Judge: Kevin C. Brazile, Case: 23STCV00512, Date: 2023-08-23 Tentative Ruling

Hearing Date: August 23, 2023

Case Name: Anaya, et al. v. Ygrene Energy Fund California, LLC, et al.

Case No.: 19STCV32607

Matter: Motion for Judgment on the Pleadings 

Moving Party: Defendants FortiFi Financial, Inc. and California Municipal Finance 

Authority

Responding Party: Unopposed

Notice: OK

Ruling: The Motion for Judgment on the Pleadings is granted, without leave 

to amend.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

On December 22, 2020, Plaintiffs Milagro Anaya, Felipe Rosales Picaz, Jessica Pina, and Esperanza Torres filed the operative Second Amended Complaint (“SAC”) against Defendants Ygrene Energy Fund California, LLC, Energy Efficient Equity, Inc, and Does 1-100 for (1)-(3) fraud, (4) violation of Pen. Code § 528.5(e), (5) violation of the UCL, (6) negligence per se, (7) conversion, (8) money had and received, (9) declaratory relief, (10) cancellation of instruments and quiet title, and (11) intentional infliction of emotional distress.  Plaintiffs allege that there was a conspiracy amongst the Defendants to “utilize forgery, fraud, and deceptive practices to sign up persons, such as Plaintiffs, for the . . . PACE program so as to confer a financial benefit and profit on Defendants, and each of them, at Plaintiffs’ expense.”  (SAC ¶ 10.)

Defendants FortiFi Financial, Inc. and California Municipal Finance Authority now seek judgment on the pleadings as to the SAC for failure to state sufficient facts.

“A defendant may move for judgment on the pleadings on the ground that the complaint does not state facts sufficient to state a cause of action against that defendant. A motion for judgment on the pleadings ‘is equivalent to a demurrer . . . .’ Leave to amend ‘is properly denied if the facts and nature of plaintiffs’ claims are clear and under the substantive law, no liability exists.’ ”  (Templo v. State¿(2018) 24 Cal.App.5th 730, 735.)  

Defendants argue that Plaintiffs failed to exhaust their administrative remedies before filing suit.  

The Court agrees that seeking the amounts associated with the tax liens or seeking cancellation of the liens relates to taxes because the PACE-authorizing statute provides that the collection of a PACE assessment will be in the same manner and time as the general taxes of a city or county on real property (Sts. & High. Code § 5898.30) and, in turn, the term “taxes” under the Revenue and Taxation Code “includes assessments collected at the same time and in the same manner as county taxes” (Rev. & Tax. Code § 4801; see also Hanjin Int’l Corp. v. L.A. Cty. Metro. Transp. Auth. (2003) 110 Cal.App.4th 1109, 1113.)  Indeed, “the PACE assessments can only be treated as taxes.”  (Morgan v. Ygrene Energy Fund, Inc. (2022) 84 Cal.App.5th 1002, 1013.) 

Rev. & Tax. Code § 4986(a)(2) provides, “(a) All or any portion of any tax, penalty, or costs, heretofore or hereafter levied, shall, on satisfactory proof, be canceled by the auditor if it was levied or charged: . . . (2) Erroneously or illegally.”

This Section contemplates that, prior to filing suit, a taxpayer will first pursue relief before the auditor for the purposes of canceling an erroneous or illegal tax. (See Williams & Fickett v. Cty. of Fresno (2017) 2 Cal.5th 1258, 1289 (dissent) [“In 1970, section 4986 was amended to permit the cancellation of collected taxes as well as uncollected taxes. (Stats. 1970, ch. 129, § 3, p. 357.) With that change, the line began to blur between section 4986 applications (which were originally precollection proceedings) and section 5097 refund claims (which are postcollection proceedings). As a result of the 1970 amendment, these two forms of administrative exhaustion now overlap to some extent, allowing a taxpayer that has paid a tax to bring a cancellation application in addition to a refund claim.”]; see also Timothy Burke v. Renew Fin. Grp., Inc. (C.D. Cal. Aug. 13, 2021) 2021 WL 5177776, at *6 [“In short, a taxpayer seeking judicial relief from an assessment must exhaust administrative remedies before pursuing an action in court. . . . Plaintiff has not alleged that he has properly applied for assessment reduction or tax refunds . . . . As a result, the Court dismisses without prejudice Plaintiff's claim for cancellation of taxes.”].)

Here, the claims at issue either seek a tax refund or seek the cancellation of unpaid taxes, thus requiring that Plaintiffs have exhausted their administrative remedies.  There is no allegation of this in the SAC.  

Plaintiffs do allege that “the special assessments charged and assessed against plaintiffs’ properties have not been cancelled and said taxing authorities have directed and redirected plaintiffs to various government agencies and government contracting services to whom they should direct their demands for cancellation of the special tax assessments, in other words, plaintiffs have been given, and continue to be given, the run-around . . . .”  (SAC ¶ 70.)

However, Plaintiffs do not specifically allege that they submitted applications for a refund/cancellation before the auditor.  Therefore, the Motion for Judgment on the Pleadings is granted, without leave to amend.

The Request for Judicial Notice is granted.  

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.