Case Name: Mark W. A. Hinkle, et al. v. Santa Clara County Open Space Authority, et al.
Case No.: 1-14-CV-268387
Demurrer by Defendant Santa Clara County Open Space Authority to Petition for Writ of Mandate and Complaint for Declaratory Relief by Plaintiffs Mark W. A. Hinkle and Linda Hinkle
The Hinkles own real property within the territory designated as District One by defendant Santa Clara County Open Space Authority (“OSA”). (Complaint, ¶1.) On July 20, 1994, OSA levied an assessment of $12 for each “benefit unit” for each year on over 300,000 parcels within District One, including the parcel owned by the Hinkles. (Complaint, ¶4.)
In November 1996, California voters enacted Proposition 218 adding Articles XIIIC and XIIID to the California Constitution, establishing procedural and substantive rules for the levy of assessments on real property. (Complaint, ¶5.) Article XIIID Section 4 of the California Constitution requires a ballot to be sent to each property owner to indicate approval or disapproval of a proposed assessment. (Complaint, ¶5.)
On June 24, 2014, the Hinkles submitted a written protest to the OSA for the proposed levy of assessment of $12 for each benefit unit on over 300,000 parcels in District One, including the Hinkles’ parcel, for the property tax period of July 1, 2014 to June 30, 2015 without complying with the requirements of the California Constitution. (Complaint, ¶6 and Exh. B.) The only notice of this assessment was a single advertisement in the Mercury News on June 16, 2014. (Complaint, ¶5.)
At a public hearing on June 26, 2014, OSA passed resolution number 14-29 for the levy of the assessment of $12 for each benefit unit on over 300,000 parcels in District One, including the Hinkles’ parcel, for the property tax period of July 1, 2014 to June 30, 2015. (Complaint, ¶¶5 – 6.) OSA failed to send out ballots to property owners listed in the assessment roll for the proposed assessment for the fiscal year July 1, 2014 to June 30, 2015. (Complaint, ¶5.)
On July 23, 2014, the Hinkles commenced this action by filing a petition for writ of mandate and complaint for declaratory relief. On August 22, 2014, OSA responded by filing the present demurrer. On September 5, 2014, the Hinkles filed opposition to OSA’s demurrer. On September 11, 2014, OSA filed a reply.
Discussion
- Request for Judicial Notice
OSA’s first request for judicial notice, filed with the moving papers, is GRANTED. The court take judicial notice of the existence of court records, but not necessarily the truth of any matters asserted therein. (See Evid. Code, §452, subd. (d); People v. Woodell (1998) 17 Cal.4th 448, 455.) OSA’s second request for judicial notice, filed with the reply, is DENIED.
- Collateral Estoppel/ Release
In demurring to the Hinkles’ petition for writ of mandate and complaint for declaratory relief, OSA argues first that the Hinkles are barred from collaterally attacking the Settlement Agreement and Final Judgment in Silicon Valley Taxpayers Assn., et al. v. Santa Clara County Open Space Authority (Case No. 1-02-CV-804474) because the Hinkles’ petition/complaint seeks relief on behalf of all claimants and seeks to set aside the levy as it pertains to all parcels within District One.
OSA concedes that, according to the Judgment, “33 property owners, including the [Hinkles] and their counsel, opted out of the class action.” (OSA’s MPA, p. 8, lines 19 – 20.) “The only result of the [Hinkles] opting out of the class action settlement is that they may pursue their own personal claims. But, they cannot purport to represent an entire class of property owners who already received the benefits of a settlement and are bound by the settlement and the Judgment in the class action.” (OSA’s MPA, p. 8, lines 23 – 27.)
Based upon their opt-out, the Hinkles are not collaterally estopped from pursuing their own individual claim. Thus, OSA’s demurrer is to a portion of the causes of action that seek relief on behalf of class members bound by the Settlement Agreement and Final Judgment in Silicon Valley Taxpayers Assn., et al. v. Santa Clara County Open Space Authority (Case No. 1-02-CV-804474). A defendant cannot demur to a portion of a cause of action. (See Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778—“[A] defendant cannot demur generally to part of a cause of action;” see also PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682—“A demurrer does not lie to a portion of a cause of action;” Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274—“ A demurrer challenges a cause of action and cannot be used to attack a portion of a cause of action.”)
For that reason, OSA’s demurrer to the Hinkles’ petition/complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)], i.e., the petition/ complaint is barred by the doctrine of collateral estoppel, is OVERRULED.
- Failure to Exhaust Administrative Remedies
“A demurrer may properly be sustained based on the failure to adequately plead exhaustion of administrative remedies. [Citation.] In order to withstand a demurrer for failure to allege exhaustion of available administrative remedies, the plaintiff must allege facts showing that he did exhaust administrative remedies or facts showing that he was not required to do so. [Citation.]” (Tejon Real Estate, LLC v. City of Los Angeles (2014) 223 Cal.App.4th 149, 156 (Tejon).)
In Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, 1307 – 1308 (Steinhart), the California Supreme Court wrote, “the Legislature has statutorily established a three-step process for handling challenges to property tax assessments and refund requests. The first step is the filing of an application for assessment reduction… The second step, which occurs after payment of the tax, is the filing of an administrative refund claim… The third and final step in the process is the filing of an action in superior court… A court action may not ‘be commenced or maintained … unless a claim for refund has first been filed pursuant to Article 1 (commencing with Section 5096).’ (§ 5142, subd. (a).).”
In opposition, the Hinkles argue first that the exhaustion of administrative remedies requirement does not apply to cases such as this which involve benefit assessments. The Hinkles rely for this assertion upon Harrison v. Board of Supervisors (1975) 44 Cal.App.3d 852 (Harrison), to argue that the mere filing of a protest fulfills the exhaustion of administrative remedies requirement. Harrison does not stand for this proposition. In Harrison, the court held that enough property owners raised certain issues in their written protest to allow those issues to be litigated in a later court action. “[W]here the property owner has an administrative remedy, he must avail himself of it [citation] and that the board is entitled to notice of the objections and an opportunity to act upon them. [Citation.]” (Harrison, supra, 44 Cal.App.3d at p. 860.) Thus, Harrison stands for the proposition that the scope of issues in later court action may be limited if not raised at the administrative level. Harrison does not obviate the exhaustion of administrative remedies requirement. Under Harrison, the Hinkles’ allegation that they filed written protest (see Petition/ Complaint, ¶6 and Exh. B) [pursuant to Sts. & Hy. Code, §22628] simply defines the grounds for their challenge; it does not fulfill the requirement that a “plaintiff must allege facts showing that he did exhaust administrative remedies or facts showing that he was not required to do so.” (Tejon, supra, 223 Cal.App.4th at p. 156.)
“An exception to the exhaustion requirement 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.” (Steinhart, supra, 47 Cal.4th at p. 1310; see also 9 Witkin, Summary of California Law (10th ed. 2010) Taxation, §287—“If the tax assessed is invalid, e.g., is on property wholly exempt from taxation or outside the jurisdiction of the taxing authority, no question of valuation of the property is involved and the board of equalization would have no function to perform. Hence, this administrative remedy need not be pursued.”) In opposition, the Hinkles refer to this exception, but do not cite any authority or provide any cognizable explanation as to how their petition/complaint fits within this exception.
Accordingly, OSA’s demurrer to the Hinkles’ petition/complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)], i.e., plaintiffs fail to adequately plead exhaustion of administrative remedies, is SUSTAINED with 10 days’ leave to amend.
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