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Berjikian v. Franchise Tax Board

United States District Court, C.D. California

March 12, 2015

VICKEN O. BERJIKIAN and ENNA BERJIKIAN, Plaintiffs,
v.
FRANCHISE TAX BOARD; DEPARTMENT OF MOTOR VEHICLES; BOARD OF PHARMACY, Defendants

Page 1152

For Enna Berjikian, Vicken O Berjikian, Plaintiffs: Freeman M Butland, LEAD ATTORNEY, Law Office of Vicken O Berjikian APC, Glendale, CA.

For Franchise Tax Board, Defendant: Marta Lynn Smith, CAAG - Office of the Attorney General, Los Angeles, CA.

For Department of Motor Vehicles, Defendant: Celine M Cooper, CAAG - Office of Attorney General of California, Los Angeles, CA; Marta Lynn Smith, Michael Yi, CAAG - Office of the Attorney General, Los Angeles, CA.

For Board of Pharmacy, of the State of California, Defendant: Marta Lynn Smith, CAAG - Office of the Attorney General, Los Angeles, CA; William Dylan Gardner, CAAG - California Office of the Attorney General, Los Angeles, CA.

Page 1153

ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

DEAN D. PREGERSON, United States District Judge.

Presently before the Court are the parties' cross-motions for summary judgment. Having considered the submissions of the parties, the court grants Plaintiffs' Motion, denies Defendants' Motion, and adopts the following Order.

I. Background

California Revenue and Taxation Code Section 19195 directs the state's Franchise Tax Board (" FTB" ) to " make available as a matter of public record at least twice each calendar year a list of the 500 largest tax delinquencies in excess of one hundred thousand dollars." Cal. Rev. & Tax. Code § 19195. The FTB's " top 500 list" includes the taxpayer's name and address, the amount of tax delinquency, the taxpayer's occupation, and the type, status, and license number of any occupational or professional license held bye the person or persons liable for payment of the tax. Id.

Plaintiffs, husband and wife, are on the top 500 list. (Plaintiffs' Statement of Undisputed Facts (" PSUF" ) ¶ ¶ 4-5.) As of July 30, 2013, Plaintiffs owed the FTB $454,991.48. (Id. ¶ 6.) $388,653.04 of this amount involves tax years 1990-1994. (Id. ¶ ¶ 21, 25.) The taxes Plaintiffs owed the FTB for years other than 1990-1994 would not make Plaintiffs eligible for the " top 500 list" because the delinquencies were not in excess of $100,000. (Id. ¶ 27.)

A notice of proposed tax assessments for tax years 1990-1992 was sent to Plaintiffs on December 31, 1997. (Id. ¶ 18.) A notice of proposed assessments for tax years 1993-1994 was sent to Plaintiffs on July 6, 1998. (Id. ¶ 19.) Plaintiffs had sixty days from the date the notices were mailed to request a hearing regarding the tax assessments. (Id. ¶ 20.; Exhibit D.) After the sixty days had passed, Plaintiffs' right to a hearing expired. (Id. ¶ 20, 22.) Thus, Plaintiffs' right to request any hearing with regard to tax assessments for tax years 1990-1994 expired sixty-one days after July 6, 1998. (Id. ¶ 22.)

Plaintiff Enna Berjikian has been licensed as a pharmacist in California since 1981 and as an attorney since 2006. (Id. ¶ ¶ 1,3.) Plaintiff Vicken Berjikian has been licensed as an attorney in California since 1983. (Id. ¶ 2.) On July 1, 2012, California Business and Professions Code Section 494.5 went into effect. (Id. ¶ 39.) Section 494.5 provides that California state governmental licensing entities shall refuse to issue, reactivate, reinstate, or renew a license and shall suspend a license if a licensee's name is included on a certified list. Cal. Bus. & Prof. Code § 494.5. The term " certified list" includes the

Page 1154

FTB's top 500 list. Cal. Bus. & Prof. Code § 494.5(b)(1). " License" includes a certificate, registration, or any other authorization to engage in a profession or occupation issued by a state governmental licensing entity, as well as driver's licenses. Cal. Bus. & Prof. Code § 494.5(b)(2). " State governmental licensing entity" includes the DMV, the State Bar of California, and " any other state agency, board, or commission that issues a license, certificate, or registration authorizing an individual to engage in a profession or occupation, including any certificate, business or occupational license, or permit or license issued by the Department of Motor Vehicles . . . ." Cal. Bus. & Prof. Code § 494.5(b)(4).

On April 18, 2013, the DMV received notice from the FTB that Plaintiffs were on the certified list of top 500 tax delinquencies. (PSUF ¶ 28.) On May 23, 2013, the DMV issued notices of intent to suspend both Plaintiffs' driver's licenses on September 30, 2013, pursuant to Section 494.5. (Id. ¶ 29.) On May 29, 2013, the Board of Pharmacy sent a notice of intent to suspend Enna Berjikian's pharmacy license with an effective suspension date of August 30, 2013. (Id. ¶ 30.) Plaintiffs' driver's licenses and Enna Berjikian's pharmacy license have been suspended pursuant to Section 494.5. (Id. ¶ ¶ 31-32.)

At the time Plaintiffs were notified they were going to lose their driver's licenses, their right to a hearing with regard to tax years 1990-1994 had expired almost fifteen years earlier. (Id. ¶ 33.) Their right to request a hearing with regard to tax year 2004 had expired almost two years earlier. (Id. ¶ 34.)

Under Section 494.5, if a licensee wishes to challenge the submission of his or her name on a certified list, the licensee " shall make a timely written request for release to the FTB." Cal. Bus. & Prof. § 494.5(h). The FTB " shall immediately send a release to the appropriate state governmental licensing entity and the applicant or licensee," if (1) the licensee has complied with the tax obligation; (2) the licensee has submitted a request for release not later than 45 days after the licensee's receipt of a preliminary notice " but the [FTB] . . . will be unable to complete the release review and send notice of its findings to the licensee and state governmental licensing entity within 45 days . . .; " or (3) the licensee is unable to pay the outstanding tax obligation due to a " current financial hardship" as determined by the FTB. Id.

Plaintiffs requested a waiver due to financial hardship under the third option, but the FTB denied their request. (PSUF ¶ ¶ 37-38.) The FTB did not provide any hearing opportunity as to this issue. (Id.) Plaintiffs' right to a hearing with regard to tax year 2004 had expired roughly one year earlier, and Plaintiffs' right to a hearing with regard to tax years 1990-1994 had expired about fourteen years earlier. (Id. ¶ 39.) However, financial hardship was not an issue Plaintiffs could have brought up at a tax assessment hearing. (Id. ΒΆ 41.) Additionally, ...


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