Plaza Hollister Ltd. Partnership v. County of San Benito

Opinion

This is a property tax refund action brought by Plaza Hollister Limited Partnership (Plaza Hollister), a California corporation, agaiinst the County of San Benito (County). The property at issue was purchased by Plaza Hollister on December 31, 1984, and apparently was a federally subsidized apartment complex, which was operated under section 236 of the National Housing Act (12 U.S.C. § 1715z-l). The judgment was entered pursuant to a stipulation between Plaza Hollister and the San Benito County Board of Supervisors (Board of Supervisors) on behalf of the County. Arnold Pontes, the San Benito County Assessor (Assessor), who was not a party to the judgment, appeals from the denial of his motion to vacate the judgment. (Code Civ. Proc., § 904.1, subd. (a)(2).)

The stipulated judgment reduced the base-year value of the property to $2,350,000 and ordered that value to be placed on the supplemental roll for 1984-1985 and on the regular roll for 1985-1986. It ordered the value of the

Apparently, the only procedural issue before the appellate court in People v. Hy-Lond Enterprises, Inc., supra, 93 Cal.App.3d 734 , regarding the motion to vacate was whether the moving parties were “aggrieved” and not the applicability of Code of Civil Procedure section 663. (93 Cal.App.3d at p. 746.) “A case is not authority for an issue neither raised nor considered. [Citations.]” (People v. Wells (1996) 12 Cal.4th 979 , 984; fn. 4 [ 50 Cal.Rptr.2d 699 , 911 P.2d 1374 ].) Since Code of Civil Procedure section 663 has no logical application to stipulated judgments, relief from such a judgment is not available either to parties of record or to legally aggrieved parties.

D. Nonstatutory Motion to Vacate Void Judgment

1. Standing

The Assessor’s motion to vacate was also directed to the inherent nonstatutory power of a court to set aside void judgments. His notice of motion alleged that “the stipulated judgment usurp [ed] the constitutional authority granted to the county board of equalization under Article XIH Section 16 of the California Constitution” and the judgment was invalid on its face because the court determined questions of fact the court had no jurisdiction to determine. In his memorandum of points and authorities, the assessor observed that a court has inherent power apart from statute to vacate a void judgment. He asserted the stipulated judgment was void on a number of grounds.

“A stranger to an action who is aggrieved by a void judgment may move to vacate the judgment, and on denial of the motion may have the validity of the judgment reviewed upon an appeal from the order denying the motion. (Luckenbach v. Laer [(1923)] 190 Cal. 395 , 398 . . . ; 3 Witkin, Cal. Procedure (1954) p. 2177.)” (Ryerson v. Riverside Cement Co. (1968) 266 Cal.App.2d 789 , 795 [ 72 Cal.Rptr. 595 ].) “[0]ne whose rights or interests are injuriously affected by any appealable order made in an action to which he is not a party, [may] through the process of making themselves parties . . . moving to set those orders aside. [Citation.] Their motions being denied, they may, on this appeal, have the proceedings of which they complain reviewed. [Citations.]” (Luckenbach v. Laer (1923) 190 Cal. 395 , 398 [ 212 P. 918 ].) It has also been said: “[A] stranger may attack a void

The standing of a party to move to intervene by a motion to vacate is at least comparable to the standing of a party to bring a statutory motion to intervene as a matter of right. Code of Civil Procedure section 387 provides in pertinent part: “(a) Upon timely application, any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding. . . . [ft (b) If any provision of law confers an unconditional right to intervene or if the person seeking intervention claims an interest relating to the property or transaction which is the subject of the action and that person is so situated that the disposition of the action may as a practical matter impair or impede that person’s ability to protect that interest, unless that person’s interest is adequately represented by existing parties, the court shall, upon timely application, permit that person to intervene.” “While the interest [supporting intervention] is normally pecuniary, that is not an indispensable element. (County of San Bernardino v. Harsh California Corp. [(1959)] 52 Cal.2d 341 . . . ; Baroldi v. Denni [(1961)] 197 Cal.App.2d 472 . . . .)” (People ex rel. Public Util. Com. v. Ryerson (1966) 241 Cal.App.2d 115 , 119 [ 50 Cal.Rptr. 246 ]; see Simpson Redwood Co. v. State of California (1987) 196 Cal.App.3d 1192 , 1200-1201 [ 242 Cal.Rptr. 447 ]]; People ex rel. Rominger v. County of Trinity (1983) 147 Cal.App.3d 655 , 661 [ 195 Cal.Rptr. 186 ]; cf. California Assn. of Psychology Providers v. Rank (1990) 51 Cal.3d 1 , 8-10 [ 270 Cal.Rptr. 796 , 793 P.2d 2 ].)

In County of San Bernardino v. Harsh California Corp. (1959) 52 Cal.2d 341 [ 340 P.2d 617 ], the California Supreme Court concluded that the United States was entitled to intervene in an action by a county to recover unsecured personal property taxes from a taxpayer who operated a military housing project located on federally owned land which it leased from the United States even if the judgment would not directly and immediately affect the pecuniary interests of the United States: “The interest of the United States in sustaining its fiscal policy [defined by federal statute] by securing an adjudication of the validity and correct interpretation of its statute is fully sufficiént to support its intervention whether or not the judgment will directly and immediately affect its pecuniary interests. [Citations.]” (Id. at pp. 345-346.) In addition, it has been recognized: “ ‘All public agencies have an “interest” which is “direct,” in meeting their official responsibilities . . . .’ [Citation.].” (People v. Hy-Lond Enterprises, Inc., supra, 93 Cal.App.3d at pp. 750-751.)

County assessors are generally required to participate in equalization hearings challenging any individual assessment. (§ 1610.2) At an equalization hearing, the board is bound by the same principles of váluation that are legally applicable to the assessor. (Cal. Code Regs., tit. 18, § 324; see Gov. Code, § 15606.)

In general, “[t]he law presumes that the assessor has properly performed his duty and has assessed all properties fairly and upon an equal basis.” (Cal. Code Regs., tit. 18, § 321, subd. (a).) The taxpayer has the burden of proving otherwise and “[n]o greater relief may be granted than is justified by the evidence produced.” {Ibid.) “The board acts in a judicial capacity and [can] act only on the basis of evidence.” (Cal. Code Regs., tit. 18, § 302; see Gov. Code, § 15606.) An assessor may seek writ review of an adverse equalization decision. (See, e.g., Shubat v. Sutter County Assessment Appeals Bd. (1993) 13 Cal.App.4th 794 [ 17 Cal.Rptr.2d 1 ]; Carlson v. Assessment Appeals Bd. I (1985) 167 Cal.App.3d 1004 [ 213 Cal.Rptr. 555 ]; County of San Diego v. Assessment Appeals Bd. No. 2 (1983) 148 Cal.App.3d 548 [ 195 Cal.Rptr. 895 ].)

We conclude that the Assessor, in his official capacity, has a sufficient interest under our tax system to have standing to bring a motion to vacate a judgment on the ground it is void where the judgment revises the base-year value reached by the Assessor and reduces assessments on the local roll prepared by the Assessor.

In Burtnett v. King (1949) 33 Cal.2d 805 [ 205 P.2d 657 , 12 A.L.R.2d 333 ], a quiet title action, a former husband collaterally attacked a divorce decree, which had awarded all community property to his former wife in a divorce action following default in the absence of any request for such award. (Id. at p. 806.) The court stated: “It is equally clear that by reason of the mandatory language of the statute (the court cannot give a default judgment in excess of the demand), the court’s jurisdiction to render default judgments can be exercised only in the way authorized by statute. It cannot act except in a particular manner, that is, by keeping the judgment within the bounds of the relief demanded.” (Id. at p. 807, italics omitted) It concluded that “the court wholly lacked jurisdiction to render a judgment affecting the community property” and the judgment was to that extent void. (Ibid.)

In Pacific Mut. Life Ins. Co. v. McConnell (1955) 44 Cal.2d 715 [ 285 P.2d 636 ], the court explained: “It is the general rule that a final judgment or order is res judicata even though contrary to statute where the court has jurisdiction in the fundamental sense, i. e., of the subject matter and the parties. In the consideration of problems arising in this field it should be kept in mind that there is a difference between lack of jurisdiction in the

In Becker v. S.P.V Construction Co. (1980) 27 Cal.3d 489 [ 165 Cal.Rptr. 825 , 612 P.2d 915 ], the defendants moved to vacate a default judgment on the ground that it exceeded the statutory authority under Code of Civil Procedure section 580. (27 Cal.3d at p. 492.) The Supreme Court found the trial court granted relief which it had no statutory power to grant when it rendered a default judgment awarding damages in excess of the amount requested in the complaint and attorney’s fees which were not demanded and its judgment was to that extent void. {Id. at pp. 493-495.) The Supreme Court directed the trial court to strike the void portions of the judgment on remand. {Id. at p. 495.)

Accordingly, we proceed to examine whether the stipulated judgment is void in the sense it granted relief which the court under no circumstances had the power to grant in the exercise of its subject matter jurisdiction.

E. Exercise of Judgment as to Value of Property

The California Constitution directly confers the power of equalization for a county on the county board of equalization: “The county board of supervisors, or . . . assessment appeals boards created by the county board of supervisors, shall constitute the county board of equalization” with the duty to “equalize the values of all property on the local assessment roll by adjusting individual assessments.” (Cal. Const., art. XIII, § 16; see Gov. Code, § 25202.) The procedures for assessment appeals and equalization of individual assessments are statutorily provided. (§§ 80 et seq. and 1601 et seq.)

“That article XIII sections 9 and 9.5 [now section 16] confer adjudicative powers on local boards of equalization and assessment appeals boards can scarcely be gainsaid.” {Hunt-Wesson Foods, Inc. v. County of Alameda (1974) 41 Cal.App.3d 163 , 176 [ 116 Cal.Rptr. 160 ], “It must be conceded, of course, that it is well settled in this state that to the authorized county board of equalization has been confided the duty of determining ‘the

In Prudential Ins. Co. v. City and County of San Francisco, supra, 191 Cal.App.3d 1142 , an appellate court held that, in determining the assessed value of hotel property which the taxpayer purchased by paying cash and assuming a loan, an assessor was required by law to discount the assumed loan to its cash equivalent value. {Id. at pp. 1146, 1148-1156.) However, the court also determined that the judgment improperly awarded a refund for taxes paid and a remand was necessary to allow the assessment appeals board to consider the proper application of cash equivalent analysis. {Id. at pp. 1161-1162.) We think that case is most closely analogous to the situation here.

At the equalization hearing, Plaza Hollister proposed a number of base-year values, each purportedly involving application of cash equivalent analysis. None of the proposed values were adopted in the stipulated judgment. The County asserts that “[t]he váriable producing the range of values is the application of the legal doctrine of cash equivalency and application of mathematical calculation” and suggests that the trial court could properly approve any taxable value within the range of values developed at the assessment appeals hearing.

As in Prudential Ins. Co. v. City and County of San Francisco, supra, 191 Cal.App.3d 1142 , remand is necessary to allow the Board of Equalization, in keeping with its constitutional charge, to determine value. Thus, to the extent the stipulated judgment represents an exercise of judgment as to value, the trial court improperly invaded the constitutional authority of the Board of Equalization and granted relief which the court had no authority to grant under any circumstances.

The Board of Supervisors, acting on behalf of the County and Plaza Hollister, could not confer jurisdiction upon the court to equalize individual assessments. (See Summers v. Superior Court (1959) 53 Cal.2d 295 , 298 [ 1 Cal.Rptr. 324 , 347 P.2d 668 ]; Sampsell v. Superior Court (1948) 32 Cal.2d 763 , 776 [ 197 P.2d 739 ], disapproved on another ground Robinson v. Superior Court (1950) 35 Cal.2d 379 , 385 [ 218 P.2d 10 ].) The fact that the Board of Supervisors constituted the Board of Equalization is irrelevant since the Board of Supervisors was not acting as a county board of equalization when it entered into the stipulation on behalf of the County.

F. Assessment Appeals

Section 80 et seq. governs assessment appeals challenging the base-year value for an assessment. Generally, the applicant in equalization proceedings (§ 1601 et seq.) may establish the correct base-year value applicable to a current year’s assessment subject to the limitations of section 80. (§ 81.)

The Assessor asserts that the conclusive presumption regarding base-year value stated in section 80, subdivision (a)(3), means that “once Plaza Hollister filed its application for a reduced assessment for the 1986-87 year, and once the County Board of Equalization denied that application and upheld Assessor’s 1985-86 base-year assessment, that base-year assessment became conclusive and could not be challenged by Plaza Hollister in any

The County maintains that the conclusive presumption established by section 80, subdivision (a)(3), does not prevent a claim for refund or a refund action and the attendant review of an equalization determination on an application for a reduction in an assessment. Plaza Hollister makes a similar argument and asserts that Assessor’s interpretation of section 80, subdivision (a)(3), would leave the taxpayer without any remedy and render sections 5097 (claim for refund) and 5141 (refund action) meaningless. It contends that the power to correct improper assessments is implicit in the authority to grant refunds and the conclusive presumption does not operate until there is a final judicial determination regarding a challenged base-year value.

Section 80, subdivision (a)(3), provides: “The base-year value determined pursuant to paragraph (2) of subdivision (a) of Section 110.1 shall be conclusively presumed to be the base-year value, unless an application for equalization is filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the three succeeding years. Once an application is filed, the base-year value determined pursuant to that application shall be conclusively presumed to be the base-year value for that assessment.” Section 80, subdivision (a)(5), states: “Any reduction in assessment made as the result of an appeal under this section shall apply for the assessment year in which the appeal is taken and prospectively thereafter.” Section 80 was intended to apply to the determination of base-year values for the 1979-1980 assessment year and thereafter. (Stats. 1979, ch. 242, § 41, p. 526; see § 118.)

The statutory language of section 80, subdivision (a)(3), plainly creates conclusive presumptions and does not itself bar refund claims or refund actions. A conclusive presumption is an evidentiary concept, which means that once foundational facts upon which such a presumption is based are established, the assumed fact may not be controverted by contrary evidence. (See Evid. Code, §§ 600, 601, Fam. Code, § 7540.) Misapplication of an evidentiary rule in an action is merely an error of substantive law which does render a judgment void for lack of jurisdiction. (See Adoption of Matthew B., supra, 232 Cal.App.3d 1239 , 1268; In re Marriage of Mansell (1989) 217 Cal.App.3d 219 , 229-230 [ 265 Cal.Rptr. 227 ].) Consequently, section 80,

The Green court’s holding was followed in Mission Housing Development Co. v. City and County of San Francisco (1997) 59 Cal.App.4th 55 [ 69 Cal.Rptr.2d 185 ], a tax refund action. There, the City and County of San Francisco argued that the taxpayers’ failures to file valid applications for reduction of an assessment and to file properly verified claims for a tax refund were failures to exhaust administrative remedies. (Id. at p. 66.) The appellate court held, that the “defense of failure to exhaust administrative remedies may be waived if not properly or timely raised” (id. at p. 67) and concluded the government waived that defense as to the alleged “fail[ure] to file valid applications for reassessment” (id. at p. 68).

The doctrine of exhaustion of administrative remedies provides that “where an administrative remedy is provided by statute, relief must be sought from the administrative body and this remedy exhausted before the courts will act.” (Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280 , 292 [ 109 P.2d 942 , 132 A.L.R. 715 ].) “The doctrine of exhaustion of administrative remedies was evolved by the courts to promote comity between coequal branches of government and to relieve overburdened courts from the need to deal with cases where effective administrative remedies are available. (Bozaich v. State of California (1973) 32 Cal.App.3d 688 , 698 .. . .)” (Patane v. Kiddoo (1985) 167 Cal.App.3d 1207 , 1214 [ 214 Cal.Rptr. 9 ].) The doctrine prevents interference with the subject matter jurisdiction of another tribunal where an administrative tribunal was created by law to adjudicate the issue sought to be presented to the court and claim is within the special jurisdiction of the administrative tribunal. (See Rojo v. Kliger (1990) 52 Cal.3d 65 , 85 [ 276 Cal.Rptr. 130 , 801 P.2d 373 ].) The doctrine presupposes that an administrative authority and a court both have jurisdiction over a matter.

The doctrine “is a fundamental rule of procedure laid down by courts of last resort, followed under the doctrine of stare decisis, and binding upon all courts.” (Abelleira v. District Court of Appeal, supra, 17 Cal.2d at p. 293.)

As the court in Green v. City of Oceanside, supra, 194 Cal.App.3d 212 , astutely observed, “[t]he association of the exhaustion doctrine with the ‘jurisdiction’ of the superior court has led to some confusion. At least one court assumed that jurisdiction in this context refers to subject matter jurisdiction and, relying on the venerable rule [that subject matter jurisdiction may not be waived by a party or conferred on the court by consent] [citation], concluded that the failure to exhaust administrative remedies ‘may be challenged at any stage of the proceeding.’ [Citations.]” (Id. at p. 220.) The Green court rejected the notion that the exhaustion doctrine affected the fundamental subject matter jurisdiction of the court: “Abelleira makes it abundantly clear that the exhaustion doctrine does not implicate subject matter jurisdiction but rather is a ‘procedural prerequisite’ originally devised for convenience and efficiency’ and now ‘followed under the doctrine of stare decisis, . . .’ (Id. at pp. 288, 291.) It is ‘jurisdictional’ only in the sense that a court’s failure to apply the rule in a situation where the issue has been properly raised can be corrected by the issuance of a writ of prohibition.” (Id. at p. 222, italics in original.)

The court in Mission Housing Development Co. v. City and County of San Francisco, supra, 59 Cal.App.4th 55 , found the reasoning in Green persuasive and applied its holding without further analysis to the taxpayers’ failure to file valid applications for reduction in assessment. (Id. at pp. 67-68.) We disagree with Mission Housing Development Co. to the extent it implies that a court may have jurisdiction to equalize an overassessment where a taxpayer’s failure to file an equalization application for reduction of an alleged overassessment is not timely or properly raised.

Early California cases required taxpayers to seek relief from local boards of equalization as a precondition to judicial review of alleged overassessments involving valuation questions. In Luce v. City of San Diego (1926) 198 Cal. 405 [ 245 P. 196 ], the Supreme Court explained: “In the early case of Fall v. Marysville [(1861)] 19 Cal. 391 , it was held by this court that an objection to a tax assessment which did not go to the validity of the tax itself but simply as to its amount must be made to the proper tribunal for reduction before an action would lie to restrain the collection of such a tax. In the case of Henne v. Los Angeles County [(1900)] 129 Cal. 297 . . . , the foregoing doctrine was extended so as to be given application to an assessment of property which was not assessable, as in that case to the imposition of a tax

In Montgomery Ward & Co. v. Welch (1936) 17 Cal.App.2d 127 [ 61 P.2d 790 ], an action for declaratory relief to determine the correct assessment of allegedly overassessed property, the court recognized: “[I]n cases of mere overvaluation of property, relief is to be obtained by making timely objection before the board of supervisors sitting as a board of equalization. [Citations.]” (Id. at p. 131.) It stated: “The case before us is purely that of a claimed overvaluation of the property and is not one of a double, erroneous or illegal assessment which is entirely void. Assuming that the assessment of property at nearly four times its actual value may be so inequitable as to constitute a constructive fraud it does not follow that such an assessment may be attacked at any time and in any place. It is essential to the performance of governmental functions that an orderly system of assessment and collection of taxes shall be maintained, and that the amounts of the assessments be fixed with certainty in a prescribed manner and at a definite time. Our system provides a method of reviewing the values fixed by the assessor and a tribunal to pass upon any claims of overvaluation. If that tribunal fails to properly discharge its duty the courts may intervene, but a different situation is presented where a taxpayer fails to avail himself of the machinery provided and fails to make timely application to and make proof of his contentions before the board of equalization. Under the statutes and the authorities above referred to we conclude that an application for relief to the board of equalization is a necessary prerequisite to the maintenance of such an action as this, and that the complaint filed by the appellant failed to state a cause of action.” (Id. at pp. 133-134.)

Later cases strictly applied the doctrine of exhaustion of administrative remedies against taxpayers in property tax matters without any discussion of waiver. (See, e.g., McHugh V. County of Santa Cruz (1973) 33 Cal.App.3d 533 [ 109 Cal.Rptr. 149 ] [taxpayer failed to seek reduction in assessment in each assessment year]; Stenocord Corp. v. City etc. of San Francisco (1970) 2 Cal.3d 984 , 987 [ 88 Cal.Rptr. 166 , 471 P.2d 966 ] [taxpayer failed to seek review, equalization, and adjustment by the local board of equalization]; Security-First Nat. Bk. v. County of L.A. (1950) 35 Cal.2d 319 , 320-321 [ 217 P.2d 946 ] [taxpayer failed to apply to the local board of equalization for correction of the assertedly erroneous assessment]; cf. Star-Kist Foods, Inc. v. Quinn, supra, 54 Cal.2d 507 , 510 [no question of valuation]; City & Co. of S.F. v. County of San Mateo (1950) 36 Cal.2d 196 , 201 [ 222 P.2d 860 ] [“problem of ‘equalization and adjustment’ confided by the Constitution to the State Board of Equalization”].)

As explained by the California Supreme Court: “Ordinarily a taxpayer seeking relief from an erroneous assessment must exhaust available administrative remedies before resorting to the courts. [Citations.] An exception is made when the assessment is a nullity as a matter of law because, for example, the property is tax exempt, nonexistent or outside the jurisdiction. [citations], and no factual questions exist regarding the valuation of the property which, upon review by the board of equalization, might be resolved in the taxpayer’s favor, thereby making further litigation unnecessary [citations].” (Stenocord Corp. v. City etc. of San Francisco, supra, 2 Cal.3d 984 , 987.)

“The fact that the assessor erroneously overvalues property which is otherwise subject to tax does not render the assessment a nullity under the

“Our analysis commences with the premise that the objective of statutory interpretation is to ascertain and effectuate legislative intent. [Citation.] 1 “Our first step [in determining legislative intent] is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning.” ’ [Citations.] ‘”In analyzing statutory language, we seek to give meaning to every word and phrase in the statute to accomplish a result consistent with the legislative purpose ....”’ [Citation.] ‘Ordinarily, if the statutory language is clear and unambiguous, there is no need for judicial construction.’ [Citations.]” (Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763 , 775 [ 72 Cal.Rptr.2d 624 , 952 P.2d 641 ].)

Statutorily prescribed prerequisites to statutory causes of action have been held jurisdictional and the failure to satisfy such preconditions has been held fatal to the action. (Cf. Shiseido Cosmetics (America) Ltd. v. Franchise Tax Bd. (1991) 235 Cal.App.3d 478 , 486-496 [ 286 Cal.Rptr. 690 ] [administrative claim for refund of state franchise tax is jurisdictional prerequisite to a franchise tax refund action]; Rojo v. Kliger, supra, 52 Cal.3d 65 , 83 [exhaustion of FEHA administrative remedies is a statutory prerequisite to statutory cause of action]; Patane v. Kiddoo, supra, 167 Cal.App.3d 1207 , 1213-1214 [appeal to Unemployment Insurance Appeals Board from denial of refund claim is statutory prerequisite to employer’s action for refund of unemployment insurance contributions].) In regards to a tax refund action under section 5141 et seq., the Legislature has expressly and plainly prescribed the procedural prerequisite of filing a timely claim for refund. We think this requirement must be viewed as a precondition to the court’s exercise of jurisdiction given the unambiguous statutory language. Any other reading would be unreasonable and contravene legislative intent.

Nevertheless, Plaza Hollister suggests that failure to file a claim for refund may be viewed as a failure to exhaust administrative remedies, a defense which it alleges the County waived by entering the stipulation. Our response is that the judicially developed doctrine of exhaustion of administrative remedies is distinct from statutorily prescribed jurisdictional prerequisites to

In this case, it appears Plaza Hollister did not file a claim for refund for each tax payment sought to be recovered. The trial court had no power to grant relief as to any tax payment for which there was not a timely claim for refund and to that extent its judgment is void.

In view of our conclusions, we do not decide the remaining issues.

The order denying the motion to vacate is reversed and the trial court is directed to vacate the stipulated judgment upon remand. Each party shall bear its own costs.

Premo, Acting P. J., and Wunderlich, J., concurred.

A petition for a rehearing was denied June 11, 1999, and the petition of respondent Plaza Hollister Limited Partnership for review by the Supreme Court was denied August 18, 1999.