Cohn v. City of Oakland

Opinion

Plaintiffs and appellants Lowell Cohn and Dawn Cohn (Cohn) appeal from a summary judgment granting a declaratory judgment to defendants and respondents City of Oakland and Rene C. Davidson (Oakland) on the ground that Oakland’s increase of a real estate transfer tax from 0.75 percent to 0.95 percent was not barred by article XIII A of the California Constitution.

Cohn contends that the transfer tax is invalidated by article XIII A, formerly known as Proposition 13. We affirm the judgment.

Statement of the Case and Facts

The instant action arose from a complaint for declaratory relief filed by Cohn which sought a refund of $265 paid under the above-described tax law and a declaration that the tax violated article XIII and was therefore invalid. A motion for summary judgment filed by Cohn was denied by the superior court. Cohn requested reversal of the superior court in a petition for a writ of mandate. The petition was denied by an order of this court per Presiding Justice Anderson, Justice Channell, and Justice Perley. A petition for review was denied by the Supreme Court. Oakland then filed a motion for summary judgment which was granted. This appeal followed.

It is undisputed that the tax involved in the instant case was enacted after article XIIIA was passed by the voters and that moneys collected under the tax go into the general fund.

Discussion

Cohn contends that section 4 of article XIII A prohibits the increase in the transfer tax. This contention lacks merit.

In City and County of San Francisco v. Farrell (1982) 32 Cal.3d 47 [ 184 Cal.Rptr. 713 , 648 P.2d 935 ], the issue before the Supreme Court was whether certain increases in payroll and gross receipts taxes were invalidated by section 4 because they were enacted by a simple majority rather than two-thirds of the voters. The court held that section 4 only applied to “special taxes” and not to all taxes by cities and counties. (Id. at p. 51.) Special taxes were defined as “taxes which are levied for a specific purpose rather than, as in the present case, a levy placed in the general fund to be utilized for general governmental purposes.” (Id. at p. 57.) Section 4 is ambiguous and imprecise. It was strictly interpreted because the two-thirds requirement is inherently undemocratic and the section prevents the majority of citizens from taxing themselves to benefit local programs. (Id. at p. 52.)

City of Atascadero v. Daly (1982) 135 Cal.App.3d 466 , 470 [ 185 Cal.Rptr. 228 ], held that “the words ‘special tax’ as they are used in article XIII A, section 4 of the California Constitution . . . have been authoritatively defined by our Supreme Court in City and County of San Francisco v. Farrell (1982) 32 Cal.3d 47 .” In Heckendorn v. City of San Marino (1986) 42 Cal.3d 481 , 486, 489 [ 229 Cal.Rptr. 324 , 723 P.2d 64 ], the Supreme Court reaffirmed its holding in Farrell and interpreted the portion of section 4 which is in issue herein as follows: “Section 4 also prohibits the imposition of a special tax that is an ad valorem tax on real property.” (Id. at p. 486; see also Los Angeles County Transportation Com. v. Richmond (1982) 31 Cal.3d 197 , 205 [ 182 Cal.Rptr. 324 , 643 P.2d 941 ].)

Accordingly, we conclude that increase of the transfer tax in issue was not prohibited by article XIII A because it was a general tax.

Conclusion

The judgment is affirmed.

Anderson, P. J., and Poché, J., concurred.

Appellants’ petition for review by the Supreme Court was denied November 15, 1990. Eagleson, J., and Arabian, J., were of the opinion that the petition should be granted.