Prang v. L.A. County Assessment Appeals Bd. No. 2

Filed 8/27/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
JEFFREY PRANG, as County B301194
Assessor, etc.,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BS173434)
v.
LOS ANGELES COUNTY
ASSESSMENT APPEALS
BOARD NO. 2,
Defendant and
Respondent;
DOWNEY LANDING SPE,
LLC,
Real Party in Interest
and Appellant.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Mitchell L. Beckloff, Judge. Affirmed.
Everett L. Skillman, for Real Party in Interest and
Appellant.
Ajalat, Polley, Ayoob & Matarese, Richard J. Ayoob,
Christopher J. Matarese, and Gregory R. Broege as Amicus
Curiae on behalf of Real Party in Interest and Appellant.
Lamb and Kawakami, Michael K. Slattery and Thomas G.
Kelch, and Mary Wickham, County Counsel, Richard Girgado,
Deputy County Counsel, and Justin Y. Kim, Deputy County
Counsel, for Plaintiff and Respondent.
******
When a county reassesses real property within its
boundaries based on a triggering event that occurred at some
point prior to the current “assessment year,” the county assessor
has the authority—and a constitutional duty—to levy retroactive
assessments to recapture any under-taxation in the prior years
that would otherwise escape taxation due to the delay between
the triggering event and the reassessment. (Rev. & Tax. Code,
§§ 51.5, subd. (d), 531, 531.2; Trailer Train Co. v. State Bd. of
Equalization (1986) 180 Cal.App.3d 565, 580 (Trailer Train).)1
Although our Legislature placed statutory caps on how many
years’ worth of escape assessments an assessor may seek to levy
(§ 532, subds. (a), (b)(1), (b)(2)), it also enacted section 532,
subdivision (b)(3) that eliminates any cap and authorizes escape
assessments for each year back to the “year in which the property
escaped taxation” if “[the] property . . . escaped taxation” due to a
“change in ownership” of a legal entity and the taxpayer
acquiring the legal entity did not file with the State Board of
Equalization (the State Board) a “change in ownership
statement” mandated by section 480.1. (§§ 532, subd. (b)(3),
1 All further statutory references are to the Revenue and
Taxation Code unless otherwise indicated.
2
480.1, subds. (a) & (b).) This case presents the question: Is the
filing requirement set forth in section 480.1 satisfied—and, thus,
may an assessor no longer levy escape assessments back to the
year of the change in ownership pursuant to section 532,
subdivision (b)(3)—when the taxpayer acquiring the legal entity
recorded a document with less than all the information required
by section 480.1 (namely, a Certificate of Merger certified by
another state) in the wrong place (namely, the county recorder’s
office)? We conclude that the answer is “no” because taxpayers
must strictly comply with those aspects of the notice
requirements of section 480.1. Accordingly, we affirm the trial
court’s issuance of a writ of administrative mandamus.
FACTS AND PROCEDURAL BACKGROUND
I. Facts
The property at issue in this case is the Downey Landing
Shopping Center on Lakewood Boulevard in the city of Downey
(the Property). The Property has 376,645 square feet of “leasable
improvement area” and this area was leased to a number of
retailers, including (as of 2009) Old Navy, Pier 1 Imports, Bally
Total Fitness and Bed Bath and Beyond. Prior to May 2006, the
landlord and owner of the Property was Downey Landing, LLC
(Downey).
In May 2006, Downey merged with Downey Landing SPE,
LLC (Downey SPE). This merger was ultimately determined to
have effected a “change in ownership,” which triggers a
reassessment of the base value of the Property now owned by
Downey SPE.
A few days after the merger, Downey SPE filed a copy of
the Certificate of Merger (the Certificate), certified by the State of
Delaware, with the Los Angeles County Recorder’s Office. The
3
Certificate is silent as to whether either entity owns property in
California. Downey SPE did not file anything with the State
Board.
In 2009, some of the leases on the Property were renewed
and the Los Angeles County Assessor’s Office (the Assessor)
evaluated whether to reassess the base value of those leasehold
interests. (§ 104, subd. (a) [“real property” “includes”
“possess[ory]” interests]; Seibold v. County of Los Angeles (2015)
240 Cal.App.4th 674, 681-682 [possessory interests are taxable].)
On a “Possessory Interest Appraisal Worksheet,” the Assessor
noted that the “Less[or]” had changed from “Downey Landing,
LLC” to “Downey Landing SPE, LLC”; the “Remarks” section of
the worksheet also noted, among other things, that “Region 28 is
assessing the other portion of the Shopping Center.” The
Assessor did not at that time reassess the base value of any
ownership interest in the Property.
In May 2013, Downey SPE filed a Form BOE-100-B with
the State Board. The Form BOE-100-B is the standardized form
taxpayers acquiring legal entities may file to satisfy the
requirements of section 480.1. Downey SPE’s form listed all of
the parcels (and assessment numbers) for the Property.
In April and August 2015, respectively, the Assessor sent
Downey SPE Notices of Assessed Value Change and Adjusted
Property Tax Bills for each of the parcels comprising the
Property.2 Through these documents, the Assessor (1) reassessed
2 The notices and bills were addressed to Downey, and it was
Downey—not Downey SPE—that filed an administrative appeal,
was named the real party in interest in the writ proceedings, and
is the named appellant here. However, we refer to Downey SPE
4
the base value of the parcels, as of 2006, for use on a going-
forward basis, and (2) demanded payment of “escape
assessments” reflecting the amount of property taxes that would
have been collected on each parcel had the parcels been
reassessed back in 2006, which corresponds with the 2007-2008
fiscal year. The total of the escape assessments came to
$16,014,000.
II. Procedural Background
A. Administrative proceedings
Downey SPE filed an appeal to the Los Angeles County
Assessment Appeals Board to challenge the amount of the escape
assessment. Specifically, Downey SPE argued that the Assessor
could collect escape assessments for only the four years prior to
the reassessment (that is, for the 2011-2012, 2012-2013, 2013-
2014 and 2014-2015 fiscal years); assessments for earlier years,
Downey SPE urged, were barred by a four-year limitations
period. According to Downey SPE, the total permissible escape
assessments came to $8,607,147.
The Assessment Appeals Board, Board No. 2 (the agency)
sided with Downey SPE. In a written ruling issued in October
2017, the agency ruled that the Assessor was bound by the four-
year limitations period generally applicable to escape
assessments. The agency also ruled that the Assessor could not
collect escape assessments all the way back to the 2007-2008
fiscal year under section 532, subdivision (b)(3) because (1) the
Certificate recorded by Downey SPE “was the equivalent of [a]
BOE-100-B filing,” such that the prerequisite for the Assessor’s
reliance on section 532, subdivision (b)(3)—that is, the failure to
herein because it is the pertinent taxpayer following the change
in ownership via merger.
5
file a “change in ownership statement” with the State Board
under section 480.1—was missing, and (2) the Assessor also “had
actual and constructive notice of [the] change in
control/ownership in 2009,” as reflected in the Possessory
Interest Appraisal Worksheet and in conversations between
Downey SPE and the Assessor’s office.
B. Writ proceedings
The Assessor filed a petition for a writ of administrative
mandate challenging the agency’s ruling.
Following briefing on the merits, the trial court overturned
the agency’s ruling. The court ruled that section 532, subdivision
(b)(3) applied and authorized escape assessments reaching back
to the 2007-2008 fiscal year.
The court cited two reasons for its ruling. First, the court
determined that section 480.1’s express requirement that a
“change in ownership statement” be filed with the State Board
was to be strictly enforced. Strict compliance is warranted, the
trial court reasoned, because (1) strict compliance is consistent
with the Legislature’s “very specific” and “detailed” instructions
“about who was to receive the notice, where the notice was to be
filed and what the notice must say,” and (2) strict compliance
facilitates “[t]he legislative scheme” that “makes the [State
Board] the repository of entity change of control information” and
then entrusts the State Board with “determin[ing] whether an
entity’s change of control—sometimes a complex transaction—
results in a change of ownership of real property subject to
reassessment” and, if reassessment is appropriate in any given
case, “notif[ying] county assessors through an advisory letter.”
Here, Downey SPE had not strictly complied with the statutory
notice procedures. Second, and in the alternative, the court
6
determined that even if substantial compliance were enough, it
was lacking here because the Certificate did not advise the
Assessor “whether and to what extent, if any, [Downey SPE]
owned real property in the County.”
C. Appeal
Downey SPE filed a timely notice of appeal.
DISCUSSION
Downey SPE argues that the trial court erred in granting
the petition for a writ of mandate allowing the Assessor to levy
more than four years’ worth of escape assessments.3 Because a
writ of mandate seeking review of an administrative agency’s
determination is appropriately granted when the agency has
“prejudicial[ly] abuse[d] [its] discretion” (Code Civ. Proc.,
§ 1094.5, subds. (a) & (b)), whether the writ should have been
granted in this case boils down to two interlocking questions: (1)
Whether the agency properly determined that the prerequisites
for the Assessor to levy retroactive escape assessments under
section 532, subdivision (b)(3) were not met, which hinges on (2)
Whether the agency properly determined that Downey SPE had
met section 480.1’s filing requirements. Because these questions
entail questions of statutory interpretation as applied to the
agency’s amply supported factual findings (that are not
challenged on appeal) and because this case does not involve or
substantially affect a “fundamental, vested right,” we stand in
the shoes of the trial court and review the agency’s answers to
3 Ajalat, Polley, Ayoob & Matarese (amicus), a California tax
law firm, applied to file an amicus curiae brief in support of
Downey SPE. We granted the application, and provided the
Assessor with an opportunity to respond to the amicus’s
arguments.
7
these questions de novo. (Id., subd. (b); Bixby v. Pierno (1971) 4
Cal.3d 130, 143-144; TG Oceanside, L.P. v. City of Oceanside
(2007) 156 Cal.App.4th 1355, 1370-1371; see also Harris v. City of
Santa Monica (2013) 56 Cal.4th 203, 225 [questions of statutory
interpretation reviewed de novo].)
I. Are Section 532, Subdivision (b)(3)’s Prerequisites
Satisfied?
A. The pertinent law4
The assessors in each of California’s 58 counties have the
authority—and duty—to levy taxes on all of the property within
their boundaries. (Cal. Const., art. XIII A, § 1(a); § 401.) The
amount of the levy is the property’s assessed value (referred to as
its “full cash value”) multiplied by the applicable, one-percent tax
rate. (Ibid.; § 401.3; Title Ins. & Trust Co. v. County of Riverside
(1989) 48 Cal.3d 84, 88 (Title Ins.).)
When Proposition 13 became law in 1978, the assessed
value of real property was redefined as (1) either (a) the value of
the property reflected on its “1975-[19]76 tax bill” or, if certain
events triggering reassessment occur, (b) the “appraised value of
[the] real property” at the time of the triggering event, plus (2) an
“inflationary rate not to exceed 2 percent for any given year”
keyed to the “consumer price index or comparable data.” (Cal.
Const., art. XIII A, § 2, subds. (a) & (b); §§ 110.1, 110.)
Although, in theory, county assessors will discover
triggering events and reassess the property in the same
“assessment” year that the triggering event occurred, there is
4 Because we must apply the law in effect when property
taxes are due (Texas Co. v. County of Los Angeles (1959) 52
Cal.2d 55, 66; Trailer Train, supra, 180 Cal.App.3d at p. 577, fn.
8), we are setting forth the law in effect in 2015 (which, in
pertinent part, is still in effect today).
8
sometimes a delay between the event and its discovery. When
that happens, the question arises: Can the assessor levy
retroactive escape assessments to collect any underpayment
during the assessment years in between? The answer to that
question ends up turning on two considerations. First, and as a
threshold matter, reassessment of the property (which will define
the property’s value on a going-forward basis in future tax years)
must be appropriate. If the assessor is not empowered to
reassess the property at all, he or she has no basis to seek escape
reassessments. Second, and if reassessment is appropriate, the
assessor must have the power to levy escape assessments on a
retroactive basis.
1. When reassessment is appropriate
Whether an assessor has the authority to reassess the
value of property and thereby fix a new value on a going-forward
basis turns on two considerations: (1) Has there been a
qualifying triggering event, and (2) Is the reassessment timely?
a. Qualifying triggering events
Since the passage of Proposition 13, an assessor may
reassess real property only if one of three triggering events has
occurred—namely, (1) when the property has been “purchased,”
(2) when the property is “newly constructed,” or (3) when “a
change in ownership has occurred.” (Cal. Const., art XIII A, § 2,
subd. (a); § 110.1; 926 North Ardmore Ave. LLC v. County of Los
Angeles (2017) 3 Cal.5th 319, 326 (926 North Ardmore) [“[a]
change in ownership triggers reappraisal and reassessment for
property tax purposes”]; Osco Drug, Inc. v. County of Orange
(1990) 221 Cal.App.3d 189, 192; Sav-On Drugs v. County of
Orange (1987) 190 Cal.App.3d 1611, 1615.).
9
Because legal entities (such as corporations, partnerships,
limited liability companies and the like) can own property, our
Legislature has also specifically defined when a change in
ownership of such entities also constitutes a change in the
ownership of property held by those entities. (See, e.g., § 64.)
Without such definitions, legal entities might be able to “avoid
reassessment” (and the often higher property taxes that come
with it) by transferring property through the strategic use of
corporate takeovers and mergers, thereby upsetting the “parity”
and “equalization of the tax burden between individual and
corporate purchasers of real property.” (Title Ins., supra, 48
Cal.3d at pp. 95-96.)
b. Timeliness of reassessment
Even if a qualifying triggering event has occurred,
reassessment is appropriate only if it is also timely. Whether a
reassessment is timely depends upon the reason for the
reassessment. If an assessor is seeking to reassess the property
because he or she made an error in valuing the property during a
prior assessment—that is, if the assessor is seeking to reassess to
fix an error “involv[ing] the exercise of [the] assessor’s judgment
as to value”— then the assessor must act “within four years”
after the “assessment year for which the [allegedly incorrect]
base year value was first established,” unless the valuation error
“result[ed] from the taxpayer’s fraud, concealment,
misrepresentation, or failure to” furnish required information.
(§ 51.5, subds. (b) & (c); Montgomery Ward & Co. v. County of
Santa Clara (1996) 47 Cal.App.4th 1122, 1130 (Montgomery
Ward).) But if the assessor is seeking to reassess the property for
reasons “not involv[ing] the exercise of [the] assessor’s own
judgment as to value,” then there is no time limit and the
10
assessor may “correct” the error by reassessing the property “in
any assessment year in which the error or omission is
discovered.” (§ 51.5, subd. (a); Sunrise Retirement Villa v. Dear
(1997) 58 Cal.App.4th 948, 957, 960 (Sunrise Retirement Villa)
[“section 51.5(a) errors are correctable at any time”]; Montgomery
Ward, at p. 1129 [“there is no limitations period to revise the base
year value”].) An assessor’s “failure to set a new base year value
upon a change of ownership” does not involve the exercise of the
assessor’s judgment as to value, and thus may be corrected
through reassessment at any time. (Kuperman v. San Diego
County Assessment Appeals Bd. No. 1 (2006) 137 Cal.App.4th
918, 926 (Kuperman) [so holding]; see also, Harmony Gold
U.S.A., Inc. v. County of Los Angeles (2019) 31 Cal.App.5th 820,
826 (Harmony Gold) [“Examples of nonjudgmental error include
. . . incorrectly concluding a change of ownership took place.”];
Little v. Los Angeles County Assessment Appeals Bds. (2007) 155
Cal.App.4th 915, 926 [same].)
2. When escape assessments are appropriate
If, under the rules set forth above, reassessment is
appropriate, then the assessor has “a constitutional [and a
statutory] duty to levy retroactive assessments” “if [he or she]
discovers property has ‘escaped assessment.’” (American Airlines,
Inc. v. County of San Mateo (1996) 12 Cal.4th 1110, 1127
(American Airlines); § 51.5, subd. (d) [authorizing “appropriate”
“escape assessments” if reassessment is permitted]; Harmony
Gold, supra, 31 Cal.App.5th at p. 833 [so noting]; Trailer Train,
supra, 180 Cal.App.3d at p. 580 [“Both Constitution and statute
require the [State] Board to levy the escape assessment.”].) The
duty to levy escape assessments springs from our Constitution’s
mandate that “[a]ll property . . . be taxed in proportion to its full
11
value” (Cal. Const., art. XIII, § 1, subd. (b), italics added), and
this mandate obligates assessors “(1) to assess all property in
[their] jurisdiction and (2) to do so on a uniform basis.” (Knoff v.
City etc. of San Francisco (1969) 1 Cal.App.3d 184, 195.) “If any
property subject to taxation should escape assessment in any
year,” our Supreme Court explained in 1881, “the taxation for
that year would not be equal and uniform, nor would all property
in this State be taxed in proportion to its value, and the behest of
the Constitution would not be obeyed.” (Biddle v. Oaks (1881) 59
Cal. 94, 96 (Biddle).)
Our Legislature has nevertheless narrowed the breadth of
this duty by enacting statutes that place limits on how many
years’ worth of retroactive escape assessments may be levied.
The general rule limits an assessor to levying escape assessments
“for the . . . four years” “preceding” the reassessment. (§ 532,
subd. (a); Blackwell Homes v. County of Santa Clara (1991) 226
Cal.App.3d 1009, 1014, 1017.)5 Section 532, subdivision (b)(3) is
one of the exceptions to this four-year cap.
Section 532, subdivision (b)(3) provides:
5 The statute requires that escape assessments “shall be
made within four years after July 1 of the assessment year in
which the property escaped taxation or was underassessed.”
(§ 532, subd. (a).) Because a property “‘escape[s] taxation’” up
until the year it is reassessed, this language erects a four-year
limitations period running backwards from the “assessment year”
when the property is reassessed. (Blackwell Homes, supra, 226
Cal.App.3d at p. 1017; see also Montgomery Ward, supra, 47
Cal.App.4th at p. 1136 [“there is a new assessment year each and
every year while there is only one year when the base year value
of a particular property is established”].)
12
“Notwithstanding paragraphs (1) and (2) [of
subdivision (b)], in the case where property has
escaped taxation, in whole or in part, or has been
underassessed, following a change in ownership or
change in control and either [(1)] the penalty
provided for in Section 503 must be added or [(2)] a
change in ownership statement, as required by Section
480.1 or 480.2 was not filed with respect to the event
giving rise to the escape assessment or
underassessment, an escape assessment shall be made
for each year in which the property escaped taxation
or was underassessed.”
(§ 532, subd. (b)(3), italics added.)
As the italicized language makes clear, an assessor is
entitled—and, indeed, obligated—to levy escape assessments for
each year all the way back to the first year of underassessment
where (1) there was a “change in ownership” (which should have
triggered reassessment and for which reassessment on a going-
forward basis was appropriate); (2) the property “escaped
taxation or was underassessed” despite the change in ownership
triggering reassessment; and (3) “a change in ownership
statement, as required by Section 480.1 . . . was not filed with
respect to” that triggering event.
B. Analysis
Applying this framework, every single one of the
prerequisites for the escape assessments challenged by Downey
SPE is not only satisfied, but is undisputedly so. It is undisputed
that Downey SPE’s acquisition of Downey effected a “change in
ownership” that qualified the Property for reassessment.
(Accord, Kuperman, supra, 137 Cal.App.4th at p. 926.) It is
13
undisputed that the Property was underassessed from fiscal year
2007-2008 through its reassessment in 2015. And it is
undisputed that Downey SPE did not file a “change in ownership
statement” with the State Board “as required by Section 480.1.”6
Thus, whether the agency properly determined that the Assessor
could not rely on section 532, subdivision (b)(3) to levy escape
assessments outside the generally applicable four-year cap turns,
first and foremost, on whether section 480.1’s filing requirement
must be strictly complied with.7
Before turning to this question, however, Downey SPE and
its amicus urge that we can avoid it altogether and offer four
reasons why, in their view, the Assessor cannot rely upon section
532, subdivision (b)(3) at all. Most of these arguments were
never raised below, but because most involve a “‘pure[]
. . . question[] of law’” (namely, statutory interpretation), we will
consider them for the first time on appeal. (Kramer v. Intuit Inc.
(2004) 121 Cal.App.4th 574, 578.)
First, Downey SPE argues section 532, subdivision (b)(3)
applies only when section 532 would otherwise allow for eight
years of escape assessments, and thus is inapplicable in this case.
This argument rests on the following syllogism: Subdivision
6 Although Downey SPE filed a section 480.1-compliant
change of ownership statement in 2013, this was years beyond
the 90-day due date. Throughout the administrative and writ
proceedings, the parties have treated this late-filed statement as
a nullity. We will do the same.
7 Because, as we determine, strict compliance is required, we
have no occasion to decide whether Downey SPE’s recording of
the Certificate at the County Recorder’s Office constituted
substantial compliance with section 480.1.
14
(b)(3) applies “[n]otwithstanding paragraphs (1) and (2) [of
subdivision (b)];” this phrase means that subdivision (b)(3)
operates only as an exception to subdivisions (b)(1) and (b)(2);
subdivisions (b)(1) and (b)(2) by their terms do not apply here;
and therefore, subdivision (b)(3) cannot apply.
We reject this reading of section 532. Our task is to
interpret statutory language “‘in the context of the statutory
framework as a whole.’” (People v. Murphy (2001) 25 Cal.4th 136,
142.) Subdivision (a) of section 532 sets forth the generally
applicable four-year cap on escape assessments, and subdivision
(b) of section 532 goes on to define a series of cascading
exceptions to that general rule. Subdivisions (b)(1) and (b)(2),
respectively, set forth an eight-year reachback cap on escape
assessments when the taxpayer has willfully failed to disclose
information regarding the transfer of “tangible personal property
to evade taxation” (§§ 532, subd. (b)(1), 504, 502) and when the
taxpayer has not filed a “deed or other document evidencing a
change in ownership” “with the county recorder’s office” as
required by sections 480 or 480.3 (§ 532, subd. (b)(2)).
Subdivision (b)(3) allows for an unlimited reachback period when,
as pertinent here, a person or entity acquiring a legal entity has
not filed the required “change in ownership statement” with the
State Board, and this unlimited period trumps any and all
shorter limitation periods, including the eight-year limitation
period set forth in subdivisions (b)(1) and (b)(2). This is why
subdivision (b)(3) applies “notwithstanding” subdivision (b)(1)
and (b)(2). (See In re Greg F. (2012) 55 Cal.4th 393, 406-407 [the
phrase “notwithstanding” “signals” an intent for one statutory
provision “to prevail over all contrary law”].)
15
Second, Downey SPE contends section 532, subdivision
(b)(3) does not really mean what it says when it authorizes escape
assessments for “each year in which the property escaped
taxation or was underassessed” because at least one court—
Dreyer’s Grand Ice Cream, Inc. v. County of Alameda (1986) 178
Cal.App.3d 1174 (Dreyer’s), superseded by § 51.5—has declared
the notion of “giv[ing] [an] assessor an open-ended opportunity to
impose escape assessments without any time limitation” to be “an
illogical,” “absurd” and “unfair result” because it could call upon a
taxpayer “to challenge escape assessments levied 20 years later.”
(Id. at p. 1181.) Thus, Downey SPE argues, construing section
532, subdivision (b)(3) to allow for an unlimited reachback is
foreclosed by Dreyer’s.
We reject this contention. Whatever the Dreyer’s court may
have thought about a limitless reachback period for escape
assessments, our Legislature felt differently when it enacted
section 532, subdivision (b)(3) eight years after Dreyer’s. As
explained above, section 532, subdivision (b)(3)’s plain language
mandates that escape assessments “shall be made for each year
in which the property escaped taxation or was underassessed”—
that is, all the way back to the initial year of the change in
ownership. (§ 532, subd. (b)(3), italics added; accord, Montgomery
Ward, supra, 47 Cal.App.4th at p. 1131, fn. 4 [noting how section
532’s “wording was slightly altered in 1994 and the eight-year
limitations period was eliminated.”].) In addition to disagreeing
with Dreyer’s view of what is “absurd” and “unfair,” our
Legislature also disagreed in part with Dreyer’s specific holding
that an assessor may only reassess a property on a going-forward
basis within four years of its initial assessment (and may not levy
any retroactive escape assessments for reassessments outside
16
this window). (Dreyer’s, supra, 178 Cal.App.3d at pp. 1180-1181.)
As noted above, our Legislature enacted section 51.5, subdivision
(a) the year after Dreyer’s came out to eliminate Dreyer’s four-
year limitation period for reassessments where the error to be
corrected “does not involve the exercise of an assessor’s judgment
as to value.” (§ 51.5, subd. (a); accord, Blackwell Homes, supra,
226 Cal.App.3d at pp. 1014-1016 [noting how section 51.5
overruled Dreyer’s in part]; Montgomery Ward, at p. 1135 [same];
Kuperman, supra, 137 Cal.App.4th at pp. 923-926 [same];
Sunrise Retirement Villa, supra, 58 Cal.App.4th at p. 957 [same];
Sea World v. County of San Diego (1994) 27 Cal.App.4th 1390,
1399, fn. 13 [same].) Downey SPE’s argument that section 51.5
does not overrule Dreyer’s because section 51.5 does not explicitly
reference section 532 ignores that section 51.5 (in subdivision (d))
explicitly authorizes escape assessments whenever
reassessments are appropriate, and ignores the solid wall of cases
cited above that recognize section 51.5’s partial abrogation of
Dreyer’s. In sum, we decline to ignore the plain language of
section 532, subdivision (b)(3) based on language from a case that
our Legislature has superseded, including on the very point to
which that language pertains.
Third, Downey SPE argues for the first time in its reply
brief that the Assessor has no “standing” to file its writ petition
because the applicability of section 532, subdivision (b)(3) turns
on filing a “change in ownership statement” with the State Board,
such that the State Board is the only entity with standing. Not
only has Downey SPE ostensibly waived this argument by raising
it for the first time in its reply brief on appeal (People v. Tully
(2012) 54 Cal.4th 952, 1075 [“It is axiomatic that arguments
made for the first time in a reply brief will not be entertained
17
because of the unfairness to the other party.”]), this argument is
frivolous. A party has standing to petition for a writ of mandate
if he has “a ‘beneficial interest’ in the outcome” of that
proceeding. (Municipal Court v. Superior Court (Gonzalez) (1993)
5 Cal.4th 1126, 1129.) The Assessor most certainly has a
“‘beneficial interest’ in the outcome” of the administrative
proceeding reviewing its own levy of the escape assessments
Downey SPE has elected to challenge; the writ proceedings will
determine whether the Assessor’s levy is legally proper. That our
Legislature has elected to require “change in ownership
statement[s]” to be filed with the State Board did not somehow
anoint the State Board as the legal representative of every county
assessor as to every levy for which notice to the State Board is
mandated by statute—or, worse yet, divest those assessors of the
right to enforce and defend their own levies. Downey SPE’s
argument to the contrary is without merit.
Lastly, the amicus argues that the Assessor’s levy of escape
assessments in 2015 is barred by the equitable doctrine of laches.
This is the first mention of laches, ever, in this case. Such a fact-
intensive doctrine cannot be raised for the first time on appeal.
(Miller v. Eisenhower Medical Center (1980) 27 Cal.3d 614, 624
[application of laches is a question of fact].) In any event, laches
is inapplicable both legally and factually. Legally, “‘“[l]aches is
not available where it would nullify an important policy adopted
for the benefit of the public.”’” (Krolikowski v. San Diego City
Employees’ Retirement System (2018) 24 Cal.App.5th 537, 568
(Krolikowski), quoting City of Oakland v. Oakland Police and
Fire Retirement System (2014) 224 Cal.App.4th 210, 248.)
Applying laches here would nullify the “constitutional duty [of
assessors] to levy retroactive assessments” as a means of
18
fulfilling the constitutional mandate of “equal and uniform”
taxation of “all” property because it would place new limits on
assessors’ ability to fulfill that duty over and above the time
limits created by our Legislature in section 532. (American
Airlines, supra, 12 Cal.4th at p. 1127; Biddle, supra, 59 Cal. at p.
96.) Factually, laches, as an equitable doctrine, is not available
to a party with unclean hands. (Magic Kitchen LLC v. Good
Things Internat., Ltd. (2007) 153 Cal.App.4th 1144, 1165; see
generally Bakersfield Elementary Teachers Assn. v. Bakersfield
City School Dist. (2006) 145 Cal.App.4th 1260, 1275.) Downey
SPE does not have “clean hands” insofar as the Assessor’s alleged
delay in levying the escape assessments was a direct result of
Downey SPE’s own failure to timely file an informationally
sufficient document with the state agency having the expertise to
evaluate that information.
Because Downey SPE’s and the amicus’s arguments do not
obviate our need to examine section 480.1’s filing requirement,
we now turn to the questions of whether strict compliance with
section 480.1 is required and whether it was satisfied by the
recording in this case.
II. Was Section 480.1’s Filing Requirement Satisfied?
Section 480.1 applies “[w]henever there is a change in
control of any corporation, partnership, limited liability company,
or other legal entity, as defined in subdivision (c) of Section 64,”
and requires “the person or legal entity acquiring ownership or
control” (1) to file “a signed” and sworn “change in ownership
statement” setting forth (a) “information relative to the
ownership control acquisition transaction,” including the date
and parties to that transaction, (b) “all counties in which the”
legal entity “owns real property,” and (c) “a description of the
19
property owned by the” legal entity, and (2) to file that statement
with the State Board “within 90 days from the date of the change
in control of the” legal entity. (§ 480.1, subds. (a) & (b).) The
statute also requires the “change in ownership statement” to
contain “a notice” with statutorily specified content and to set
forth that notice in a certain font size and typeface. (Id., subd.
(b).)
Whether Downey SPE’s filing of the Certificate with the
County Recorder’s Office satisfies section 480.1’s filing
requirement turns, as a threshold matter, on whether section
480.1 demands strict compliance as to some or all of its
requirements.
A. Must taxpayers strictly comply with section
480.1’s filing requirement?
Although courts sometimes construe statutory mandates
liberally to effectuate their remedial purpose (e.g., Meyer v.
Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 645), strict
compliance with a statute is warranted when our Legislature
evinces its intent that the statute’s requirements are to be
followed precisely. We may infer such an intent when (1) “the
Legislature has provided a detailed and specific mandate”
(Harold L. James v. Five Points Ranch (1984) 158 Cal.App.3d 1,
6; Hub Construction Specialties, Inc. v. Esperanza Charities, Inc.
(2016) 244 Cal.App.4th 855, 862), or (2) “the intent of [the]
statute can only be served by demanding strict compliance with
its terms” (County of Tulare v. Campbell (1996) 50 Cal.App.4th
847, 853).
Our Legislature has evinced its intent that two aspects of
the filing requirement set forth in section 480.1 are to be strictly
enforced—namely, (1) its requirement regarding the information
that must be disclosed in the filing, and (2) its requirement that
20
the filing be made with the State Board. (Accord, Stockton
Teachers Assn. CTA/NEA v. Stockton Unified School Dist. (2012)
204 Cal.App.4th 446, 462 [holding that strict compliance is
required as to a “portion of [a] statute”]; Oberlack v. Trusas
(1944) 67 Cal.App.2d 238, 243 [same].)
To begin, the Legislature in section 480.1 has provided a
“detailed and specific mandate” to the person or legal entity
acquiring a property-owning legal entity—namely, that it must
file a “change in ownership statement” (a) with the State Board,
(b) within 90 days of the change in ownership, and (c) with a
description of the transaction effecting the change in entity
ownership as well as a description of each property owned and
the county in which it is situated. Although, as Downey SPE
correctly observes, section 480.1 does not specify that the only
acceptable “change in ownership statement” is a BOE-100-B
form, this does not mean that the statute’s requirements as to
what information a “change in ownership statement” must
disclose and where and when it must be filed are not to be strictly
enforced.
Further, requiring that the acquiring person or entity
strictly adhere to the informational content and location-of-filing
portions of section 480.1 is necessary to serve the intent behind
that statute—and, by extension, section 532, subdivision (b)(3).
As noted above, our Legislature defined when changes in the
structure of legal entities also constitute a change in ownership of
the property owned by those entities (§ 64), and did so because
those entities might be otherwise able to engage in complex
transactions available only to legal entities aimed at concealing
changes in ownership, and thereby to evade reassessment and to
sidestep the constitutional mandate of equal taxation of
21
individuals and legal entities. (Title Ins., supra, 48 Cal.3d at pp.
95-96.) To ensure that the entity with the most expertise at
parsing complex transactions between and among legal entities is
given the opportunity to do so and then to give notice and
guidance to the local county assessors as to whether
reassessment of property owned by those entities is warranted,
our Legislature mandated that the “change in ownership
statement” be filed with the State Board and contain the
information necessary for the State Board to conduct its nuanced
analysis and then pass its guidance on to the county assessors
who would need to conduct any reassessments. (Id. at p. 90
[explaining how the State Board analyzes complex corporate
transactions to determine whether they constitute a change in
ownership and then sends an advisory letter to the assessors
regarding reassessment]; Ocean Avenue LLC v. County of Los
Angeles (2014) 227 Cal.App.4th 344, 350 [noting how the State
Board “has promulgated administrative regulations interpreting
the change in ownership statutes” and “[l]ocal assessors must
follow the[m]”]; 926 North Ardmore, supra, 3 Cal.5th at pp. 326,
333, fn. 15 [noting how the State Board must receive this
information, but how assessors may determine for themselves
whether reassessment is warranted under the State Board’s
regulations]; see generally, Gov. Code, §§ 15606, subd. (c), 15608
[authorizing the State Board to “instruct, advise, and direct
assessors” and to “[p]rescribe rules and regulations”].) Section
480.1’s requirement that the acquiring person or legal entity file
a “change in ownership statement” describing the mechanism of
the acquisition as well as identifying the specific property around
the state owned by the acquired entity is critical to the State
Board’s dual roles as a centralized clearinghouse and as a
22
repository of expertise. Thus, the intent of section 480.1 is
disserved by anything less than strict compliance with its
requirement that the information it mandates be disclosed in a
filing made to the State Board.8
Downey SPE and its amicus disagree with our conclusion
that strict compliance is necessary to serve the intent behind
sections 480.1 and section 532, subdivision (b)(3). They cite cases
holding that where “the Legislature’s intent in imposing
administrative exhaustion requirements” is aimed at “ensur[ing]”
that the agency “receives sufficient notice of [a] claim and its
basis,” strict compliance is not necessary to effectuate that intent
and substantial compliance—including actual notice—will
suffice. (J.H. McKnight Ranch, Inc. v. Franchise Tax Bd. (2003)
110 Cal.App.4th 978, 986-988 (J.H. McKnight); see also, ibid.[litigant’s failure to raise particular doctrine in initial pleading
before administrative agency does not preclude reliance on that
doctrine when agency had actual notice during the course of the
administrative proceedings of litigant’s reliance on that doctrine];
Franchise Tax Bd. Limited Liability Corp. Tax Refund Cases
(2018) 25 Cal.App.5th 369, 380-387 (Franchise Tax) [litigants’
failure to plead class claims in initial pleading before
administrative agency does not preclude such claims when each
8 In light of our reliance on the plain text of the pertinent
statutes as well as the legislative intent derived from that text,
we have no need to resort to legislative history. (E.g., Henson v.
C. Overaa & Co. (2015) 238 Cal.App.4th 184, 198 [looking to
legislative history is optional where “the statutory text is clear”].)
Thus, although we have the power to judicially notice the
snippets of that history proffered by the Assessor (Evid. Code,
§§ 452, subd. (c), 459), we decline to do so and deny the Assessor’s
request for such notice as unnecessary.
23
class member individually exhausted his or her claim, such that
agency had actual notice of class members’ claims].) Because,
they continue, the purpose of section 480.1 is also to provide the
State Board and county assessors with notice of a potential need
for reassessment, substantial compliance—and, in particular,
actual notice—should suffice here as well.
We reject this argument. The filing requirement erected by
section 480.1 is different from the pleading requirements at issue
in the cases cited by Downey SPE and its amicus. The intent
behind those pleading requirements had a singular goal—
namely, to provide the agency with notice of the claim at issue so
the agency “‘has the opportunity to reevaluate its position, reach
the correct result, and obviate the need for a subsequent
lawsuit.’” (Franchise Tax, supra, 25 Cal.App.5th at p. 386,
quoting J.H. McKnight, supra, 110 Cal.App.4th at pp. 986-987.)
Because an agency could reevaluate its position as long as it
received notice of the claim at issue “‘from whatever source,’”
demanding strict adherence to the pleading requirements was
not necessary to further the intent behind those requirements.
(Ibid., italics omitted.) The intent behind section 480.1’s
requirement that persons or entities acquiring a legal entity file a
“change in ownership statement” is, as explained above,
twofold—namely, to (1) provide centralized notice to the State
Board, which could then notify all local assessors of affected
property within their counties, and (2) draw upon the State
Board’s specialized expertise at parsing complex transactions
between and among legal entities to determine whether those
transactions also effect a change in ownership of the taxable
property owned by the acquired legal entity. That a local county
assessor learns of a change in ownership is not enough to serve
24
either of these purposes because such notice does not ensure that
other counties learn of the change in ownership and, more to the
point, completely sidesteps—and thereby obviates—the State
Board’s critical role in expertly evaluating whether that change
in ownership warrants reassessment. What is more, the
happenstance in this case that the Assessor in the only county in
which the taxpayer owned property acquired notice of a change in
ownership does not override our broader analysis of legislative
intent (or, for that matter, provide notice that the change in
ownership constituted a taxable event, the very determination
typically reserved for the State Board). The maxim of statutory
interpretation cited by Downey SPE (namely, that ambiguous
statutes are to be “construed most strongly against the
government and in favor of the taxpayer” (Dreyer’s, supra, 178
Cal.App.3d at p. 1182)) adds nothing to our analysis because it is
inapplicable (because, as we conclude, sections 480.1 and 532 are
not ambiguous), is contradicted by a dueling maxim (IBM
Personal Pension Plan v. City and County of San Francisco (2005)
131 Cal.App.4th 1291, 1299 [statutes governing tax refund
actions are to be strictly construed]), and cannot in any event
override our Legislature’s clear intent to require strict
compliance with some of section 480.1’s requirements.
B. Does Downey SPE’s filing strictly comply with
section 480.1?
It is undisputed that Downey SPE’s act of recording the
Certificate with the County Recorder’s Office did not strictly
comply with section 480.1’s informational requirements (because
it lacked several categories of information) or with section 480.1’s
requirement that the information be provided to the State Board.
25
DISPOSITION
The judgment is affirmed. The Assessor is entitled to his
costs on appeal.
CERTIFIED FOR PUBLICATION.
______________________, J.
HOFFSTADT
I concur:
_________________________, Acting P. J.
ASHMANN-GERST
26
Prang v. Los Angeles County Assessment Appeals Board No. 2
B301194
BAKER, J., Concurring
The opinion the majority publishes today decides more than
necessary and proceeds on a largely undefined dichotomy: “strict
compliance” on one hand and some background notion of
“substantial compliance” on the other. I agree we must affirm
the result the trial court reached on the facts of this case, but I
write separately to distance myself from the majority’s
observations that are unnecessary to the result it reaches.
Revenue and Taxation Code section 532 establishes the
conditions under which a local assessor may seek to retroactively
collect taxes on real property it did not timely reassess.1 I agree
the statute allows retroactive reassessment of property taxes due
without limit (i.e., for each year in which the property was
underassessed or “escaped taxation”) when ownership or control
of the property changes and “a change in ownership statement, as
required by Section 480.1 or 480.2 [i]s not filed with respect to
the event giving rise to” taxes owed but not collected. (§ 532,
subd. (b)(3); see also § 480.1, subd. (e) [“The . . . assessors may
inspect any and all records and documents of a corporation,
partnership, limited liability company, or legal entity to ascertain
whether a change in control as defined in subdivision (c) of
Section 64 has occurred”].) Stated simply, then, the proper
outcome in this case turns on whether the property owner here
1 Undesignated statutory references that follow are to the
Revenue and Taxation Code.
submitted a change in ownership statement as required by one of
these two cross-referenced subsections.
The assessment appeals board below considered
information “in oral and written form” that the property owner
provided to the office of the Los Angeles County Assessor (the
Assessor) and made an express factual finding that the Assessor
had “actual and constructive notice of [a] change in
control/ownership” of the subject property in 2009. This finding
of actual notice is effectively a determination that the Assessor
knew a reassessment of the subject property was necessary at
that time but did nothing. Arguably, the appeals board’s finding,
which is due some deference on appeal, could suffice to establish
the Assessor was given information that should bar unlimited
retroactive assessments. Answering that question definitively
will have to wait for another day, however, because there is an
obvious problem here that defeats the taxpayer’s position.
Subdivision (a) of section 480.1 (the pertinent statute of the
two cross-referenced in section 532, subdivision (b)(3)) states:
“Whenever there is a change in control of any corporation,
partnership, limited liability company, or other legal entity, as
defined in subdivision (c) of Section 64, a signed change in
ownership statement as provided for in subdivision (b), shall be
filed by the person or legal entity acquiring ownership control of
the corporation, partnership, limited liability company, or other
legal entity with the [State Board of Equalization] at its office in
Sacramento within 90 days from the date of the change in control
of the corporation, partnership, limited liability company, or
other legal entity.” The assessment appeals board made no
finding that a change of ownership statement had been timely
filed with the State Board of Equalization, nor a determination
2
that the State Board of Equalization had actual notice in 2009 of
a change in ownership or control of the subject property. To the
contrary, the majority correctly states it is undisputed that the
owner of the subject property did not file a change in ownership
statement with the State Board as required by section 480.1.
That is dispositive of the issue presented in this appeal. As
the majority says in answering its own question at the outset of
its opinion, “no,” a taxpayer cannot avoid unlimited retroactive
assessments when the taxpayer does not give notice of a change
in ownership to the statutorily described entity, the State Board
of Equalization. Stopping with that unassailable and
unremarkable holding would have been wise.
But the majority’s opinion says more. It uncritically
accepts the Assessor’s framing of the question to be decided in
this litigation, a framing that maintains (wrongly) we must
decide whether section 480.1 requires so-called strict compliance
with its terms. (Rec. of Oral Arg. at 11:02-11:20 [counsel for
respondent’s statement that “[t]he way we presented the case to
[the trial court judge] was: does this particular statute, [section]
480.1, have to be strictly enforced because the assessment
appeals board crafted a substantial compliance exception to it”].)
In accepting that framing, the majority gives the Assessor license
to deploy today’s opinion to excuse derelict performance by his
office so long as the taxpayer in question—no matter her, his, or
its good-faith—does not perfectly jump through all bureaucratic
hoops erected pursuant to the statutory scheme (see generally
§ 480.1, subd. (b)). Astute readers of the majority’s opinion,
however, will understand this case ultimately stands for one
proposition and one proposition only: if you notify your local
assessor’s office of a change in ownership or control but do not
3
notify the State Board of Equalization, you will be on the hook for
unlimited retroactive property tax assessments even if the
assessor’s office neglects to undertake a timely reassessment.
_________________________, J.
BAKER

Associate Justice of the Court of Appeal, Second Appellate
District, Division Five, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
4