2014-00157245-CU-MC

Verizon California, Inc. vs. Ca State Board of Equalization

Nature of Proceeding: Motion to Strike (Joinder by County of Orange)

Filed By: Ali, Serajul F.

Defendant California State Board of Equalization’s (“SBE”) motion to strike portions of
Plaintiff Verizon California, Inc.’s complaint is denied.

SBE seeks to strike Verizon’s request for attorneys fees on the basis that its complaint
is based on Revenue & Taxation Code § 5148 which authorizes an action to recover
taxes levied on state-assessed property “arising out of a dispute as to an assessment
made pursuant to Section 721 (which provides that the SBE values and assesses
property required to be assessed by it pursuant to the Constitution)” and does not
provide for attorneys’ fees. SBE also argues that as the Court has ruled in a related
case between the parties, that Verizon is also not entitled to fees pursuant to § 5152
which allows for fees where a county assessor erroneously assesses property and is
inapplicable in an action where taxes are assessed by the SBE for state assessments. no. 2013-00138191) The Court repeats that ruling in the instant matter and
incorporates its ruling from case no. 2013-00138191 in full.

The Court next addresses Verizon’s contention that fees are available pursuant to
Government Code § 800. That section provides that “[i]n any civil action to appeal or
review the award, finding, or other determination of any administrative proceeding….if
it is shown that the award, finding, or other determination of the proceeding was the
result of arbitrary or capricious action or conduct by a public entity or an officer thereof
in his or her official capacity, the complaining party may collect from the public entity
reasonable attorney’s fees.” Fees pursuant to Section 800 are limited to $7,500.
(Gov’t Code § 800(a).)

Here, the Court agrees that the motion to strike the request for attorneys’ fees must be
denied as Government Code § 800 may allow Verizon to recover fees, at least up to
$7,500, in the event certain factual findings are made (e.g., that a public entity or
officer acted arbitrarily or capriciously). This is an action where Verizon has for all
intents and purposes challenged a property assessment made in an administrative
proceeding. Fees have been allowed under Section 800 in an action where a county
board of equalization improperly assessed a plaintiff’s property. (Madonna v. County
of San Luis Obispo (1974) 39 Cal.App.3d 57, 61-62.)

SBE argues, however, that a tax refund suit for property assessed by the SBE is
fundamentally different than one involving property assessed by a county and is not an
“appeal or review” of an administrative proceeding because the trial court is not
restricted to the administrative record in the instant tax refund suit. (Rev. & Tax. Code
§ 5170.) Rather the Court will consider “all evidence relating to the valuation of the
property admissible under the rules of evidence…[and] shall base its decision on the
‘preponderance of the evidence’.” (Id.) According to SBE this ability to go outside the
administrative record means that the instant lawsuit is not an “appeal or review” within
the meaning of Government Code § 800. The Court disagrees. In reply, SBE
concedes that Verizon’s instant lawsuit required exhaustion of administrative
remedies. Indeed, prior to bringing a suit under Revenue and Taxations Code § 5148,
a party must first file a petition for reassessment pursuant to Revenue and Taxations
Code § 741 which the SBE will hold an administrative hearing as set forth in Revenue
and Taxations Code § 742. Further, as discussed above, an action pursuant to
Revenue and Taxations Code § 5148 is one “arising out of a dispute as to an
assessment made pursuant to Section 721 (which provides that the SBE values and
assesses property required to be assessed by it pursuant to the Constitution). The
Court fails to see how a suit under Revenue and Taxations Code § 5148 which seeks
to recover taxes levied on state assessed property arising out of a dispute as to an
assessment made by the SBE and for which an administrative proceeding has been
held, does not constitute a civil action to “appeal or review” an administrative
proceeding within the plain language of Government Code § 800. The fact that the
Revenue and Taxations Code § 5170 allows the court to consider evidence beyond
the administrative record simply changes the scope of the review but does not show
that the civil action is not an “appeal or review” of the challenged assessment
proceeding. Thus, the Court rejects SBE’s argument that Government Code § 800
does not apply to the instant action.

Further, while Verizon did not specifically reference Government Code § 800 in its
complaint, and did not specifically allege that the assessment being challenged was
the result of arbitrary and capricious such omission is not fatal. Indeed, where “attorneys fees are awarded pursuant to a statute rather than by contract, they are
costs and can be awarded even though there was no special demand for attorneys
fees in the complaint.” (Committee for Sewer Referendum v. Humboldt Bay
Wastewater Authority (1978) 77 Cal.App.3d 117, 125, n.7 [overruled on other
grounds].) The authority cited by SBE does not dictate a different result. (Rutherford
v. Board of Trustees (1974) 37 Cal.App.3d 775, 781-782.) Rutherford dealt with a
situation where a party argued on appeal that a trial court erroneously failed to award
attorneys’ fees. The appellate court noted that the subject petition for mandate did not
specify any basis for a fee award. It also noted that the petition did not allege the
“arbitrary or capricious action” set forth in Government Code § 800. The appellate
court found that such allegations “should have been placed before the court in some
fashion” and that “[i]n the absence of a record which establishes the trial court’s
decision not to award fees, we cannot say error was committed.” (Id.) Thus,
Rutherford, does not, as SBE argues lay down a bright line rule that a party seeking
fees pursuant to Government Code § 800 must specifically allege the statutory
language in a complaint or be precluded from recovery. Rather, Rutherford simply
noted that a party seeking such fees must place the allegations regarding Government
Code § 800 before the Court in “some fashion” for example by way of a motion for
fees. Rutherford found that in the absence of allegations in the petition for mandate in
connection with the fact that there was no record to establish the basis for the trial
court’s decision not to award attorneys’ fees, it could not determine that the trial court
erred in not awarding fees under Section 800. Whether Verizon will be able to prove
its entitlement to fees under Section 800 is not relevant.

The motion to strike is denied.

The joinder of the 38 county defendants is unopposed and granted.

This minute order is effective immediately. No formal order pursuant to CRC rule
3.1312 or other notice is required.