Blackwell v County of Santa Clara

1-13-CV-256907

Plaintiff Deborah Blackwell (“Blackwell”) was the fee simple owner of 45 Sutter Street in San Jose (“Property”) from March 7, 2007 to November 27, 2012. (First Amended Complaint (“FAC”), ¶2.) Blackwell acquired the Property for a purchase price of $525,000 but defendant County of Santa Clara (“County”) assessed the property at a value of $930,000. (FAC, ¶5.) Blackwell overpaid her property taxes from March 2007 until 2012 by the amount of $18,300.69. (FAC, ¶9.) On March 29, 2013, Blackwell made a request for refund from County, but on June 5, 2013, the County rejected Blackwell’s claim. (FAC, ¶¶10 – 11.)

On December 2, 2013, Blackwell filed a complaint against County asserting a single claim for refund of overpaid property taxes. On March 6, 2014, the court (Hon. Stoelker), in a detailed ruling, sustained County’s demurrer to Blackwell’s complaint. On March 17, 2014, Blackwell filed her first amended complaint (“FAC”). The only apparent difference between the original complaint and the FAC is the addition of the following two paragraphs:

2. Prior to filing this lawsuit  Blackwell was not required to seek a reduced assessment from the County Assessment Appeals Board or a refund from same because the taxes were erroneously or illegally collected or in the alternative illegally assessed or levied or in the alternative were paid on an assessment in excess of the ratio of assessed value to full value by reason of the assessor’s clerical or excessive or improper assessments attributable to excessive or improper assessments attributable to erroneous property information supplied by the assessee.
3. In addition, exhaustion of administrative remedies was not required because the assessment is a nullity as a matter of law and there are no factual disputes regarding valuation. The purchase price of the subject property as of March 2007 was $525,000, not the $930,000 which was erroneously assessed against the property.

On April 24, 2014, County filed the motion now before the court, a demurrer to the FAC.

On August 1, 2014, Blackwell filed an opposition to County’s demurrer

As it did before, County demurs to the FAC on the ground that it is barred because Blackwell failed to exhaust her administrative remedies prior to bringing this litigation.  According to County, Blackwell was required to file an application for changed assessment, appear before the County’s Assessment Appeals Board (“AAB”), and obtain a decision from the AAB prior to filing the lawsuit.

In the prior order, the court identified an exception to this exhaustion requirement. “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, 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.” (Stenocord Corp. v. City & Cnty. of San Francisco (1970) 2 Cal.3d 984, 987 (Stenocord); citations omitted.)

As explained by the court in Georgie v. County of Santa Clara (2007) 151 Cal.App.4th 1428, 1434 (Georgie), because the AAB is the only body with the power to assess the value of property, a petition to the AAB is a prerequisite to a claim to the county board of supervisors for a property tax refund unless the assessment is totally void as an attempt to tax property not subject to taxation, rather than merely an inaccurate assessment of the value of taxable property.  (Id. at p. 1434.)

In the FAC, Blackwell tries to fit within the exception by alleging “the assessment is a nullity as a matter of law,” but this is a conclusion of law. “In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules.  ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The Stenocord and Georgie decisions make clear that the exception does not apply to situations where the plaintiff merely alleges an inaccurate assessment which the plaintiff does in the FAC at paragraphs 12 and 13.

Accordingly, defendant County of Santa Clara’s demurrer to plaintiff Deborah Blackwell’s first amended complaint for refund of property taxes on the ground that plaintiff failed to exhaust her administrative remedies prior to bringing the lawsuit is SUSTAINED WITHOUT LEAVE TO AMEND.