Judge: Teresa A. Beaudet, Case: 20STCV41848, Date: 2024-06-10 Tentative Ruling

Case Number: 20STCV41848    Hearing Date: June 10, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

On November 2, 2020, Plaintiff LA Live Theatre, LLC (“Plaintiff”) filed a “Verified Complaint for Refund of Property Taxes Paid” (the “Complaint”) in this action against Defendant County of Los Angeles (“Defendant”). The Complaint alleges one cause of action for recovery of taxes paid after denial of claims for refund. 

In the Complaint, Plaintiff alleges, inter alia, that “Plaintiff owns and operates a performing arts theater venue, formerly known as the Nokia Theatre and presently called the Microsoft Theatre, located within the LA Live Entertainment Complex at Figueroa Street and Olympic Boulevard in downtown Los Angeles. The theater’s building improvements were assessed for property tax purposes following completion of construction on or about October 12, 2007. Plaintiff administratively challenged that new construction assessment before the Los Angeles County Assessment Appeals Board No. 1 (the ‘Appeals Board’ or ‘Board’). This action is an appeal from the administrative decision by the Appeals Board on the base year value for the newly-constructed theater building improvements as of October 12, 2007.” (Compl., ¶ 1.)

Plaintiff now moves “for an order granting Plaintiff leave to amend its Verified Complaint for Refund of Property Taxes Paid…to conform to proof adduced at trial to include, without limitation, the addition of a claim that the findings of fact…issued by the Los Angeles County Assessment Appeals Board No. 1…in this matter are legally deficient, and ordering the proposed First Amended Verified Complaint for Refund of Property Taxes Paid…submitted with [the] Motion be deemed filed and served as of the date of the granting of [the] Motion.” Defendant opposes.

Request for Judicial Notice

The Court grants Plaintiff’s request for judicial notice filed in support of Plaintiff’s reply.

Discussion

Pursuant to Code of Civil Procedure section 473, subdivision (a)(1), “[t]he court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading.”

In addition, pursuant to Code of Civil Procedure section 576, “[a]ny judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading or pretrial conference order.”

 “[T]he court’s discretion will usually be exercised liberally to permit amendment of the pleadings. The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified.” ((Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428 [internal citations omitted].) “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend….”   ((Morgan v. Superior Court of Los Angeles County (1959) 172 Cal.App.2d 527, 530.) Prejudice includes “delay in trial, loss of critical evidence, or added costs of preparation.” ((Solit v. Tokai Bank (1999) 68 Cal.App.4th 1435, 1448.)

Pursuant to Code of Civil Procedure section 469, “[v]ariance between the allegation in a pleading and the proof shall not be deemed material, unless it has actually misled the adverse party to his or her prejudice in maintaining his or her action or defense upon the merits. If it appears that a party has been so misled, the court may order the pleading to be amended, upon such terms as may be just.”

 “‘[Code of Civil Procedure section] 469 specifically governs motions to amend at trial to conform to proof … . [It] provides in relevant part as follows: ‘No variance between the allegation in a pleading and the proof is to be deemed material, unless it has actually misled the adverse party to his prejudice in maintaining his action or defense upon the merits.’ Such amendments at trial to conform to proof, ‘if not prejudicial, are favored since their purpose is to do justice and avoid further useless litigation.’ …” ((Duchrow v. Forrest (2013) 215 Cal.App.4th 1359, 1378.) “The cases on amending pleadings during trial suggest trial courts should be guided by two general principles: (1) whether facts or legal theories are being changed and (2) whether the opposing party will be prejudiced by the proposed amendment. Frequently, each principle represents a different side of the same coin: If new facts are being alleged, prejudice may easily result because of the inability of the other party to investigate the validity of the factual allegations while engaged in trial or to call rebuttal witnesses. If the same set of facts supports merely a different theory … no prejudice can result…The basic rule applicable to amendments to conform to proof is that the amended pleading must be based upon the same general set of facts as those upon which the cause of action or defense as originally pleaded was grounded…” ((Ibid. [internal quotations omitted].)

Plaintiff asserts that here, “leave to amend Plaintiff’s Complaint to conform to proof to include, without limitation, the addition of a claim that the Board’s Findings are legally deficient should be granted because the amended pleading would be based on the same set of facts as those presently in the Complaint and in the record, and Defendant would not be adversely prejudiced by the amendment.” (Mot. at p. 12:6-9.) As discussed, Plaintiff seeks “leave to amend its Verified Complaint for Refund of Property Taxes Paid…to conform to proof adduced at trial to include, without limitation, the addition of a claim that the findings of fact…issued by the Los Angeles County Assessment Appeals Board No. 1…in this matter are legally deficient…” (Notice of Motion at p. 2:5-8.)

In connection with the motion, Plaintiff provides a “redlined” version of the proposed First Amended Verified Complaint for Refund of Property Taxes Paid (“FAC”). (Sislyan Decl., ¶ 3, Ex. 2.) The proposed FAC would amend the original Complaint to include, inter alia, the following allegation:  

“The Board’s Findings are deficient as a matter of law and violate Section 1611.5, Rule 324(e), and case law, including Next Century and Farr, because, among other reasons: the Findings do not fairly disclose the Board’s determination of all material points raised in the Applications and at the hearing; the Findings do not set forth findings, or sufficient findings, to bridge the analytic gap between the raw evidence and the Board’s ultimate decision or order; the Findings randomly leap from evidence to conclusion; the Findings do not draw or include all legally relevant sub-conclusions supportive of the Board’s ultimate decision; the Findings fail to enable a reviewing court to trace and examine, or adequately trace and examine, the Board’s mode of analysis; the Findings do not address, or sufficiently address, specifically the Board’s reasoning for accepting or rejecting each issue raised by the parties; the Findings do not address, or sufficiently address, specifically the Board’s reasoning for accepting or rejecting each valuation of the Subject Property set forth by the parties; the Findings do not address, or sufficiently address, specifically the Board’s reasoning for accepting or rejecting the evidence set forth by the parties; the Findings do not tell the parties, and reviewing courts, why the Board rejects evidence in other than conclusory terms; the Findings do not provide sufficient explanation or analysis for the Board’s ultimate decision; and the Findings force reviewing courts into unguided and resource-consuming explorations and/or to grope through the record to determine whether some combination of credible evidentiary items which supported some line of factual and legal conclusions supported the Board’s ultimate decision.” (Sislyan Decl., ¶ 3, Ex. 2, ¶ 37.)

The proposed FAC would also include, inter alia, the following additional allegation: “Revenue and Taxation Code section 1611.6 (‘Section 1611.6’) provides, in relevant part: ‘If the county board fails to make findings upon request, or if findings made are found by a reviewing court to be so deficient that a remand to the county board is ordered to secure reasonable compliance with the elements of findings required by Section 1611.5, the action of the county board shall be deemed to be arbitrary and capricious within the meaning of Section 800 of the Government Code, so as to support an allowance of reasonable attorney’s fees against the county for the services necessary to obtain proper findings. The dollar limitation set forth in Section 800 of the Government Code shall not apply to an allowance of attorney’s fees pursuant to this section.’ Property Tax Rule 308(c) (Cal. Code Regs., tit. 18, § 308, subd. (c)) (“Rule 308(c)”) provides the same…The Findings made by the Board are so deficient that a remand to the Board is required, and should be ordered, to secure reasonable compliance with the elements of findings required by Section 1611.5.” (Sislyan Decl., ¶ 3, Ex. 2, ¶¶ 46-47.) The proposed FAC also contains the allegation that “Plaintiff has had to retain counsel and incur attorney’s fees in order to prosecute this action. Plaintiff is entitled to an award of reasonable attorney’s fees under applicable law, including but not limited to Section 1611.6, Rule 308(c), and Government Code section 800.” (Sislyan Decl., ¶ 3, Ex. 2, ¶ 48.)

Plaintiff asserts that “the amendment to conform to proof merely adds a new theory of recovery on the same set of facts (i.e., the Board’s Findings) upon which Plaintiff’s claim set forth in the Complaint is based. While the errors already pled highlight the specific errors in the Board’s decision set forth in the Findings, the new theory of recovery simply alleges a general deficiency in the Board’s Findings. Plaintiff’s claim as pled and the new legal theory are both based upon the Board’s Findings.” (Mot. at p. 12:10-14.) Plaintiff cites to paragraph 32 of the original Complaint, which alleges that the Appeals Board made certain specified errors in reaching the decision set forth in its “Findings of Fact.” (See Compl., ¶ 32.)

Plaintiff also asserts that “Defendant will not be prejudiced by allowing the amendment of the Complaint to conform to proof. The proof necessary to support the amendment (i.e., the Board’s Findings, AR-0048-0092) is already in the record.” (Mot. at p. 6:18-20.)

In the opposition, Defendant asserts that leave to amend should be denied. First, Defendant asserts that “Plaintiff’s request is not timely.” (Opp’n at p. 6:17.) As an initial matter, as noted by Plaintiff and as set forth above, pursuant to Code of Civil Procedure section 576, “[a]ny judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading or pretrial conference order.” (Emphasis added.)

Defendant also cites to P&D Consultants, Inc. v. City of Carlsbad (2010) 190 Cal.App.4th 1332, 1345, where the Court of Appeal noted that “[c]ourts must apply a policy of liberality in permitting amendments at any stage of the proceeding, including during trial, when no prejudice to the opposing party is shown. However, even if a good amendment is proposed in proper form, unwarranted delay in presenting it may—of itself—be a valid reason for denial.” (Internal quotations and citation omitted.) In addition, Defendant cites to City of Stanton v. Cox (1989) 207 Cal.App.3d 1557, 1563, where the Court of Appeal noted that “Stanton amended its ordinance on March 26, 1985, to outlaw enclosed booths. It filed suit against Earmark only two days later, but failed to mention the booth issue or the facts surrounding it and did not attempt to amend its pleading until September 1986. No excuse was offered for the delay.” The City of Stanton Court noted that “[a]t the conclusion of the trial, on October 23, 1986, some 15 months after amending the ordinance to require open visible booths in adult mini-movie arcades and after filing suit, Stanton finally sought leave to amend its complaint to allege that Cox was operating an adult motion picture arcade with fully enclosed booths not visible from the entrance.” ((Id. at p. 1562.) The Court of Appeal found that “[a] party who waits 18 months before attempting to amend, and then does so only after trial has commenced, and who offers no excuse for the failure, can hardly complain when the request to amend is denied. Under these circumstances, we cannot say the trial judge abused his discretion.” ((Id. at p. 1564.)

Defendant contends that here, “Plaintiff waited about 42 months after filing the Complaint and about 19 months after the beginning of trial to file the Motion and offers no reasonable excuse for this delay.” (Opp’n at p. 8:5-7.) In the reply, Plaintiff asserts that “delay alone, absent prejudice, is insufficient to deny amendment.” (Reply at p. 7:12.) Plaintiff cites to Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1046, where “Kittredge Sports Company (Kittredge) petition[ed] for relief after the superior court denied its motion to amend the complaint.” The Court of Appeal concluded the trial court abused its discretion and granted the relief sought. The Kittredge Court noted that “Marker contends Kittredge unreasonably delayed moving to amend. Even if this were so, it is an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment.” ((Id. at p. 1048.) As discussed below, the Court does not find that Defendant has shown that it would be prejudiced by the proposed amendment here.

Defendant asserts that the proposed amendment would prejudice Defendant because “[i]t would likely delay the resolution of this lengthy trial; it would…increase the County’s litigation costs; and it would add a highly contentious new issue. Further, the County went into trial without notice that issues relating to insufficient findings or attorney fees under R&TC §§ 1611.5 and 1611.6 were going to be raised.” (Opp’n at p. 10:7-11.) In the reply, Plaintiff counters that “[n]otwithstanding Defendant’s conclusory statement that the amendment ‘would likely delay the resolution of this lengthy trial; . . . increase the County’s litigation cost; and would add a highly contentious new issue’ (Opp., 10:7-9), Defendant presents no evidence and/or argument to support the same for the simple reason that none exist.” (Reply at p. 2:15-19.) Indeed, Defendant does not appear to explain how granting the instant motion would purportedly delay the resolution of trial. In addition, Defendant does not appear to provide evidence that the proposed amendments would increase Defendant’s litigation costs. In addition, to the extent the “highly contentious new issue” Defendant is referring to is the proposed new allegations pertaining to attorney’s fees, such argument is addressed below. 

Plaintiff also cites to N. 7th St. Assocs. v. Constante (2001) 92 Cal.App.4th Supp. 7, 11-12, where the Court of Appeal noted that “[a]n amendment according to proof is permitted at any time during a trial. Where the evidence to support the amendment is already before the court, there is usually no prejudice to the opposing party in allowing the amendment.” (Internal citation omitted.) Here, Defendant does not appear to dispute that the evidence to support the proposed amendment is already before the court. In addition, as discussed, “[t]he basic rule applicable to amendments to conform to proof is that the amended pleading must be based upon the same general set of facts as those upon which the cause of action or defense as originally pleaded was grounded.” (Duchrow v. Forrest, supra, 215 Cal.App.4th at p. 1378.) Here, Defendant does not appear to dispute that the amendments in the proposed FAC are based upon the same general set of facts as those upon which the cause of action in the original Complaint is based.

In support of the opposition, Defendant also submits the Declaration of its counsel, who asserts that when the Assessment Appeal Board (the “AAB”) “is named as a defendant in a property tax refund action, or writ petition challenging an AAB decision, the AAB typically does not actively participate in the litigation.” (Parker Decl., ¶ 3.) Defendant’s counsel contends that “[w]here the property tax lawsuit includes a claim that the AAB’s findings of fact are legally insufficient, the AAB and its counsel takes a more active role in the litigation. Those claims create a significant financial stake for the County and the AAB. If the reviewing Superior Court decides that the findings do not meet the requirements of Rev. & Tax. Code § 1611.5, § 1611.6 authorizes the trial court to award the plaintiff taxpayer the attorney’s fees it spends to correct the deficiency.” (Parker Decl., ¶ 4.) As set forth above, the proposed FAC alleges that “Plaintiff has had to retain counsel and incur attorney’s fees in order to prosecute this action. Plaintiff is entitled to an award of reasonable attorney’s fees under applicable law, including but not limited to Section 1611.6, Rule 308(c), and Government Code section 800.” (Sislyan Decl., ¶ 3, Ex. 2, ¶ 48.) Defendant contends that “[t]he volume of recent appellate litigation over § 1611.6 fee awards shows how important and contentious this issue has become.” (Opp’n at p. 9:26-27.)

Defendant argues that “[t]he failure of the Plaintiff to allege insufficient findings in its complaint has ‘actually misled’ the County and the AAB. It was not until nearly two years after the filing of the Complaint that Plaintiff raised the issues of insufficient findings and attorney fees under R&TC §§ 1611.5 and 1611.6. The County had not prepared for nor was it on notice of these being issues in the case. In addition…the separately represented AAB was equally unaware of the issue and for this reason did not participate in the case. There is, as a result, substantial prejudice to the Defendant and the AAB…” (Opp’n at p. 11:21-27.) But as noted by Plaintiff in the reply, the original Complaint in this action alleges that Plaintiff seeks “attorney’s fees as provided by law.” (Compl., p. 15:22.) Plaintiff thus asserts that “[t]he amended claim creates no prejudice as to any relief for attorney’s fees because attorney’s fees based upon the conduct of the Board was already prayed for in the original complaint.” (Reply at p. 3:13-14.) Plaintiff notes that “the proposed amendment in this case would restate the same claim for relief for attorney’s fees as in the operative complaint, based on the same general set of facts.” (Reply at p. 3:27-28.) In its opposition, Defendant does not address the fact that Plaintiff prayed for attorney’s fees in the original Complaint.  (Compl., p. 15:22.)

 Lastly, Defendant asserts that “denial of the motion would not prejudice Plaintiff because the proposed additional claim has no merit.” (Opp’n at p. 12:1-2.) Defendant asserts that “[t]he record is full of evidence, most of it introduced by Plaintiff, to support the AAB’s finding about an improved real estate market…” (See Opp’n at p. 13:12-25.) However, in the reply, Plaintiff notes that “[w]hile Defendant recognizes that the law provides that the Board’s Findings ‘shall fairly disclose the board’s determination of all material points raised by the party in his or her petition’ and must ‘enable the reviewing court to trace and examine the agency’s mode of analysis,’ (Opp., 12:23-13:1),” Defendant does not appear to specifically point out “where in the Findings the Board provided the necessary explanation and analysis required for the Findings to meet the legal standard for findings.” (Reply at p. 8:5-10.)

            Based on the foregoing, the Court finds that Plaintiff has demonstrated good cause for leave to amend the Complaint to conform to proof.

Conclusion

Based on the foregoing, Plaintiff’s motion is granted. The proposed FAC submitted with Plaintiff’s instant motion is deemed filed and served as of the date of the granting of the motion.

Plaintiff is ordered to provide notice of this ruling.

DATED:  June 10, 2024                                 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court