Chinese Theatres, LLC v. County of L.A.

Filed 12/8/20; Certified for Publication 1/4/21 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
CHINESE THEATRES, LLC, B302708
Plaintiff and Respondent, Los Angeles County
Super. Ct. No. BC687084
v.
COUNTY OF LOS ANGELES,
Defendant and Appellant.
APPEAL from a postjudgment order of the Superior Court
of Los Angeles County, Christopher K. Lui, Judge. Reversed.
Nicole Davis Tinkham and Alima Starr Coleman, Assistant
County Counsel, Richard Girgado, Drew M. Taylor, and Thomas
R. Parker, Deputy County Counsel; Lamb and Kawakami,
Michael K. Slattery and Thomas G. Kelch, for Defendant and
Appellant.
Thomas E. Montgomery, County Counsel (San Diego) and
Walter J. De Lorrell III, Deputy County Counsel (San Diego), for
California State Association of Counties as Amicus Curiae on
behalf of Defendant and Appellant.
Greenberg Traurig, C. Stephen Davis and Colin W. Fraser,
for Plaintiff and Respondent.
_______________________________________
INTRODUCTION
This appeal arises out of a property tax refund action
brought by plaintiff Chinese Theatres, LLC (Chinese Theatres or
company) against defendant County of Los Angeles (County).
After remanding this matter to the Los Angeles County
Assessment Appeals Board (Board) to reduce the value of real
property owned by Chinese Theatres and to correct the tax roll,
the trial court awarded Chinese Theatres attorney fees under
Revenue and Taxation Code 1 section 1611.6. The County appeals
the award, arguing Chinese Theatres was not entitled to fees
under section 1611.6. We agree and reverse the postjudgment
order awarding Chinese Theatres fees.
FACTUAL AND PROCEDURAL BACKGROUND
Chinese Theatres owns real property in Hollywood,
California (Property), on which the historic landmark formerly
known as the Grauman’s Chinese Theatre is located. About eight
years ago, Chinese Theatres and TCL Corporation (TCL) entered
into the “Theatre Naming Rights Agreement” (TNRA), granting
TCL the right to name the theater the “TCL Chinese Theatre.”
The TNRA also granted TCL various advertising rights
concerning the theater and its operation.
1All undesignated statutory references are to the Revenue and
Taxation Code.
2
After the TNRA was executed, the Los Angeles County
Assessor (Assessor) assessed the Property’s value for tax
purposes for the 2013 base year. The Assessor initially valued the
Property at $55.8 million but later increased the value to $69.3
million. The Assessor attributed about $26 million of the
Property’s value to revenue generated by the TNRA.
Chinese Theatres appealed the Assessor’s decision to the
Board, seeking a reduction of the Property’s value for tax
purposes. Among other things, Chinese Theatres asked the Board
to deduct the amount the Assessor attributed to the TNRA,
arguing the agreement was an intangible asset exempt from the
Property’s assessment under California law.
The Board agreed with Chinese Theatres, in part,
concluding the TNRA included “some measurable amount of
intangible value … .” Specifically, the Board found half of the
TNRA was an intangible asset, so only 50 percent of the revenue
generated by the agreement should be included in the Property’s
value for tax purposes. The Board, therefore, reduced the
Property’s value by $13 million. The Board did not explain,
however, how it determined that half of the TNRA constituted a
tangible, taxable asset.
After the Board issued its decision, Chinese Theatres filed
this lawsuit against the County for refund of property taxes.
Chinese Theatres challenged, among other things, the Board’s
determination that half of the TNRA was a taxable asset. The
Assessor filed a cross-petition for writ of mandate against the
Board, seeking an order requiring the Board to vacate its decision
exempting 50 percent of the revenue generated by the TNRA
from the Property’s assessment.
3
Following a bench trial, the court issued a statement of
decision finding the entire TNRA was an intangible asset exempt
from the Property’s assessment. The court explained that the
Board’s decision to treat part of the TNRA as a taxable asset was
flawed in two ways. First, the Board’s decision violated California
law exempting intangible assets from property tax assessments.
Second, the decision was procedurally flawed because the Board
didn’t explain how it determined half of the revenue generated by
the TNRA was taxable or cite any evidence to support its
conclusion, rendering its decision on that issue “arbitrary and
invalid.”
Before entering judgment, the court directed the parties to
meet and confer, “ ‘with an eye toward[ ] avoid[ing] a remand,’ ”
regarding “ ‘the simple, ministerial, arithmetic calculation’ ”
needed to amend the Property’s value in light of the court’s
decision. Although the parties “agreed that it may be possible to
calculate the amount of refund arithmetically, [they could not]
agree that remand could be avoided due to various procedural
issues that [Chinese Theatres] contend[ed] must be addressed by
the Assessment Appeals Board.”
The court entered judgment in favor of Chinese Theatres
and remanded the matter to the Board with the following
directions: “This action is remanded to the Board for further
proceedings consistent with this judgment and the Court’s
Statement of Decision entered herein. Upon remand, the Board is
ordered to remove one-hundred percent (100%) of the value of the
[TNRA] from the base year value of the TCL Chinese Theatre, …
and to thereafter cause the necessary corrections to be made to
4
the tax roll. The preceding sentence establishes the sole purpose
of the remand.” 2 The County did not appeal the court’s judgment.
Chinese Theatres later moved for attorney fees under
section 1611.6. The company argued it was entitled to fees
because the Board failed to make sufficient findings under
section 1611.5 when it found part of the TNRA was a taxable
asset. The Assessor and the Board opposed the motion.
The court, through a different judge from the one who
entered judgment, granted Chinese Theatres’s motion and
awarded the company nearly $180,000 in attorney fees. The court
reasoned that the judgment remanding the action “implicitly
required” the Board to make new findings that comply with
section 1611.5. The court explained, “[b]ecause the Board’s
findings were deemed deficient and the court remanded the
matter back for ‘further proceedings consistent with[ ] the
judgment,’ the remand necessarily is to ‘secure reasonable
compliance with the’ Board’s requirement to issue final
determinations that [are] ‘supported by the weight of the
evidence.’ ”
The County appeals the postjudgment order awarding
Chinese Theatres attorney fees.
2 The final sentence of the remand order was interlineated by hand
into the judgment after the parties agreed to include it.
5
DISCUSSION 3
The County contends the court erred in awarding Chinese
Theatres attorney fees under section 1611.6. Alternatively, the
County argues the amount of the fees award was unreasonable
and should be reduced. We agree with the County that Chinese
Theatres was not entitled to attorney fees and, therefore, reverse
the fees award in its entirety.
1. Standard of Review and Applicable Provisions of the
Revenue and Taxation Code
We generally review a trial court’s award of attorney fees
for abuse of discretion. (Land Partners, LLC v. County of Orange
(2018) 19 Cal.App.5th 741, 745.) But where, as here, the
prevailing party’s entitlement to fees turns on an issue of
statutory interpretation, our review is de novo. (Ibid.)
In this case, the court found Chinese Theatres was entitled
to attorney fees under section 1611.6. That statute 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
3 The County filed a request asking us to take judicial notice of the
following documents: (1) a “Stipulation to Implement Court’s
Judgment” filed with the Board in July 2019, after the court entered
the judgment in this case; (2) a “Motion Sheet” also filed with the
Board in July 2019 after the court entered judgment; (3) a transcript of
the Board’s July 2019 hearing after the court entered judgment; and
(4) legislative history materials concerning Senate Bill 285, which
enacted section 1611.6 in 1977. We deny the County’s request as to the
stipulation, motion sheet, and hearing transcript, because those
records were generated after the court entered the judgment giving
rise to the award of attorney fees in this case. We grant the County’s
request as to the legislative history materials.
6
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.” (§ 1611.6.)
Section 1611.5 establishes when and how a county appeals
board must make findings when reviewing an application for
reduction of a property tax assessment. Relevant here, that
statute requires: “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 … . 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.” (§ 1611.5.)
2. Section 1611.6’s plain language controls.
“Our primary task in construing a statute is to determine
the Legislature’s intent.” (Jarrow Formulas, Inc. v. LaMarche
(2003) 31 Cal.4th 728, 733 (Jarrow Formulas).) “ ‘Because the
statutory language is generally the most reliable indicator of
legislative intent, we first examine the words themselves, giving
them their usual and ordinary meaning and construing them in
context.’ [Citation.]” (Ramirez v. City of Gardena (2018) 5 Cal.5th
995, 1000 (Ramirez).) “ ‘ “If the language is clear and
unambiguous there is no need for construction, nor is it necessary
to resort to [extrinsic] indicia of the intent of the Legislature ... .” ’
[Citation.]” (Jarrow Formulas, at p. 735.)
7
Here, section 1611.6 clearly and unambiguously delineates
when a court may award attorney fees to a property owner in a
tax refund action. That is, under a plain reading of section
1611.6, it’s clear the Legislature intended to allow for an award of
attorney fees to compensate for the “services necessary to obtain
proper findings” from a county board in only two circumstances.
(See § 1611.6.)
The first circumstance appears in the first clause of the
statute’s opening sentence, where a property owner may recover
fees if the court finds the county board failed to make requested
findings. (See § 1611.6.) The second circumstance appears in the
second clause of the first sentence, where a property owner may
recover fees if the court finds the board’s findings are so deficient
that the court remands the matter back to the board to make new
findings that reasonably comply with the requirements of section
1611.5. (See § 1611.6.) As noted above, section 1611.5 requires a
county board to fairly disclose how it determined all material
points raised by a party in its petition or at the tax refund
hearing. (§ 1611.5.) Thus, when read in context with section
1611.5, the second clause of section 1611.6 permits an award of
attorney fees only if the court remands the matter to the board
with directions to make findings that “fairly disclose the board’s
determination” on the point at issue, including a “statement of
the method or methods of valuation used in appraising the
property.” (See §§ 1611.5, 1611.6; see also Esberg v. Union Oil Co.
(2002) 28 Cal.4th 262, 268 [when interpreting a statute, we must
examine the statute’s words in context].)
Without identifying any ambiguities in section 1611.6’s
language, Chinese Theatres argues we must begin our analysis
with the statute’s legislative history. In Chinese Theatres’s view,
8
the statute permits an award of attorney fees under the second
clause of the statute in any case where a court finds the county
board’s findings are deficient or arbitrary, regardless of whether
the court remands the matter to the board with directions to
make new findings that reasonably comply with section 1611.5’s
findings requirement. While acknowledging that “the text of the
statute includes the [phrase] ‘a remand to the county board is
ordered,’ ” Chinese Theatres insists we must ignore that phrase
because it does not appear anywhere in section 1611.6’s
legislative history, including statements from the Legislative
Counsel Digest, the Senate Daily File, the Legislative Analyst’s
Office, and the Department of Finance Analysis.
Chinese Theatres also urges us to consider section 1611.6’s
remedial nature in interpreting the statute. According to Chinese
Theatres, because section 1611.6 is a remedial statute, we must
resolve any ambiguities in favor of the parties it was designed to
protect—i.e., property owners in tax refund actions. (See Lande v.
Jurisich (1943) 59 Cal.App.2d 613, 617 [when a remedial
statute’s meaning is in doubt, courts will interpret it to “suppress
the mischief at which it was directed, and to advance or extend
the remedy provided”].) Because the statute is remedial in nature
and the legislative history “makes no reference to any ‘remand,’ ”
the company contends the Legislature did not intend to limit an
award of fees under the second clause to circumstances where a
court remands the matter with directions for the county board to
make findings that reasonably comply with section 1611.5. These
arguments lack merit for several reasons.
As a preliminary matter, since section 1611.6’s plain
language establishes the Legislature’s intent to limit attorney
fees to cases that fall within the two categories discussed above,
9
we need not consider legislative history or principles of statutory
construction when interpreting section 1611.6. (Jarrow
Formulas, supra, 31 Cal.4th at p. 733.) In any event, section
1611.6’s legislative history does not compel us to interpret the
statute as Chinese Theatres reads it, and the rules of statutory
construction support an interpretation of the statute that is
consistent with its plain language.
Under well-settled rules of statutory construction, courts
are required to give meaning to “ ‘ “every word of a statute if
possible[ ] and should avoid a construction making any word
surplusage.” ’ [Citation.]” (Briggs v. Eden Council for Hope &
Opportunity (1999) 19 Cal.4th 1106, 1118 (Briggs).) Courts also
lack the power to rewrite a statute to make it conform to a
“presumed intention” which is not expressed in the statute itself.
(Jarrow Formulas, supra, 31 Cal.4th at p. 737.)
Chinese Theatres’s interpretation of section 1611.6 violates
both of these principles. First, it ignores an entire phrase of the
statute—“that a remand to the county board is ordered to secure
reasonable compliance with the elements of findings required
by Section 1611.5 … .” (§ 1611.6.) Second, it essentially asks us to
rewrite the statute to permit an award of attorney fees in
circumstances not contemplated by the statute’s language—i.e.,
where the court finds a county board’s findings are deficient
regardless of whether the court remands the matter with
directions for the board to issue new findings that comply with
section 1611.5. We therefore reject Chinese Theatres’s
interpretation of section 1611.6 because it fails to “give[ ]
meaning and assign[ ] import” to large portions of the statute’s
text. (See Briggs, supra, 19 Cal.4th at p. 1118.)
10
We also disagree with Chinese Theatres’s argument that a
literal interpretation of section 1611.6’s language would lead to
absurd results because the statute’s legislative history “makes no
reference to any ‘remand.’ ” While the statute’s legislative history
materials do not explicitly reference any requirement that a court
remand a tax refund action to a county board before attorney fees
may be awarded, those materials contain statements that are
consistent with a remand requirement. For example, in its
analysis of Senate Bill 285, through which 1611.6 was enacted in
1977, the Department of Finance Analysis explained that the
statute was intended to “allow reasonable attorney’s fees to be
charged against the county for the services necessary to obtain
proper findings, if the county fails to make findings upon request,
or the findings made are found by a reviewing court to be
deficient.” (Italics added.) Likewise, the Senate Daily File
explained, “if a county board of equalization fails to make
findings upon request or such findings are found by a reviewing
court to be deficient, reasonable attorney’s fees be allowed
against the county for services necessary to obtain proper
findings.” (Italics added.)
It is reasonable to conclude that the phrase “the services
necessary to obtain proper findings” includes the services
necessary to reappear before a county board to obtain findings
that comply with section 1611.5, not just the services necessary
to challenge those findings in court. If the Legislature intended to
award attorney fees in any case where a county board’s findings
are found to be deficient or arbitrary, regardless of whether a
remand to secure compliant findings is ordered by the court, it
would not have included the language in the statute’s second
clause requiring such a remand. (See Ramirez, supra, 5 Cal.5th
11at p. 1001 [“If the Legislature had intended plaintiff’s
interpretation, it would have said so directly, as it easily could
have done.”].)
In sum, we conclude that section 1611.6’s language is clear
and unambiguous. Under a plain reading of the statute, attorney
fees are permitted in a tax refund action where: (1) a county
board fails to make requested findings; or (2) the court concludes
the board’s findings are so deficient that it remands the matter
with directions for the board to make findings that “fairly disclose
[its] determination” on the point at issue, including a “statement
of the method or methods of valuation used in appraising the
property.” (See §§ 1611.5, 1611.6.) As we explain in the next
section, neither circumstance exists in this case.
3. Chinese Theatres is not entitled to attorney fees under
section 1611.6.
Chinese Theatres argues the attorney fees award was
proper under the first clause of section 1611.6, a point expressly
rejected by the trial court. Specifically, the company contends the
Board failed to make a finding that “ ‘[t]he Assessor was required
by law to identify, value and remove intangible assets[, such as
the TNRA,] from assessment, or refrain assessing such assets in
the first instance.’ ” We agree with the lower court and reject this
argument.
In its 13-page Findings of Fact, the Board made a finding
about whether the TNRA was an intangible asset. Specifically, it
found that part of the TNRA was a tangible, taxable asset and
identified the taxable value of the agreement that could be
included in the Property’s assessment. In particular, the Board
found that half of the TNRA was a tangible asset and that the
taxable amount of the revenue generated by the TNRA was about
12
$13 million. Indeed, the Board’s finding on that issue is one of the
primary reasons Chinese Theatres filed this lawsuit. The Board
just didn’t explain how it found half of the TNRA was a taxable
asset.
Chinese Theatres also wasn’t entitled to attorney fees
under the second clause of section 1611.6. Although the court
found the Board’s finding that part of the TNRA was a tangible,
taxable asset was “arbitrary and invalid” because the Board
didn’t explain how it reached that conclusion, nothing in the
court’s statement of decision or the judgment remanding the
matter indicates the court intended for, or “implicitly required,”
the Board to make new findings that comply with section 1611.5’s
requirements.
To the contrary, the court’s judgment states that the “sole
purpose of the remand” was for the Board to excise the taxable
value of the TNRA from the Property’s assessment, which was
already established and not in dispute, and to make necessary
corrections to the tax roll. Thus, the Board did not need to make
any new findings to explain how it valued the Property once half
of the revenue generated by the TNRA was deducted from the tax
assessment. (Cf. CAT Partnership v. County of Santa Cruz (1998)
63 Cal.App.4th 1071, 1088–1089 [where the court can determine
what amount the county board incorrectly applied to the
property’s assessment, it is not necessary for the court to remand
the matter for the board to make new findings concerning the
property’s value for tax purposes].) Indeed, the court encouraged
the parties to agree on language to be included in the judgment
that would avoid a remand because the Board needed to do
nothing more than make a simple mathematical deduction from
13
the Property’s assessment and make necessary corrections to the
tax roll.
To summarize, Chinese Theatres was not entitled to
attorney fees under section 1611.6 for two reasons: the Board
made a finding concerning whether the TNRA was a taxable
asset, and the court did not remand the matter to the Board with
directions to make new findings that comply with section 1611.5.
DISPOSITION
The postjudgment order awarding Chinese Theatres
attorney fees is reversed. Chinese Theatres’s request for attorney
fees on appeal is denied. The County of Los Angeles shall recover
its costs on appeal.
LAVIN, Acting P. J.
WE CONCUR:
EGERTON, J.
DHANIDINA, J.
14
Filed 1/4/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
CHINESE THEATRES, LLC, B302708
Plaintiff and Respondent, Los Angeles County
Super. Ct. No. BC687084
v.
Order Certifying Opinion
COUNTY OF LOS ANGELES,
for Publication
Defendant and Appellant. [No change in judgment]
BY THE COURT: *
Defendant and Appellant County of Los Angeles and nonparty
California State Association of Counties have requested that our
opinion in the above-entitled matter, filed December 8, 2020, be
certified for publication. It appears that our opinion meets the
standards set forth in California Rules of Court, rule 8.1105(c).
The opinion is ordered published in the Official Reports.
* LAVIN, Acting P. J. EGERTON, J. DHANIDINA, J.