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California State University, Fresno Association, Inc. v. County of Fresno

California Court of Appeals, Fifth District

March 2, 2017

CALIFORNIA STATE UNIVERSITY, FRESNO ASSOCIATION, INC., Plaintiff and Respondent,
v.
COUNTY OF FRESNO, Defendant and Appellant CITY OF FRESNO et al., Interveners and Appellants.

         CERTIFIED FOR PARTIAL PUBLICATION [*]

         APPEAL from judgments of the superior court of Fresno County, No. 12CECG03791 M. Bruce Smith and Alan M. Simpson, Judges.[†]

          Daniel C. Cederborg, County Counsel, and Peter Wall, Deputy County Counsel, for Defendant and Appellant and Defendant and Respondent County of Fresno.

          Bewley, Lassleben & Miller, Leighton M. Anderson, Joseph A. Vinatieri, and Patricia Verdugo for Plaintiff and Respondent and Plaintiff and Appellant California State University, Fresno Association, Inc.

          McCormick, Kabot, Jenner & Lew and Nancy A. Jenner for Intervener and Appellant and Intervener and Respondent City of Fresno.

          Lozano Smith, David J. Wolfe and Jenell A. Van Bindsbergen for Intervener and Appellant and Intervener and Respondent City of Clovis.

          OPINION

          DETJEN, J.

         Introduction

         County of Fresno (County) appeals from a judgment of the superior court entered on July 28, 2015, in favor of California State University, Fresno Association, Inc. (Association) in Fresno County Superior Court case No. 12CECG03791. Association appeals from the superior court's post-judgment order issued November 17, 2015, denying its motion for attorney's fees in the same case.[1]

         Association is a nonprofit public benefit corporation and auxiliary organization serving California State University, Fresno (University). Along with administering University's dining services, residence halls, bookstore, student union, and fitness and recreation center, Association operates and maintains Save Mart Center, an estimated 430, 000-square-foot on-campus arena that hosts athletic, cultural, and entertainment events and seats up to 16, 000 spectators.

         In 2007, Association received property value assessments of Save Mart Center, and the related tax bills, for the period of 2003 through 2006. Association applied for reduced assessments pursuant to Revenue and Taxation Code section 1603.[2] The applications were not designated as refund claims. Following a hearing, the Fresno County Assessment Appeals Board (Board), inter alia, valued the property for the years 2004, 2005, and 2006 at amounts that were less than those set by the Fresno County Assessor (Assessor). Board mailed written notice of its decision to Association on November 4, 2010. The notice did not advise Association to file a claim for refund. Thereafter, Association paid the tax bills plus penalties.

         On February 24, 2012, more than a year after Board mailed the notice, Association filed a property tax refund claim with County. County denied the claim.

         On November 30, 2012, Association brought a property tax refund action against County pursuant to section 5140. County argued, inter alia, the action was barred because Association failed to file a timely refund claim pursuant to section 5097, subdivision (a)(3)(A)(i).[3], [4] Following a trial, the superior court found the one-year time limit of section 5097, subdivision (a)(3)(A)(i) did not “begin[] to run” until the date the tax was paid. Hence, it determined Association filed a timely claim, reversed Board's November 4, 2010, decision, and remanded the matter for further proceedings.

         On appeal, County again asserts the superior court lacked jurisdiction to consider Association's action because Association's February 24, 2012, claim was untimely. We agree.[5]

         Section 5097, subdivision (a)(3)(A)(i) sets the procedural time limit within which a party in Association's position must file a claim with County for a refund of taxes. That procedural time limit is one year. That time limit is not affected by the timing of the party's payment of the property taxes due. Since Association did not file their claim for refund of taxes with the County within the one-year time limit of section 5097, subdivision (a)(3)(A)(i), the superior court lacked jurisdiction over Association's subsequent property tax refund action against County. Accordingly, we reverse.

         Factual and Procedural History

         I. County's appeal.

         Association and the Trustees of the California State University (Trustees) entered into a ground lease dated October 1, 2001, under which Association agreed to lease from Trustees certain undeveloped land on the University campus; undertake the planning, financing, construction, and operation of Save Mart Center; and convey to Trustees unencumbered title to the real property at the end of the lease term. At the time, Association was “the only vehicle for revenue bond financing for the university” and was “used as the financing vehicle to get [Save Mart Center] built.” Construction began in December 2001 and ended on November 1, 2003. Association issued $74, 475, 000 in revenue bonds to pay most of the building costs.

         In fiscal year 2003, Trustees approved the Systemwide Revenue Bond Program. It was through that program that the bond debt incurred to construct Save Mart Center was refinanced in early 2005. Association and Trustees entered into a facility purchase contract dated March 1, 2005, under which Trustees agreed to purchase Association's right, title, and interest in and to Save Mart Center for the amount of the outstanding bonds. Association and Trustees then entered into a ground and facility lease dated March 1, 2005, under which Association agreed to lease Save Mart Center from Trustees; occupy, operate, and maintain Save Mart Center for the benefit of University; and convey to Trustees unencumbered title to the real property at the end of the lease term.

         Association received a notice of supplemental assessment dated February 5, 2007, in which Assessor appraised Save Mart Center as of November 1, 2003, the date of its completion, and established a taxable value of $64, 500, 000. A supplemental property tax bill charged $461, 477.74. On March 27, 2007, Association filed an assessment reduction application, which was not designated as a refund claim. Association then received a notice of enrollment of escape assessments[6] dated May 31, 2007, in which Assessor retroactively appraised Save Mart Center as of the lien dates for 2004, 2005, and 2006 (see § 531) and enrolled escape assessments of $64, 500, 000; $65, 790, 000; and $67, 105, 800, respectively. Unsecured property tax bills charged $786, 320.79 for 2004; $802, 047.20 for 2005; and $818, 088.14 for 2006. On June 18, 2007, Association filed three additional assessment reduction applications, one for each escape assessment. These applications were not designated as refund claims.

         Board conducted a bifurcated hearing on Association's applications. The first phase, scheduled for April 15 and 16, 2010, was “limited to the existence of an assessable property interest.” The second phase, scheduled for July 15 and 16, 2010, “relate[d] to valuation of the subject property.” Board announced its decision denying Association's applications on November 4, 2010. First, it concluded Association had a taxable interest in Save Mart Center. Second, utilizing the cost method of appraisal, [7] Board ordered the following “ ‘equalized' ” property values, which were lower than Assessor's original figures: (1) $62, 528, 309.34 as of November 1, 2003; (2) $62, 840, 950.88 as of January 1, 2004; (3) $45, 143, 297.43 as of January 1, 2005; (4) $45, 257, 328.97 as of March 1, 2005; and (5) $43, 906, 188.90 as of January 1, 2006. Board mailed a written notice of its decision to Association on November 4, 2010, and a written copy of its findings of fact on December 2, 2010. The notice did not advise Association to file a refund claim.

         Association paid $4, 190, 859.84 in taxes and penalties on May 5, 2011, and filed a property tax refund claim on February 24, 2012. County, through its auditor-controller/treasurer-tax collector, denied the claim on August 24, 2012.

         On November 30, 2012, Association brought a property tax refund action against County, averring Board's use of the cost method instead of the income method[8] was legally erroneous. In an answer filed January 17, 2013, County alleged, inter alia, the action was “barred by the statute of limitations set forth in... section 5097, subd[ivision] (a)(3)(A)(i)” because Association's February 24, 2012, refund claim was untimely. A bench trial commenced on October 7, 2014, and ended October 9, 2014. The issue of timeliness was addressed at the outset. After receiving evidence and considering counsels' arguments on the matter, the superior court sided with Association:

         “I'm satisfied that... Association received the notice and the findings. [¶] The presumption that they were mailed is not rebutted in my mind. My hang up comes... with... [s]ection 5097. The first line, no order for a refund under this article shall be made except on a claim. Right there number one, plain meaning, verified by the person who paid the tax. If there is no tax paid, my position is, and I am sure others may differ and maybe be settled at the [c]ourt of appeal. But... it's my feeling and interpretation that verified by the person who paid the tax... means that you can't seek a refund until the tax is paid.

         “... [I]n this case, the decision and the findings of facts were prepared and sent out. I'm satisfied that everybody had them by mid-December. [¶] I'm satisfied and the record shows as demonstrated that... Association paid the tax and penalties on May 5th, 2011, [less than] six months thereafter.... And that they filed their claim for refund on February 24th, 2012.

         “... I understand the arguments. And if I'm wrong, sobeit [sic], but these are my findings and I will deny. I'll find for [Association] with respect to the statute of limitations....”

         In a statement of decision adopted July 25, 2015, the court reversed Board's November 4, 2010, decision, finding Board's application of the cost method “arbitrary, in excess of discretion, and in violation of the standards prescribed by law, ” inter alia. Beforehand, the statement of decision clarified the court's stance on the timeliness of Association's refund claim:

         “[S]ection 5097, subdivision (a)(3)(A)(i) is the applicable statute of limitations when an applicant has filed an assessment reduction application pursuant to... section 1603 that does not state that the application is intended to also constitute a claim for refund, the county assessment appeals board makes a final determination on the application, and the assessment appeals board mails a written notice of its determination to the applicant that does not advise the applicant to file a claim for refund. In this case, it is undisputed that [Association] filed four assessment reduction applications pursuant to... section 1603, that each of the assessment reduction applications specifically stated that they were not also claims for refund, that... Board made a final determination on [Association]'s four applications, and that the written notice of its determination did not advise [Association] to file a claim for refund....

         “The Court finds that... Board mailed out a written notice of its decision on [Association]'s four assessment reduction applications on November 4, 2010[, ] and mailed out a written copy of its findings of fact on December 2, 2010. Further, the Court finds that... Board sufficiently mailed written notice of its final determination to [Association] when it mailed written notice of its decision and written notice of its findings of fact to [Association's co-counsel]. Therefore, since all of the factual prerequisites have been met, the Court finds that the statute of limitation[s] applicable to this action is the one-year statute of limitations established in... section 5097, subdivision (a)(3)(A)(i).

         “Consequently, [County] argues that, because [Association] did not file its claim for refund until February 2012, more than a year after... Board mailed written notice of its decision to [Association] on November 4, 2010[, ] and mailed written notice of its findings of fact on December 2, 2010, this action for a property tax refund is barred by... section 5097, subdivision (a)(3)(A)(i). The Court disagrees. ‘It is elementary that a statute of limitations does not begin to run until the cause of action accrues. [Citations.] Equally basic is that a cause of action does not accrue “until the party owning it is entitled to begin and prosecute an action thereon” [citation], that is, not until “the last element essential to the cause of action” occurs.' (Spear v. California State Auto[.] Assn. (1992) 2 Cal.4th 1035, 1040.) It is clear that the statute of limitations in... section 5097, subdivision (a)(3)(A)(i) establishes a number of factual conditions to accrual of the right to file a claim for refund, but the Court finds that the statute does not state that accrual occurs, and the statute of limitations begins to run, when all of the factual conditions listed in the statute are met. This is because the statute does not mention the most important condition to accrual of the right to file a refund claim - payment of the disputed taxes.

         “The law is similarly clear that a claim for refund pursuant to... section 5097 cannot be made until after the taxes (and any penalties) have been paid. (... § 5097, subd. (a)(1); JPMorgan Chase Bank, N.A. v. City and County of San Francisco[(2009)] 174 Cal.App.4th 1201, 1210 [(JPMorgan)].) Accordingly, since a refund claim cannot be properly made until after the disputed taxes are paid, the right to file a claim for refund does not accrue, and the statute of limitations in... section 5097, subdivision (a)(3)(A)(i) does not start running, until after all of the factual conditions listed in the statute have been met and the disputed taxes have been paid. In this case, this means that, if [Association] had paid the disputed taxes before filing its assessment reduction applications, then the one-year statute of limitations would have commenced when... Board mailed [Association] the final decision and findings of fact. However, since [Association] did not pay ...


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