Case Number: BC524849 Hearing Date: May 13, 2014 Dept: 34

Moving Party: Defendant County of Los Angeles (“defendant”)

Resp. Party: Plaintiff Jewish Community Centers Development Corp. (“plaintiff”)

Defendant’s demurrer to the complaint is OVERRULED.

The Court takes judicial notice of the existence of portions of the List of Organizations Holding State Board of Equalization (BOE) Organizational Clearance Certificates – as of 10-1-13. (See Evid. Code, §§ 452(c), (h); 453.)

Defendant has not requested that the Court take judicial notice of Exhs. A and B that were attached to the Notice of Demurrer. The Court will not consider nor take judicial notice of these unauthenticated exhibits.

BACKGROUND:

Plaintiff commenced this action on 10/17/13 against defendant for refund of property taxes. Plaintiff was previously the owner of the subject property. (Compl., ¶ 6.) At all relevant times, the property was leased to Friends of Valley Cities dba Valley Cities Jewish Community Center (“Friends”) who utilized the entire premises. (Id., ¶ 7.) Plaintiff sold the property to a third party in July 2008. (Ibid.) Defendant assessed the property taxes, penalties, and interest on the property for 2005 to 2008, and plaintiff paid in full the amount of $109,388.76 on the closing of the sale of the property. (Id., ¶ 8.) In September 2010, plaintiff filed a Claim for Organizational Clearance Certificate (“OCC”) with the State Board of Equalization, and was issued an OCC in March 2012. (Id., ¶ 9.) In October 2012, plaintiff filed a Claim for Welfare Exemption for the property with defendant’s Office of the Assessor. (Id., ¶ 10.) In July 2012, plaintiff field a written claim for a refund of the property taxes paid. (Id., ¶ 11.) Defendant denied the claim for a refund and no refund has been paid. (Id., ¶¶ 12-13.)

ANALYSIS:
Defendant allegedly demurs to the complaint on the ground that plaintiff fails to state a cause of action. However, defendant has not filed a demurrer – it has only filed a Notice of Demurrer and a Memorandum of Points and Authorities. On this ground alone, the demurrer could be overruled.

Even assuming defendant filed a demurrer, it would be overruled.

Defendant argues that plaintiff has not alleged compliance with Revenue and Taxation Code section 214 because the operator of the property, Friends, did not have an OCC and did not file a claim.

As an initial matter, the items that the Court has judicially noticed do not support defendant’s contention that Friends did not have an OCC during the relevant time period. At most, defendant’s RJN Exhibits A and B suggest that Friends did not have an OCC on 10/1/13. Nothing in these exhibits establish that Friends did not have an OCC at any point from 2005 to 2008.

Moreover, defendant has not established that it was necessary for Friends to obtain an OCC. Defendant cites to Revenue and Taxation Code section 214. Section 214(a) provides:

Property used exclusively for religious, hospital, scientific, or charitable purposes owned and operated by community chests, funds, foundations, limited liability companies, or corporations organized and operated for religious, hospital, scientific, or charitable purposes is exempt from taxation, including ad valorem taxes to pay the interest and redemption charges on any indebtedness approved by the voters prior to July 1, 1978, or any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition, if:

(1) The owner is not organized or operated for profit. However, in the case of hospitals, the organization shall not be deemed to be organized or operated for profit if, during the immediately preceding fiscal year, operating revenues, exclusive of gifts, endowments and grants-in-aid, did not exceed operating expenses by an amount equivalent to 10 percent of those operating expenses. As used herein, operating expenses include depreciation based on cost of replacement and amortization of, and interest on, indebtedness.

(2) No part of the net earnings of the owner inures to the benefit of any private shareholder or individual.

(3) The property is used for the actual operation of the exempt activity, and does not exceed an amount of property reasonably necessary to the accomplishment of the exempt purpose.

(Rev. & Tax. Code, § 214(a).) Section 214(a)(3)(A) provides that, in determining whether the property is used for the operation of an exempt activity, consideration is not to be given to the use of the property for occasional fundraising activities. Section 214(a)(3)(C) provides that subparagraph (A) is inapplicable in determining whether 214(a)(3) has been satisfied “unless the owner of the property and any other organization using the property as provided in subparagraph (A) have filed with the assessor a valid organizational clearance certificate. . . .” Defendant cites to this subparagraph to support its assertion that “both entities [owner and operator] must file a valid organizational clearance certificate with the Assessor.” (Dem., p. 4:13-15.) It is clear from the language of the statute that subparagraph (C) merely provides that subparagraph (A), which pertains to fundraising activities, will not apply unless the owner and operator file an OCC. Nothing in the complaint or a judicially noticed item establishes that any fundraising activities or other conduct occurred at the property such that subparagraph (A) could be applicable.

The allegations in the complaint sufficiently show compliance with section 214(a). (See Compl., ¶¶ 1, 7.) In the reply, defendant cites to sections 254.5(a), 254.5(b)(1), and 254.6(a) to argue that if plaintiff is relying on Friends’ use of the property to satisfy the charitable use element, Friends must also file a welfare exemption claim and obtain an OCC. Nothing in these sections requires a non-owner operator of a property to seek a welfare exemption claim or OCC.

Defendant also relies on the Handbook attached as exhibit A to the alleged demurrer. As stated above, the Court was never asked to take judicial notice of this exhibit, and declines to take judicial notice of this exhibit. Therefore, it cannot support defendant’s demurrer. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [demurrers must be based on defects on the face of the pleading or from judicially noticeable matters].)

Defendant’s demurrer to the complaint is OVERRULED.