Judge James C. Chalfant, Case Number: 22STLC05464, Date: 2023-09-05 Tentative Ruling

Rick Ladd v. County of Los Angeles and Jeff Prang, 22STLC05464

Tentative decision on (1) demurrer: sustained in part; (2) motion to strike: denied

Defendants County of Los Angeles and Jeff Prang (collectively “County”) demur to the First Amended Complaint (“FAC”) filed by Petitioner Rick Ladd (“Ladd”). The County separately moves to strike portions of the FAC.

The court has read and considered the moving papers, oppositions, and replies,[1] and renders the following tentative decision.

Petitioner Ladd filed the Complaint against Respondent County on August 17, 2022. The operative pleading is the FAC filed on May 1, 2023, alleging causes of action for (1) refund of property taxes, (2) accounting, and (3) declaratory relief. The FAC alleges in pertinent part as follows.

On December 30, 2019, Ladd audited and assessed the property taxes the County had assessed against him for 3912 West 106th Street, Inglewood, CA 90303 (“Property”). FAC ¶¶ 1, 8. Ladd purchased the Property for $275,000. FAC ¶9. Through various audits, Ladd determined that the County wrongfully assessed excess property taxes of $16,781.52 for the three fiscal years between July 2019 and June 2022. FAC ¶8.

Also on December 30, 2019, Ladd filed a Los Angeles County Assessment Appeal Demand for Property Tax Reassessment from Incorrect Valuation of $590,000.00 to Correct Valuation of $275,000 (“Reassessment Demand”). FAC ¶9, Ex. A p. 3. Ladd has used the Reassessment Demand to try to compel the County to conduct a verified, factual reassessment and make the appropriate adjustments on the property tax bills. FAC ¶9. The County has failed to do so. FAC ¶9.

On January 18, 2022, Ladd timely filed his Claim For Damages to Person or Property (“Damages Claim”) with the County as to these acts and omissions. FAC ¶11, Ex. A. On February 17, 2022, the County served a written denial of the Damages Claim. FAC ¶12, Ex. B.

The County Assessment Appeals Board (“AAB”) has failed to timely comply with Revenue and Taxation Code (“R&T Code”) sections 1604(c), 1604(c)(2), 1604(d)(1), and 1604(f)(1) as to Assessment Appeal No. 2019-00835. FAC ¶10. The County also failed to comply with R&T Code section 405 et. seq. FAC ¶10. The County also failed to comply with Cal. Const. Art. XIIIA section 2(a) as to proper property valuation standards. FAC ¶10.

The County untimely granted an Assessment Appeal Hearing, which occurred on July 6, 2022. FAC ¶21. At the hearing, Ladd requested an accounting as to how the County would calculate any refunds due to him. FAC ¶21. The County agreed to provide an accounting after the hearing, but it has failed to do so. FAC ¶21. The only documents Ladd has received are three Property Tax Refund Payments on November 7, 2022. FAC ¶¶ 18, 21. Based on these refund payments, Ladd has adjusted the principal damages from the improper assessment from $16,781.52 to $7,382.65. FAC ¶¶ 17-18. Ladd demands a full accounting as agreed at the hearing. FAC ¶22.

Ladd seeks $7,382.64 in damages with prejudgment interest, an accounting to substantiate all property taxes that the County alleges is due, and a declaration and judicial determination as to the rights and responsibilities of each party. FAC Prayer for Relief, ¶¶ 1-3. That determination should find that (1) the County arbitrarily and erroneously assessed the property tax against the Property, and (2) Ladd is entitled to a refund of excess taxes paid with any interest, penalties, and compensatory damages that the court may deem just and proper. FAC ¶26. Ladd also seeks costs of suit. FAC Prayer for Relief, ¶4.

On March 24, 2023, Ladd personally served the County with the Complaint and Summons.

On May 2, 2023, Department 26 (Hon. Mark Windham) granted the County’s motion to reclassify the case as civil unlimited jurisdiction. The case was reassigned to this court.

Demurrers are permitted in administrative mandate proceedings. CCP §§ 1108, 1109. A demurrer tests the legal sufficiency of the pleading alone and will be sustained where the pleading is defective on its face.

Where pleadings are defective, a party may raise the defect by way of a demurrer or motion to strike or by motion for judgment on the pleadings. CCP §430.30(a); Coyne v. Krempels, (1950) 36 Cal.2d 257. The party against whom a complaint or cross-complaint has been filed may object by demurrer or answer to the pleading. CCP §430.10. A demurrer is timely filed within the 30-day period after service of the complaint. CCP §430.40; Skrbina v. Fleming Companies, (1996) 45 Cal.App.4th 1353, 1364.

A demurrer may be asserted on any one or more of the following grounds: (a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading; (b) The person who filed the pleading does not have legal capacity to sue; (c) There is another action pending between the same parties on the same cause of action; (d) There is a defect or misjoinder of parties; (e) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain (“uncertain” includes ambiguous and unintelligible); (g) In an action founded on a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct; (h) No certificate was filed as required by CCP sections 411.35 or 411.36. CCP §430.10.

A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. CCP §430.30(a); Blank v. Kirwan, (1985) 39 Cal.3d 311, 318. The face of the pleading includes attachments and incorporations by reference (Frantz v. Blackwell, (1987) 189 Cal.App.3d 91, 94), but it does not include inadmissible hearsay. Day v. Sharp, (1975) 50 Cal.App.3d 904, 914.

The sole issue on demurrer for failure to state a cause of action is whether the facts pleaded, if true, would entitle the plaintiff to relief. Garcetti v. Superior Court, (“Garcetti”) (1996) 49 Cal.App.4th 1533, 1547; Limandri v. Judkins, (1997) 52 Cal.App.4th 326, 339. The question of plaintiff’s ability to prove the allegations of the complaint or the possible difficulty in making such proof does not concern the reviewing court. Quelimane Co. v. Stewart Title Guaranty Co., (1998) 19 Cal.4th 26, 47.

The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. Marshall v. Gibson, Dunn & Crutcher, (1995) 37 Cal.App.4th 1397, 1403. This rule does not apply to allegations expressing mere conclusions of law, or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken. Vance v. Villa Park Mobilehome Estates, (“Vance”) (1995) 36 Cal.App.4th 698, 709.

For all demurrers filed after January 1, 2016, the demurring party must meet and confer in person or by telephone with the party who filed the pleading for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. CCP §430.31(a). As part of the meet and confer process, the demurring party must identify all of the specific causes of action that it believes are subject to demurrer and provide legal support for the claimed deficiencies. CCP §430.31(a)(1). The party who filed the pleading must in turn provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency. Id. The demurring party is responsible for filing and serving a declaration that the meet and confer requirement has been met. CCP §430.31(a)(3).

“[A] demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” State ex rel. Metz v. CCC Information Services, Inc., (2007) 149 Cal.App.4th 402, 413.

If a demurrer is sustained, the court may grant leave to amend the pleading upon any terms as may be just and shall fix the time within which the amendment or amended pleading shall be filed. CCP §472a(c). However, in response to a demurrer and prior to the case being at issue, a complaint or cross-complaint shall not be amended more than three times, absent an offer to the trial court as to such additional facts to be pleaded that there is a reasonable possibility the defect can be cured to state a cause of action. CCP §430.41(e)(1).

The County demurs to the FAC on the basis that (1) a tax refund action is the only remedy available to Ladd (Dem. at 4-10), and (2) the County is a public entity immune to liability except by statute (Dem. at 3-4).

The County also moves to strike portions of the FAC alleging that it violated sections of the R&T Code (FAC ¶10), that it untimely granted an Assessment Appeal Hearing (FAC ¶21), and that Ladd timely filed a damages claim (FAC ¶11). The County also moves to strike any reference to principal or compensatory damages (FAC ¶¶ 17, 18, 26).

On April 4, 2023, counsel for the County met and conferred by telephone to discuss the bases for the demurrer and motion to strike. Kim Decl., ¶2, Ex. A. The parties agreed to stipulate to a 15-day extension to answer or otherwise plead. Kim Decl., ¶4, Ex. A.

On May 1, 2023, Ladd served the FAC. Kim Decl., ¶5. On May 23, 2023, the parties met and conferred to further discuss the demurrer and motion to strike, on the same grounds as before. Kim Decl., ¶¶ 6-7.

California Constitution article XIII, section 32 (“art. XIII, section 32”) establishes a procedure of “pay and sue” for taxpayers to challenge their state taxes:

“No legal or equitable process shall issue in any proceeding in any court against this State or any officer thereof to prevent or enjoin the collection of any tax. After payment of the tax claimed to be illegal, an action may be maintained to recover the tax paid, with interest, in such manner as may be provided by the Legislature.” (emphasis added).

This constitutional provision bars not only suits for injunctive relief, but also actions for declaratory relief or mandamus. Pacific Gas & Electric Co. v. State Board of Equalization (“Pacific Gas”) (1980), 27 Cal.3d 277, 280 (plaintiff could not seek mandamus and declaratory relief to compel adjustment of real property assessment). The purpose of this requirement is to “allow revenue collection to continue during litigation so that essential public services dependent on the funds are not unnecessarily interrupted.” Merced County Taxpayers’ Ass’n v. Cardella (“Cardella”) (1990), 218 Cal.App. 3d 396, 400. Art. XIII, section 32 bars “not only injunctions but also a variety of prepayment judicial declarations or findings which would impede the prompt collection of a tax.” State Board of Equalization v. Superior Court, (1985) 39 Cal.3d 633, 639. A post-payment tax refund action is the exclusive means of obtaining judicial review of state proceedings. People ex rel. Franchise Tax Bd. v. Superior Court, (1985) 164 Cal.App.3d 526, 545-546; Horack v. Franchise Tax Bd., (1971) 18 Cal.App.3d 363, 370.

R&T Code section 4807 parallels the state prohibition for county property taxes:

“No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action, or proceeding in any court against any county . . . or any officer thereof, to prevent or enjoin the collection of property taxes sought to be collected.”

Additionally, mandamus may only issue “when there is not a plain, speedy, and adequate remedy in the ordinary course of law.” CCP §1086. A post-payment refund action is an adequate remedy at law. Flying Dutchman Park, Inc. v. City & County of San Francisco, (“Flying Dutchman”) (2001) 93 Cal.App.4th 1129, 1138; Cardella, supra, 218 Cal.App.3d at 400-01.

As a result, the judicial review of decisions by a county assessment appeals board ordinarily is made not by administrative mandamus, but through a tax refund suit. Little v. Los Angeles County Assessment Appeals Bds. (2007), 155 Cal.App.4th 915, 922-23. This review by tax refund suit, and not administrative mandamus, is significantly different than other administrative decisions reviewed under CCP section 1094.5. Id. The tax refund lawsuit mechanism is compelled by art. XIII, section 32 and the fact that a tax refund suit is an adequate remedy at law. Id.

In Cardella, supra, 218 Cal.App.3d at 400-01, the petitioners sought mandamus commanding the county assessor to correct the assessments. Id. at 398. The court noted that R&T Code section 4807 precludes mandamus or an injunction to prevent the collection of property taxes. Id. at 400. The Cardella court noted that the California Supreme Court held in Pacific Gas, supra, 27 Cal.3d at 280, that a mandamus and declaratory relief action to compel an adjustment to the assessment of real property is barred by art. XIII, section 32 because “the assessment of real property is an integral part of the taxing process, and a court order invalidating an assessment will in effect ‘prevent or enjoin the collection’ of the tax.” Id. at 400. The Cardella court held that Pacific Gas compelled a conclusion that a court does not have the authority to compel a reassessment because it could impede future tax collection. Id. at 401. Despite a disclaimer by the petitioners that they were not seeking a refund, the petitioners were pursuing “pre-payment relief” and their claim was barred. Ibid.

Respondent County argues that the court must dismiss the FAC because a tax refund action is the only remedy available to Ladd. Dem. at 4-5. Although the FAC’s first cause of action is for “Tax Refund,” Ladd asks for damages in an amount to be proven at trial. FAC ¶¶ 17-18. In its moving papers, the County reads this allegation to mean that Ladd seeks damages based on tort liability, to which public entities are immune. Government Code (“Govt. Code”) §815(a). Govt. Code section 860.2 also insulates any public entity or employee from liability for an injury caused by (a) any judicial or administrative proceeding or action for or incidental to the assessment or collection of a tax, and (b) any act or omission in the interpretation or application of any law relating to a tax. Dem. at 3-4.

In support of its position, the County relies on the AAB administrative record as well as the FAC’s allegations. Ladd requested in his Reassessment Demand that the County give his Property a Valuation of $275,000. FAC ¶9, Ex. A, p. 3. On July 6, 2022, a County Assessment hearing officer issued a recommended decision that changed the Market Value of the Property to $350,000 for the base year 2019. AR 47. The AAB held an Assessment Appeal Hearing in July 2022. FAC ¶21. Ladd reluctantly accepted an assessment reduction of the Property’s value to $350,000. AR 58. Ladd received three refund checks in November 2022, which he then deducted from the amount of overpayment that he claims. FAC ¶¶ 17-18. He seeks the $7,382.65 difference as damages. FAC Prayer for Relief, ¶1.

Ladd argues that the first cause of action is in fact a tax refund action. Dem. Opp. at 7-8. The FAC’s use of the word “damages” is merely a reference to the amount of overpaid taxes that the County owes Ladd. Opp. at 8. This also means that this case falls under Govt. Code section 860.4, which clarifies that Govt. Code section 860.2 does not affect any law relating to tax refunds or adjustments. Opp. at 8.

The County asserts in reply that the FAC includes a damages claim based on the overpaid taxes and the County’s denial thereof. FAC, ¶¶ 11-12, Exs. A-B. Facts in a complaint supersede inconsistent allegations, and the damages claim is inconsistent with the tax refund allegation. Moran v. Prime Healthcare Mgmt., Inc. (2016) 3 Cal.App.5th 1131, 1145-46. Reply at 3.

There are two issues in the first cause of action: (a) whether the Property was properly assessed and (b) the amount of overpaid taxes to which Ladd is entitled. Although not entirely clear from the FAC, Ladd does not appear to contend that the AAB’s assessment was wrong. The administrative record confirms this fact. AR 58. Ladd only contends that the County miscalculated the refund owed to him under that assessment. As construed, the first cause of action is a taxpayer refund action and is not uncertain. The demurrer to the first cause of action is overruled.

An accounting is an equitable proceeding which is proper where there is an unliquidated and unascertained amount owing that cannot be determined without an examination of the debits and credits on the books to determine what is due and owing. Green Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th 425, 442. Equitable principles govern, and the plaintiff must show the legal remedy is inadequate. Id.

The FAC alleges that during the AAB hearing, Ladd requested an accounting as to how the County would calculate any refunds due to him. FAC ¶21. The County agreed to provide an accounting after the hearing, but failed to do so. FAC ¶21. Ladd seeks a full accounting as agreed. FAC ¶22, Prayer for Relief, ¶2.

Although Ladd cites to a separate promise by the County to provide an accounting (FAC ¶21), he asked for it to determine how much he is owed as a tax refund. Because a tax refund action is an adequate remedy at law to obtain this information, it precludes a separate cause of action for accounting. See Dem. at 6. The demurrer to the second cause of action is sustained without leave to amend.

Injunctive and declaratory relief will not be granted where there is a plain, complete, speedy, and adequate remedy at law. Flying Dutchman, supra, 93 Cal.App.4th at 1138.

The County argues that because a tax refund action is an adequate remedy, the demurrer to the third cause of action for declaratory relief (FAC ¶26, Prayer for Relief, ¶3) should be sustained. Dem. at 9.

Ladd asserts that the declaratory relief cause of action operates prospectively to settle a controversy before it escalates into a repudiation of obligations. Opp. at 9. Because a taxpayer refund action -- which looks historically at the parties’ obligations -- is his sole relief, Ladd is not entitled to prospective declaratory relief. Nor does the FAC’s declaratory relief action allege any prospective facts. The FAC alleges that Ladd overpaid his property taxes, and that the County has only partially refunded the amount overpaid. FAC ¶¶ 1, 8-9, 17-18. Ladd asks for judgment that he is entitled to a refund of excess taxes paid. FAC ¶26. This judgment would not prevent a repudiation of obligations but rather seeks to correct one that has already occurred.

The demurrer to the declaratory relief cause of action is sustained without leave to amend.[3]

The demurrer to the FAC is overruled for the first cause of action, which is construed as a taxpayer refund claim, and sustained without leave to amend for the remaining two causes of action. As this court handles mandamus and does not hear taxpayer refund claims, the case is ordered transferred to Department 1 for reassignment to an I/C court.

[1] Ladd failed to lodge a courtesy copy of either opposition, and the County either reply, in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing. Counsel is admonished to provide courtesy copies in all future filings.

[2] The County requests judicial notice of the AAB’s certified record and transcript of proceedings (collectively “Administrative Record” or “AR”) (RJN Ex. 1). The request is granted. Evid. Code §452(c).

[3] The County moves to strike the FAC’s references to (a) lack of compliance with R&T Code sections 405 and 1604 as false, and (b) the County’s liability for damages. Ladd fails to substantively address these issues in his opposition. Nonetheless, it is clear that the FAC contends that the AAB hearing was untimely and the court will not address the merits of the AAB’s compliance in a motion to strike. Nor is the FAC’s reference to damages so improper as to justify striking it. The motion to strike is denied.