WILLIAMS & FICKETT v. COUNTY OF FRESNORespondent’s Petition for ReviewCal.February 18, 2015S22446 | IN THE SUPREME COURTOF CALIFORNIA WILLIAMS & FICKETT, Plaintiff, Appellant, and Respondent VS. COUNTY OF FRESNO, SUPREME COURT FILED FEB 1 8 2015 Defendant, Respondent, and Petitioner; Frank A. McGuire Clerk PETITION FOR REVIEW. Deputy From the Opinion of the Court of Appeal, Fifth Appellate District (Case No. F068652) Appeal from Order of the Superior Court, State of California, County of Fresno DANIEL C. CEDERBORG FRESNO COUNTY COUNSEL MICHAEL R. LINDEN, Deputy State Bar No. 192485 2220 Tulare Street, Suite 500 Fresno, CA 93721-2128 Telephone: (559) 600-3479 Attorneys for Defendant, Respondent, and Petitioner COUNTY OF FRESNO IN THE | SUPREME COURT OF CALIFORNIA WILLIAMS & FICKETT, Plaintiff, Appellant, and Respondent vs. COUNTY OF FRESNO, Defendant, Respondent, and Petitioner; PETITION FOR REVIEW From the Opinion of the Court of Appeal, Fifth Appellate District (Case No. F068652) Appeal from Order of the Superior Court, State of California, County of Fresno DANIEL C. CEDERBORG FRESNO COUNTY COUNSEL MICHAEL R. LINDEN,Deputy State Bar No. 192485 2220 Tulare Street, Suite 500 Fresno, CA 93721-2128 Telephone: (559) 600-3479 Attorneys for Defendant, Respondent, and Petitioner COUNTY OF FRESNO CERTIFICATE OF INTERESTED ENTITIES OR PERSONS (Cal. Rules of Court, Rule 8.208) There are no interested entities or personsto list in this certificate (Cal. Rules of Court, Rule 8.208(e)(3)). Zo ; 7 Dated: February 17, 2015 za Michael R. Linden Deputy County Counsel Attorney for Petitioner TABLE OF CONTENTS TABLE OF AUTHORITIES woeesceeeeeseeeseeeceececeesesaeeseeeeeressasssesssecseeereees ili-iv ISSUES PRESENTED 20... eccesessseseeesseeessersaesoeeeeseerecsessasseesessesessseasessnssaeseaeenes 1 INTRODUCTION(00... cecccccesecssecssesseesscressesesseneseesesassasseeseasnesseeseeeessessassasssssongons 2 BACKGROUND...cee ceccsteteeeeeessensessseseeseesaeessessessenseensessessesesecassaseaseesnsseesesaeseess 3 LEGAL DISCUSSION 00.eceeeessetseeneeteeeseeeneeseeseeseseasenecaeeeaesseesaesasseeeeessasseeenees 5 A. A Person Need only Have an Economic Interest in the Outcometo Apply for a Changed Assessment..........:escsesesceesceseeseeenesseseeseseeseeaeeeees 5 B. Allowing a Taxpayer to Wait Until After the Period in Section 5097(a)(3) Before Paying Taxes Defeats the Purpose of That SOCTION .....ccececesesescsccssesessccssececcsesececeecucuecuaceecescceeseeseeneuseceesseusecsncsuseuueeserss 9 CONCLUSIONoiecccccsssscccesessssesecsesssesessseseceececetssessscssssesesesesesssssstscesesssrenees 12 CERTIFICATE REGARDING LENGTH OF BRIEFuu... cceessscessscscvessneenees 19 il TABLE OF AUTHORITIES CASES California Fed. Savings & Loan Assn. v City ofLos Angeles (1995) 11 Cal.4342.cccsssssseesseccesssssnscsessssnnuenssseceessnnusnvmsssesseeeessnssnnneess ll DiCampli-Mintx v. County ofSanta Clara (2012) 55 Cal.4? 983. ccesessscsssessessssessscsessvecucssneseresscssvcssnvessecsaenecesnesees 9,11 El Tejon Cattle co. v County ofSan Diego (1967) 252 Cal.App.2d 449.0. cceccsesssseesscssetseeesessscsesnesecseneesesseeesseesseesaeeaes 8 JP Morgan Chase Bank, N.A v. City and County ofSan Francisco (2009) 174 Cal.App.4? 1201 vcccscescsssssssessesssssessssessecssesssessusesscseesssessnsenes 5, 10 Steinhart v. County ofLos Angeles (2010) 47 Cal.4™ 1298veces 6, 8 Steinhart v. County ofLos Angeles (2015) 232 Cal.App.4e .vsescesseees 4,8 Williams & Fickett v. County ofFresno (2015) 232 Cal.App.4" daeeee 4, 6, 10 CALIFORNIA CONSTITUION Article 13, Section 32 .......cccccccscsccssssscscssscceessecccsscesscececesseccsseceesscsansessecesnsess 8 REVENUE & TAXATION CODE Section 1603 (A) .....cccsccssesssecssecsssessseeessescesseecsecessseseeesessessessatecsaeeesseaecesetess 7 Section 1603, subdivision (f) ..........cscessccssececsessesseesssesssesessesecesecenseete passim Section 1604, SubGIVISION (C).......ccccsscestscesscesscsecesesssesessessesecasessesenesreesneens 10 SeOCtION 5097 ooo... cessesseseceessseecsssecsssesccssesevsessseseecessesesccssssessccersussersseseuees 3,4 Section 5097, subdivision (2)(2) .......cccsscccsecssscsseessesseceseessesssseresseensesaes 10, 11 Section 5097, subdivision (2)(3) .......sccesscesscessessessssessessessscssessecseessessessessees 1 Section 5097, subdivision (2)(3)(A)........ccsccsssssssssessecsssessesecsseesstessesseseesees 10 Section 5097, subdivision (a)(3)(A)(ii).......escceesesssseesseecesscsseetsesstneesnees passim SCHON 5142oeeesscecssessecssccsseceseessecesseessesseesseseeescsecsseseesersssesseeesseesseessenaes 8 Section 5142, subdivision (D)...........c:cccssccsssecessessecessecesseesssesecesseeseeeeneeess 6,8 Section 5142, subdivision (C)........ccccsccsssccessecsssesseecesecesesssessscesssessteesaeens 4,6 ill CALIFORNIA RULES OF COURT Rule 8.204(C)(1) ..eceeescccssesssssesscsscssesessesesssesecsecsscessusscscsssasseseucevacssssssnseanees 13 18 C.C.R. Rule 301(8) oo. ccceescesctsssecsesseseessessesscseesecsecssssesaseesecsusscavscsesssesscsvacusasensseuses 7 Rule 302(a)(4) occ ecececceccssssesesscsesseesesescesesessecscetsaseacsesscscacscscssssusavsvesesrevsesaseness 8 iv IN THE SUPREME COURT OF CALIFORNIA WILLIAMS & FICKETT, Plaintiff, Appellant, and Respondent vs. COUNTY OF FRESNO Defendant, Respondent, and Petitioner; PETITION FOR REVIEW ISSUES PRESENTED 1, Is a taxpayer required to exhaust the remedy of applying to the county board of equalization if the issue does not involve valuation of _ property? 2. May a taxpayer who files an application for changed assessment with a county board of equalization wait until longer than the period under Revenue and Taxation Code § 5097(a)(3), after the conclusion of that proceeding, before paying the property taxes and seeking a refund? I! HI /// INTRODUCTION: WHY REVIEW SHOULD BE GRANTED This action presents two significant issues of statewide importance with respect to property taxes. The first issue concerns a taxpayer’s obligation to exhaust administrative remedies. In its decision, the court of appeal, created an exception contrary to the Legislature’s express exhaustion requirement. The second issue concerns limitation periods for tax refund claims. Here, the Court of Appeal ignored a statutory exception to the general rule of requiring tax refund claims to be filed within four years ofpayment. As for the exhaustion issue, this action concerns property tax assessments on pieces of farm equipment. Those assessments were made between 1997 and 2001. Respondent alleges that due to prior sales or trade-ins, it did not own the equipment on the lien dates. With “nonvaluation issues,” unless there is a stipulation with the assessor, a taxpayer is required to apply to the county board of equalization for assessment reduction. Respondent did not file any such application until June 16, 2007, several years past the sixty-day limitation period. On this record, the trial court sustained Petitioner’s demurrer. However, the Court of Appeal reversed, reasoning that because Respondent allegedly did not ownthe property, it could not make a valid certification under subdivision (f) Revenue & Taxation Code § 1603 for an application for reduction. This is a clear error of law because a taxpayer applying for a reduction need only have an economic interest in the outcome. As such, review should be granted. The second issue concerns the limitation periods set forth in Revenue & Taxation Code § 5097. Because Appellant filed applications for changed assessment on June 16, 2007, Petitioner argued that the limitations period set forth in subdivision (a)(3)(A)(ii) of this section required Respondentto file a tax refund claim no later than June 16, 2010. However, the court of appeal held that Respondent never had any obligation to seek a tax refund until after the subject taxes were paid in 2011 and 2012. This decision effectively reads the exceptions to the general rule out of Section 5097, which underminesthe intentofthe statute. Assuch, review should be granted. BACKGROUND On February 13, 2013, Respondent brought suit against Petitioner, seeking a refund of personal property taxes that were assessed in 1997 through 2001, and eventually paid in 2011 and 2012. On April 26, 2013, Petitioner demurred to Respondent’s amended complaint, arguing that Respondentfailed to properly exhaust its administrative remedy offiling a timely application of changed assessment with the County Assessment Appeals Board (hereinafter “AAB”), as required by Revenue & Taxation Code § 5142 (hereinafter “Section 5142”), subd. (c). Petitioner also argued that since Respondent made such filings (albeit untimely), their action is barred by the one-year limitations period set forth in Revenue & Taxation Code § 5097 (hereinafter “Section 5097”), subdivision (a)(3)(A)(ii). On September 13, 2013, the trial court sustained Petitioner’s demurrer without leave to amend, based on Respondent’s failure to exhaust its administrative remedy. On appeal, Respondent argued in its Reply brief that it could not have legitimately filed applications for reduction in assessment because Revenue & Taxation Code § 1603 (hereinafter “Section 1603”), subd. (f) requires that anyone whofiles such an application “certify under penalty of perjury that he or she is ‘the owner of the property or the person affected (i.e., a person having a direct economic interest in the paymentofthe taxes on that property ...),” or an agent or attorney for the applicant. Relying on this previously-unmade argument, on January 9, 2015, the Court of Appeal reversed the trial court’s decision. Williams & Fickett v. County ofFresno (2015) 232 Cal.App.4™ 1250. In doing so, the court of appeal made the following analysis: “However, unlike the situation in Steinhart [v. County of Los Angeles (2010) 47 Cal.4™ 1298], appellant claims it does not own the assessed property. An application for a reduction in an assessment requires the applicant to declare or certify, under penalty of perjury, that the applicant is the owner of the property or has a direct economic interest in the paymentof the taxes on the property. (§ 1603, subd. (f).) Appellant, not being the owner of the subject property, cannot make such a declaration. Therefore, appellant cannot file a valid application for reduction.” Jd., at 234. With respect to the statute of limitations set forth in subdivision (a)(3)(A)(Gii) of Section 5097, the court of appeal made the following analysis in determining that this limitation period was not applicable: “First, appellant did not file an application for an assessment reduction under section 1603. More importantly, a refund claim cannot be made until after the disputed taxes have been paid. Any ‘claim filed before the payment of the disputed taxes is “inherently flawed as untimely.”’ (JPMorgan Chase Bank, N.A. v. City and County of San Francisco (2009) 174 Cal.App.4th 1201, 1210.) Therefore, appellant could not have filed its refund claims in June 2010. Rather, those claims were not viable until the taxes were paid in 2011 and 2012. Thus, appellant’s refund claims filed in May and November 2012 were timely.” Jd. On January 21, 2015, Petitioner filed a Petition for Rehearing in the court of appeal. However,this petition was denied. LEGAL DISCUSSION A. A Person Need Only Have an Economic Interest in the Outcome to Apply for a Changed Assessment In reversing the trial court’s ruling, the court concluded that Respondent could not have madea valid application to the AAB becauseit allegedly did not own the subject property at the time of the lien. As discussed below,the statutory provision relied upon by the court of appeal does not stand for this proposition. Since the Respondentpartners stood to be affected by the county assessor’s determinations, they had the statutory authority make a valid AAB application. Section 5142, subdivision (b), requires taxpayers to apply for assessment reduction “in order to exhaust administrative remedies.” While the parties can stipulate that the issues in dispute do not involve questions of valuation, “[nJothing shall be construed to deprive the county board of equalization of jurisdiction over nonvaluation issues in the absence of a contrary stipulation.’” Rev. & Tax. Code § 5142, subd. (c). In its opinion, the court of appeal, citing this Court’s decision in Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, recognized that “the absence of a valuation issue does not necessarily eliminate the need for the taxpayer to apply for an assessment reduction before pursuing a tax refund claim.” Williams & Fickett v. County ofFresno, supra, 232 Cal.App.4"at 233. However, the Court of Appeal then cited subdivision (f) of Section 1603, which provides the language for a certification on an AAB application. Replying on this subdivision, the court held that “Appellant, not being the owner of the subject property, cannot make” a supporting declaration, and thus “cannotfile a valid application for reduction.” Jd., at 234. This conclusionis in error because there is no ownership requirement. A person or entity applying for a reduction need only have an economic interest in the outcome. Under subdivision (a) of Section 1603, “(a) reduction in an assessment on the local roll shall not be made unless the party affected or his or her agent makes and files with the county board a verified, written application showing the facts claimed to require the reduction and the applicant's opinion of the full value of the property.” (ltalics added). Subdivision (f) of this section states that an AAB application is required to be signed under penalty of perjury by “(1) the ownerof the property or the person affected (i.e., a person having a direct economic interest in the payment of the taxes on that property — ‘The Applicant,’ ...” Under the State Board of Equalization’s regulations for AAB proceedings, 18 C.C.R. § 301(g) (also knownas “Property Tax Rule 301(g)”): “Person affected”or “party affected”is any person or entity having a direct economic interest in the payment ofproperty taxes on the property for the valuation date thatis the subject ofthe proceedings under this subchapter, including the property owner, a lessee required by the property lease to pay the property taxes, and a property owner who acquires an ownership interest after the lien date if the new owneris also responsible for payment ofproperty taxes for the lien date that is the subject of the application. (Italics added). There is no indication that the Legislature, or the State Board of Equalization, meant to impose an actual ownership requirement for those persons or entities making AAB applications. By use of the words “the ownerof the property or the person affected,” the Legislature contemplated a situation where a party affected by an assessor’s tax determination, but not necessarily the owner of the subject property. The State Board of Equalization made that distinction explicit in its regulations. Here, Respondent was “affected,” as the partners were being charged with the obligation of paying property taxes on the subject farm equipment. See E]/ Tejon Cattle Co. v. County ofSan Diego (1967) 252 Cal.App.2d 449, 456- 457. In fact, one function of the AAB is to determine the classification of property, which “mayresult in the property so classified being exempt from property taxation.” 1/8 C.C.R. § 302(a)(4). For all of these reasons, the Court of Appeal’s interpretation is at odds with the plain language of Section 1603. The Court of Appeal’s decision is especially problematic becauseit judicially creates an exception to the exhaustion requirement that is not found in Section 5142, or any other statute. Article 13, section 32 of the California Constitution provides that actions to recover tax payments may only be maintained “in such manner as may be provided by the Legislature.” In Steinhart v. County of Los Angeles, supra, this Court recognized the Legislature’s express intent in “confirming ‘the requirement’ that a taxpayer apply for assessment reduction ‘in order to exhaust administrative remedies,’ ...” Steinhart v. County ofLos Angeles, supra, 47 Cal.4th at 1312, quoting Rev. & Tax. Code § 5142, subd. (b). The Legislature could have made an exception for the ownership issuesthat Respondent raised; however, the Legislature did not do so, with intent that must be presumed. See DiCampli-Mintz v. County ofSanta Clara (2012) 55 Cal.4th 983, 992. Therefore, the Court of Appeal had no authority to create an exception to the exhaustion requirement where the Legislature chose not do so. From the standpoint of public policy, the Court of Appeal’s decision underminesthe goal of resolution of tax disputes at the administrativelevel, without the necessity of court intervention. The decision will likely encourage taxpayers to simply allege non-ownership of the subject property in order to avoid the requirement of exhausting before the AAB. Thereis no indication that this was the Legislature’s intent when Section 5142 was amended in 1993, Therefore, this Court should grant the instantpetition, and review the Court ofAppeal’s decision B. Allowing a Taxpayer to Wait Until After the Period in Section 5097(a)(3)_ Before Paying Taxes Defeats the Purpose of That Section With respect to the limitation periods contained in Section 5097, the Court of Appeal’s decision allows a tax claimant to wait an indeterminate amountof time before any limitations period is triggered. This holdingis contrary to the plain language of the statute, and in fact defeats the entire purpose ofhavinga statute oflimitations. Subdivision (a)(3)(A)(ii) of Section 5097 provides that if a claimant previously filed “an application for equalization of an assessment” with the AAB(and the application did not state that it was also intended as a claim for refund), if the AAB “fails to hear evidence and fails to make a final determination on the application for reduction in assessment or on the application for equalization of an escape assessment of the property,” the time limit is one year “(a)fter the expiration of the time period specified in subdivision (c) of Section 1604.” However, the Court of Appeal, citing JPMorgan Chase Bank, N.A. v. City and County ofSan Francisco (2009) 174 Cal.App.4th 1201, held that because “a refund claim cannot be made until after the disputed taxes have been paid,” no limitations period was triggered until Appellants paid their taxes in 2011-2012. Williams & Fickett v. County ofFresno, supra, 232 Cal.App.4™ at 234. As discussed below, this opinion is problematic from both a legal perspective and a policy perspective From the standpoint of statutory construction, the court of appeal’s opinion is in error. The Legislature, by the plain and unambiguous meaning of subdivision (a)(3)(A), and the prefatory clause of subdivision (a)(2) (“Except as provided in paragraph (3) or (4), ...”), imposed a requirement that if a taxpayer files with the AAB, and then wants to file a claim for refund, the taxpayer is required to pay the taxes within the 10 specified period in order file a timely refund claim. By relying on the general proposition that claimsfiled before paymentare “inherently flawed as untimely,” the court of appeal improperly read out of Section 5097 the prefatory clause of subdivision (a)(2). While Section 5097 provides a four- year period as a general rule, the exceptions are clearly stated, and “[a] court may not, “under the guise of construction, rewrite the law or give the words an effect different from the plain and direct import of the terms used.’” DiCampli-Mintz v. County of Santa Clara, supra, 55 Cal4th at 992, quoting California Fed. Savings & Loan Assn. v. City ofLos Angeles (1995) 11 Cal.4th 342, 349. As such, the decision should be reviewed. The Court of Appeal’s opinion is also problematic from the standpoint of public policy. On the argument of Respondent in this case, and surely other taxpayers to follow, there will be no need for any timing between filing with the AAB,and a later claim for refund. These two events can now beseparated by an indefinite period, subjecting counties to an extraordinary amount of uncertainty, both fiscally and with respect to litigation. With the passage of time, information is lost, the memories of witnesses fade, and sometimesthe witnessesare not available at all. This is the very reason statutes of limitations exist. Therefore, this Court should grant this petition so it can examine the policy implications of the Court of Appeal’s decision. 1] CONCLUSION Based on the foregoing, Petitioner respectfully requests that this Court grant this petition and review the decision issued by the Court of Appeal. Dated: February 17, 2015 Respectfully submitted, DANIEL C. CEDERBORG FRESNO COUNTY COUNSEL By:GL EE Michael R. Linden Deputy County Counsel Attorneys for Petitioner 12 CERTIFICATE REGARDING LENGTH OF BRIEF (Rule 8.204(c)(1)) I, Michael R. Linden, Deputy County Counsel, certify under penalty of perjury that, according to the computer program on which this brief was produced,this brief contains approximately 3,161 words. Executed on February 17, 2015, at Fresno, California. Michael R.Linden 13 PROOF OF SERVICE I, Mary Lou Hinojosa, declare that I am a citizen of the United States of America and a resident of the County of Fresno, State of California; I am over the age of eighteen years and not a party to the within action; my business addressis 2220 Tulare Street, Suite 500, Fresno, California 93721-2128. On February 17, 2015, I served a copy ofthe attached PETITION FOR REVIEW by first-class mail on the following interested parties in said action: Lynne Thaxter Brown,Esq. Ronald A. Henderson,Esq. Dowling Aaron Incorporated 8080 N. Palm Avenue, 3" Floor Fresno, CA 93729 Fresno County Superior Court Appeals Department 100 Van Ness Avenue Fresno, CA 93724 Fifth District Court of Appeal 2424 Ventura Street Fresno, CA 93721 by placing the documentlisted above for mailing in the United States mail at Fresno, California in accordance with my employer's ordinary practice for collection and processing of mail, and addressedas set forth above. [herebycertify under penalty of perjury under the law of the State of California that the aboveis a true and correct statement. Executed at Fresno, California on February 17, 2015. 14 ATTACHMENT COURT OF APPEAL OPINION COURT OFapp_ FIFTH APPELLATE DISTRICT FILED JAN 0 9 2015 CERTIFIED FORPUBLICATION Deputy IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT WILLIAMS & FICKETT, F068652 Plaintiff and Appellant, (Super. Ct. No. 13CECG00461) v. COUNTY OF FRESNO, OPINION Defendant and Respondent. APPEAL from a judgment ofthe Superior Court of Fresno County. Donald S. Black, Judge. Dowling Aaron Incorporated, Lynne Thaxter Brown and Ronald A. Henderson for Plaintiff and Appellant. Daniel C. Cederborg, County Counsel, and Michael R. Linden, Deputy County Counsel, for Defendant and Respondent. -00000- Appellant Williams & Fickett, a general partnership, challenges the judgment dismissing its complaint against respondent County ofFresno (County) for a refund of personal property taxes. Thetrial court sustained the County’s demurrer to the complaint without leave to amend on the ground that appellant did not exhaust its administrative remedies before filing suit. Thetrial court ruled that appellant was required tofirstfile an application for a reduction in assessment with the Fresno County Assessment Appeals Board (Assessment Appeals Board) under Revenue and Taxation Code! section 1603. - Appellant contendsit did not ownthe assessed property on the applicablelien dates and thus the assessments were“nullities.” Therefore, appellant argues, it was not requiredto file an application for assessment reduction. Appellant further asserts that its complaintis not barred bythestatute of limitations becauseits refund claims were filed within four years of its having paid the taxes as required by section 5097. Appellant is correct. Because appellant’s refund claimsare based.on not owning | the property in question, it was not requiredto file an assessmentreduction application. Further, appellant’s refund claims were timely filed. Accordingly, the judgment dismissing the complaint will be reversed. BACKGROUND Since the appeal is from the sustaining of a demurrer without leave to amend,the facts are derived from the complaint. This court must give the complaint a reasonable interpretation and assumethe truth ofall material facts properly pleaded. (Aubry v. Tri- City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) The Fresno County Assessor (Assessor) conducted several audits of appellant regarding personal propertyfor the tax roll years 1994 through 2001. These audits resulted in the assessmentof additional taxes for various pieces of farm equipment. In June 2007, appellant attempted to file applications for changed assessment with the County to cancel the assessment under section 4986 on the ground that appellant did not own that personal property. The Assessment Appeals Board returned the applications to appellant. The Assessment Appeals Board explained that the applications were not timely filed and therefore would not be considered. 1 All further statutory references are to the Revenue and Taxation Code. In November 2010, appellantfiled a complaint for declaratory relief against the County, the Assessment Appeals Board and the Assessor seeking a declaration thatthe. subject properties did not exist and therefore the assessments should be cancelled. The trial court sustained the defendants’ demurrerto that complaint on the groundthat appellant was seeking to enjoin the collection of property taxes in violation ofarticle AI], section 32 of the California Constitution and Revenue and Taxation Codesection 4807. The court concluded appellant was requiredto first pay the tax and then seek a refund undersection5096 et-seq. - -+ By checks written in May 2011, Februaty 2012 and June 2012, appellantpaid the disputed taxesin full along with penalties and interest. Thereafter, in May 2012 and November 2012, appellant filed claims for refund of those taxes. The claims for refund were rejected on November27, 2012. In February 2013, appellant filed the underlying action for refundofpersonal property taxes. Appellant alleged thatit did notfile an application for a reduction in the assessment under section 1603, subdivision(a). . The County demurred. The County asserted that the complaintfailedto state a cause of action because (1) appellant did not exhaust its administrative remedies as required by section 1603, subdivision (a); and (2) the action was barred by the one-year statute of limitations set forth in section 5097, subdivision (a)(3)(A)(ii). Thetrial court sustained the demurrer without leave to amend. Thetrial court concluded that appellant was requiredto file an application for reduction of the assessment with the Assessment Appeals Board undersection 1603, subdivision (a). Since appellant did not do so, the court ruled that the action was barred. DISCUSSION 1. Appellant wasnotrequiredto applyfor an assessmentreduction. Section 1603, subdivision (a), provides that “[a] reduction in an assessmenton the localroll shall not be made unless the party affected ... makes and files with the county board a verified, written application showing the facts claimed to require the reduction and the applicant’s opinion of the full value of the property.” The “county board”is the county board of supervisors meeting as a county board of equalization or an assessment appeals board.: (§ 1601, subd. (a).) Generally, filing an assessmentreduction application with the county boardis the first step in a three-step process for handling challenges to property tax assessments and refund requests. (Steinhart v. County ofLos Angeles (2010) 47 Cal.4th 1298, 1307 (Steinhart).). Thesecondstepisfilingan administrative claim, for refundunder. section 5097 and thethird andfinal step is filing a superior court action to recover the tax under section 5140. (Steinhart, supra, at p. 1307.) Ordinarily, if a taxpayer fails to apply to the county board for an assessment reduction under section 1603, the taxpayeris barred from pursuing a property tax refund action in the superior court, even if the taxpayer hasfiled a refund claim with the board of supervisors. (Steinhart, supra, 47 Cal.4th at p. 1308.) In other words,the taxpayer must exhaust all available administrative remedies before resorting to the courts. Ubid.) This is because disputes regarding the valuation ofproperty are within the special competence ofthe county board. (Stenocord Corp.v. City etc. ofSan Francisco (1970) 2 Cal.3d 984, 988 (Stenocord).) Thus,ifthe dispute is submitted to the county board, the needfor the taxpayerto file a superior court action might be obviated. (Jbid.) However, the California Supreme Court has recognized an exception to this - exhaustion requirement. “[WJhere the taxpayerattacks the assessment as void because he does not own the property on which the tax demand was made,there is no question of valuation which mustbepresented first to the board of equalization for correction.as a condition forjudicial relief.” (Parr-Richmond Industrial Corp. v. Boyd (1954) 43 Cal.2d 157, 165.) The assessmentis a nullity as a matter of law. (Stenocord, supra,.2.Cal.3d at p. 987.) Whenthere is no question ofvaluation that the local board of equalization has special competence to decide, no dispute as to the facts and no possibility that action by 4. the board might avoid the necessity of deciding theissue in the courts, recourseto the local board is not required. (Star-Kist Foods, Inc. v. Quinn (1960) 54 Cal.2d 507, 511.) Examples of such assessmentnullities include when “the property is tax. exempt, nonexistent or outside the jurisdiction [citations], and no factual questions exist regarding the valuation of the property which, upon review by the board of equalization, might be resolved in the taxpayer’s favor, thereby making furtherlitigation unnecessary [citations].” (Stenocord, supra, 2 Cal.3d at p. 987.) Appellant contendsthatit didnot own the property at issue and therefore the . . - assessment was a nullity. Accordingly, appellant asserts, it was not required to apply to the Assessment Appeals Board for an assessmentreduction undersection 1603, subdivision (a). The County respondsthat the assessments at issue were not a nullity because they were not “beyond the powerofthe taxing officials to impose.” (Parrott & Co. v. City & _ County ofSan Francisco (1955) 131 Cal.App.2d 332, 342.) The County notesthe property wasnot tax exempt, nonexistent, or outside ofthe County’sjurisdiction. Rather, the County characterizesthe situation as involving a change in ownership. Therefore, the County argues, pursuantto section 5142, subdivision (b) and Steinhart, appellant was required to apply for an assessment reduction under section 1603 before pursuingits refund claim. | In Steinhart, the issue before the court was whetherreal property was subject to reassessment under Proposition 13. There, the plaintiffwas thesister of a trust settlor who died andleft the plaintiffa life estate in the settlor’s residence. Thetrust settlor had transferred this residenceto a trust that was revocable duringthe settlor’s life but that became irrevocable upon the settlor’s death. The county auditor took theposition that the settlor’s death‘resulted in a change in ownership thattriggered reassessment: The plaintifffiled a claim for refundofthe additional property taxes she had paid withoutfirst seeking an assessment reduction undersection 1603. The Steinhart court held the plaintiff was required to apply for an assessment reduction.and therefore her refund claim wasbarred for failure to exhaust administrative remedies. (Steinhart, supra, 47 Cal.4th at p. 1313.) The court noted thatthe plaintiff and the county each interpreted the “nullity” precedents very differently. The plaintiff argued that exhaustion was unnecessary because there was no question ofvaluation thatthe assessment appeals board had special competence to decide and there was no dispute as to the relevant facts. In contrast, the county, citing Stenocord, argued the assessment was not a nullity becausethe property.wasnot “tax exempt,nonexistent,or outsidethe_. / jurisdiction.” (Steinhart, supra, 47 Cal.4th at p. 1311.) However, the court did not need to choose between these divergent interpretationsof its precedents. Rather, “the Legislature has expressly and definitively settled the exhaustion question insofar asit involves a challenge to a change in ownership determination.” (Jbid.) Section 1605.5, enacted in 1986, provides that the “county board shall hear applications for a reduction in an assessmentin cases in whichthe issue is whether or not property has been subject to a change in ownership ....” (§ 1605.5, subd.(a).) The Steinhart court also concludedthat section 5142, subdivision (b), added in 1993, further confirms that an assessment reduction application under section 1603 is a prerequisite to challenging a change in ownership determination. (Steinhart, supra, 47 Cal.4th at p. 1312.) Subdivision (b) of section 5142 specifies that, in the context of a claim for refund, if the taxpayer and the assessorfile a stipulation with the county board of equalization “stating that issues in dispute do not involve valuation questions” and the stipulation is accepted, it shall be deemed compliance with section 1603. Section 5142, subdivision (c), provides that nothing in subdivision (b) “shall be construed to deprive the county board of equalizationofjurisdiction over nonvaluation issues in theabsenceof a contrary stipulation.” Thus, the absence of a valuation issue does not necessarily eliminate the need forthe taxpayer to apply for an assessment reduction before pursuing a tax refund claim. However,unlike the situation in Steinhart, appellant claims it does not own the assessed property. An application for a reduction in an assessmentrequires the applicant to-declareor certify, underpenalty ofperjury, that the applicant is the ownerofthe property or has a direct economicinterest in the paymentofthe taxeson the property. (§ 1603, subd. (f).) Appellant, not being the ownerofthe subject property, cannot make such a declaration. Therefore, appellant cannotfile avalid application for reduction. In construing a statutory scheme, we must apply commonsenseto the language _ andinterpret the statutes to.make them workable and-reasonable.. (Wasatch Property. Management v. Degrate (2005) 35 Cal4th 1111, 1122.) Since appellant cannotfile a valid application for an assessmentreduction, it is unreasonableto hold that such an application is a prerequisite to pursuing its refund claim. Accordingly, where,as here, the taxpayer claims the assessmentis void because the taxpayer does not own the property, the taxpayer is not required to apply for an assessment reduction undersection 1603, subdivision (a), to exhaust its administrative remedies.” 2. Appellant’s refund claim is timely. Section 5097, subdivision (a)(2), provides that a claim for refund mustbe “filed within four years after making the payment sought to be refunded....” Appellant paid the taxes in May 2011, February 2012 and June 2012andfiled claims for refund ofthose taxes in May and November 2012. Thus, the claims werefiled within four years of paying the disputed taxes. The County argues that section 5097, subdivision (a)(3)(A)Gi), bars appellant’s refund claim. That subdivision provides that when a taxpayer hasfiled an application for an assessment reduction undersection 1603, a refund claim must be filed within one year after the expiration of the time period specified in section 1604, subdivision (c), if the 200 Appellant’s motion for judicial notice is granted. county assessment appeals board fails to hear evidence and fails to makea final determination on the assessmentreduction application. According to the County, when appellant filed the applications for changed assessment seeking to cancel the assessment in June 2007 and the Assessment Appeals Board returned those applications as untimely, the above statute of limitations began to run. Therefore, the County argues, appellant had until June 2010 tofile its refund claims. . First, appellant did notfile an application for an assessment reduction under section 1603. More importantly, a refund claim cannot be made until after the disputed taxes have been paid. Any “claim filed before the paymentofthe disputed taxesis ‘inherently flawed as untimely.’” (JPMorgan Chase Bank, N.A. v. City and County of San Francisco (2009) 174 Cal.App.4th 1201, 1210.) Therefore, appellant could not have filed its refund claims in June 2010. Rather, those claims were not viable until the taxes were paid in 201] and 2012. Thus, appellant’s refund claimsfiled in May and November 2012 were timely. DISPOSITION The judgmentis reversed. Costs on appeal are awardedto appellant. Ree, LEVY,Acting PJ. WE CONCUR: WV,7 Tt U0 Vw KANE,J. Hummus FRANSON,J. CITALTT_* om oy, T me x
