency but which was not there offered.” (American Chemical Corp. v. County of Los Angeles (1974) 42 Cal.App.3d 45, 54-55.) Thus, checking a box on the appeal application fails to satisfy the exhaustion requirement; the party challenging the assessment must also present argument and evidence to the Board supporting its position.
Here, the first amended complaint does not allege plaintiff pursued the base year valuation issues with the Board or provided evidence in support of its position. Instead, plaintiff generally pleads: “Plaintiff filed an appeal with the Orange County Assessment Appeals Board, No. 3, in 2002[,] and a hearing was held on Nov. 2, 2002. [¶] Plaintiff was asking for refunds, challenging the assessments and the taxes paid there as being in excess of the amount allowed by law. [¶] The Board denied the appeal and the refunds.” The first amended complaint thus fails to adequately allege exhaustion as to the base year valuation issues.
In its proposed second amended complaint, however, plaintiff more specifically alleges: “Plaintiff in the ‘appeal’ to the board indicated that the year 1993 was incorrectly valued as the base year value which should have been designated as $271,000.00.” This allegation, standing alone, might suffice to allege exhaustion as to the 1993 base year valuation issue. But this allegation is contradicted by other documents plaintiff filed in this case.
“As a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be. [Citation.] The courts, however, will not close their eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts which are judicially noticed. [Citations.] Thus, a pleading valid on its face may nevertheless be subject to demurrer when matters judicially noticed by the court render the complaint meritless. . . .” (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604-605.)
In opposing the other three defendants’ demurrer, plaintiff conceded it failed to expressly raise arguments to the Board regarding base year valuations, but argued it raised the issue by implication. For example, plaintiff argued: “The Claim for Refund specifically stated that ‘Taxes were incorrectly collected for the following reasons . . . . The assessed value was more than 2% as allowed by . . . . Cal. Revenue and Taxation Code, Section 51, subd. (a)(2)(D).’ [¶] Thus, the Board was put on notice that the ‘base year value’ had to be looked at. How else can anyone decide whether any assessment is correct or not?” Plaintiff further explained: “Section 51(a)(1)(D) provides that a 2% increase is the most that any assessment can be increased by in any one year. So one goes back to Section 110.1 to obtain the base year value, which is created when a purchase or change in ownership occurs. Once that figure is obtained, then one applies the 2% limit to that base year value figure, and that 2% increase is the most that the Tax Assessor can assess the property in any one year. [¶] Plaintiff did, indeed, cite this methodology in its claim for Refund. . . The fact that the Plaintiff did not make this kind of argument ipsissimus verbis is of no moment. The County clearly had all these records, and had full access to all these records.” (Italics added.)
Equally important, plaintiff conceded it failed to provide the Board evidence demonstrating the 1993 and 1996 base year valuations should have been, respectively, $271,000 and $250,000. Specifically, plaintiff cited to recorded documents it had attached to its first amended complaint reflecting the changes of ownership needed to determine base year values, and argued: “Whether the Board had possession of the Tax Assessor’s records, is not clear. But the Board clearly had access to those records.” Plaintiff similarly argues: ”Either they had the documents and refused to give them substance, in which case the Board must be reversed, or the Board did not have them and therefore acted capriciously and arbitrarily.”
Plaintiff has not argued documents supporting its base year valuation contentions were unavailable to it at the time of the assessment appeal; indeed, it admitted such documents were in the public records. That the Board purportedly had “access to” these records is simply an insufficient excuse for plaintiff’s failure to present evidence in support of its position at the hearing. Because plaintiff failed to “fairly and fully present his showing to the Board” at the time of its assessment appeal, plaintiff may not now pursue judicial action on his claim that the Assessor used incorrect base year values in computing tax assessments on its property. Accordingly, we conclude the trial court did not err in sustaining demurrers to plaintiff’s first amended complaint.
C. The Trial Court Did Not Err in Denying Leave to File the Second Amended Complaint
In the second amended complaint’s first cause of action, plaintiff alleges, for the first time, that the Board failed to issue written findings despite plaintiff’s request. The cause of action seeks remand of the matter to the Board with instructions they either make appropriate findings or grant a new hearing.
Revenue and Taxation Code section 1611.5 provides in part: “Written findings of fact of the county board shall be made if requested in writing by a party up to or at the commencement of the hearing . . . . However, the party requesting findings may abandon the request and waive findings at the conclusion of the hearing. . . . The written findings of fact shall fairly disclose the board’s determination of all material points raised by the party in his or her petition and at the hearing, including a statement of the method or methods of valuation used in appraising the property.” Here, plaintiff requested in the assessment appeal application that the Board make findings in support of its decision. The Board failed to do so.
Nonetheless, Revenue and Taxation Code section 1611.5’s requirements are not jurisdictional and subject to abandonment. (See Westlake Farms, Inc. v. County of Kings (1974) 39 Cal.App.3d 179, 188 (Westlake).) In Westlake, the court applied a similarly worded predecessor statute to Revenue and Taxation Code section 1611.5, and held that the “[a]ppellants’ request for findings was abandoned by implication” because “they made no attempt to pursue their request before commencing this action in the superior court,” and raised the issue for the first time on appeal. (Ibid.) Here, plaintiff did not allege it requested the Board to make findings after the Board issued its ruling. Moreover, the Board’s failure to issue written findings is mentioned neither in plaintiff’s original nor first amended complaint. Plaintiff provides no excuse why it did not raise this issue earlier. Had plaintiff done so, it would have been a relatively easy matter for the Board to issue findings based on a decision it had recently made. By waiting almost four years to complain, the Board –– even if its membership has not changed –– would be hard-pressed to reconstruct the process they had followed in reaching their decision. Moreover, because the Board’s failure to issue findings is collateral to the two percent limitation issue decided in Bezaire, an administrative mandamus petition challenging the lack of findings would likely not have been stayed, and could have been resolved in a summary fashion. We therefore conclude plaintiff abandoned his request for findings by not pursuing the matter with the Board before filing suit, and by failing to raise the issue for almost four years.
The two remaining causes of action in the second amended complaint relate specifically to the base year valuation issues and therefore are barred because plaintiff has failed to exhaust its administrative remedies, as explained above. Accordingly, we conclude the trial court did not abuse its discretion in refusing to grant leave to amend.
D. Plaintiff Fails to Demonstrate Procedural Errors Requiring Reversal
Plaintiff contends reversal is required because a judge who did not take part in sustaining the demurrers signed the judgment, and the court considered the contents of the administrative record. We disagree.
As plaintiff notes, Judge Gregory H. Lewis heard and decided the Board’s demurrers, but Judge David A. Thompson entered the judgment. Plaintiff cites Code of Civil Procedure section 635, which provides: “In all cases where the decision of the court has been entered in its minutes, and when the judge who heard or tried the case is unavailable, the formal judgment or order conforming to the minutes may be signed by the presiding judge of the court or by a judge designated by the presiding judge.” Plaintiff asserts “there is no evidence that the judge who heard the case, Judge Gregory H. Lewis, was unavailable. Even if that were the case, there is no evidence that Judge Thompson, who was not the presiding judge, was designated by the presiding judge.”
“[A] trial court is presumed to have regularly performed its official duty and acted in the lawful exercise of its jurisdiction.” (People v. Allegheny Cas. Co. (2007) 41 Cal.4th 704, 718.) Thus, the burden falls upon plaintiff to provide evidence that Judge Thompson violated the statute when he signed the judgment, rather than upon the Board to provide evidence of compliance. Because plaintiff provides no evidence of any impropriety, we do not consider its argument further.
Although one of the section headings in plaintiff’s brief asserts the court erred in considering the contents of the administrative record, the body of the argument begins with the following statement: “It is not clear whether the court did or did not consider any administrative record in this case.” Of course, the burden falls upon plaintiff to demonstrate error; a mere assertion that error may have occurred is insufficient to support reversal. Moreover, because we review the trial court’s granting of demurrers de novo, any error by the court in considering the administrative record in making its ruling is harmless as a matter of law.
III
Disposition
The judgment is affirmed. The Board is entitled to its costs of this appeal.
WE CONCUR: SILLS, P. J., FYBEL, J.