Case Number: PC055533    Hearing Date: August 05, 2014    Dept: 82

Valencia Town Center Venture L.P.,
v.
VTC Business Center, LLC; John Noguez, Assessor for County of Los Angeles; County of Los Angeles Assessment Appeals Board No. 1; and Does 1 through 10, inclusive

Tentative Decision on Defendant VTC’s Special Motion to Strike: Denied

Tentative Decision on VTC’s Demurrer: Overruled

Defendant VTC Business Center, LLC (“Invesco” or “Defendant”) moves to strike the Complaint’s First Cause of Action under Code of Civil Procedure section 425.16. Invesco also demurs to the Complaint’s First Cause of Action maintaining: (1) the Court lacks jurisdiction over the Complaint’s First Cause of Action; (2) the First Cause of Action is not ripe for judicial review; and (3) the First Cause of Action fails to state a claim for declaratory relief because it does not seek a declaration of Plaintiff Valencia Town Center Venture L.P.’s (“Westfield” or “Plaintiff”) rights.

After reading and considering the moving papers, oppositions, and the replies, the Court renders the following decision:

Requests for Judicial Notice

The unopposed requests for judicial notice are granted.

Statement of the Case

The Valencia Town Center (“VTC”) is a multi-purpose commercial complex located in Valencia, California. (Hurst Decl., ¶ 4). In July 2007, Invesco purchased the VTC’s North Parking Structure and South Parking Structure (the “Parking Structures”), along with five other buildings in the complex. (Id., ¶ 7). Westfield owns the remainder of the complex, including its entertainment center. (Complaint ¶ 13; Hurst Decl., ¶ 7).

Under the Parking Reciprocal Easement Agreement (“REA”) recorded in December 2000, Westfield enjoys a nonexclusive easement over the Parking Structures that allows Westfield’s tenants and customers to use the Parking Structures when accessing Westfield’s entertainment center. (Complaint ¶ 14; Westfield RJN, Exhibit 1 [§§3.01-3.06]). Under the REA, Westfield is responsible for 46.6% of the expenses generated by the Parking Structures, which includes the amount of Invesco’s property taxes allocable to the structures. (Complaint ¶ 26; Westfield RJN, Exhibit 1 [§1.01]). The REA defines the Parking Structures as “Common Areas.” (Westfield’s RJN Exhibit 1 [§1.11]).

When Invesco acquired its VTC properties in 2007, the Los Angeles County Assessor (“Assessor”) appraised the properties and assessed nominal tax values to the Parking Structures because they are Common Areas used by Invesco and Westfield. (Complaint ¶ 17; Hurst Decl., ¶ 9; Korman Decl., ¶ 2, Exhibit 1 [p. 200:16-25]). Subsequently, Invesco requested that the Assessor conduct a new assessment to allocate fair market values to the Parking Structures. (Hurst Decl., ¶ 10). In response, the Assessor issued a revised assessment allocating a portion of the amount assessed to Invesco’s other VTC properties to the Parking Structures accounting for the structures’ fair market value. (Id., ¶ 10).

After the Assessor allocated fair market values to the Parking Structures, Westfield filed a lawsuit seeking to invalidate the fair-market-value assessments. (See Alderfer Decl., ¶ 3, Exhibit B). On May 9, 2011, the trial court ruled in Westfield’s favor. (Id., ¶ 3, Exhibit B). On May 29, 2011, the Assessor reallocated nominal values to the Parking Structures. (Id., ¶ 4, Exhibit C).

On August 1, 2011, Invesco filed an economic unit Application for Changed Assessments with the County of Los Angeles Assessment Appeals Board (“AAB”), requesting that the Assessor reinstate the fair-market-value assessments to the Parking Structures. (Hurst Decl., ¶ 12).

On January 28, 2013, the Court of Appeal reversed the trial court’s May 9, 2011 ruling. (Alderfer Decl., ¶ 2, Exhibit A).

On July 8, 2013, Westfield filed its own appeal with the AAB, requesting that the Assessor maintain the nominal-value assessments over the Parking Structures. (Complaint 39, Exhibit A).

On February 19, 2014, after the parties briefed Westfield’s ability to file an AAB appeal concerning the Parking Structures’ assessments, the AAB dismissed Westfield’s appeal as untimely and for lack of standing. (Alderfer Decl., ¶ 9, Exhibit E [pp. 8-9]).

Invesco’s appeal before the AAB is still pending. On March 21, 2014, March 26, 2014, and April 16, 2014, and July 28, 2014, AAB conducted hearings on the merits of Invesco’s appeal. (Alderfer Decl., ¶ 10).

On February 28, 2014, Westfield filed the underlying Complaint alleging two causes of action: (1) for declaratory relief interpreting certain Revenue and Tax Code sections to require the Assessor to allocate nominal values to “shopping center common areas shared by separately owned interests;” and (2) for a writ of mandate ordering Los Angeles County and the AAB to reinstate Westfield’s administrative appeal.

On April 17, 2014, Invesco filed the instant Anti-SLAPP motion and demurrer. Through the motions, Invesco seeks to strike or dismiss the First Cause of Action for declaratory relief.

Summary of Applicable Law

1. Anti-SLAPP

The Anti SLAPP statute involves a two step approach.
First, the defendant must show that the act or acts of which the plaintiff complains were taken “in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue.” CCP § 425.16(b)(1). The defendant must demonstrate that the plaintiff’s cause of action arises from the exercise of the defendant’s free expression or petition rights. Shekhter v. Financial Indemnity Co., 89 Cal.App.4th 141, 151 (2001). A cause of action “arises from” the defendant’s protected act if the act underlying the plaintiff’s cause of action was an act made in furtherance of the right of petition or free speech. City of Cotati v. Cashman, 29 Cal.4th 69, 78 (2002). Acts in furtherance include: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest. Code Civ. Proc., § 425.16(e).

Second, if the defendant carries the initial burden, the burden shifts to the plaintiff “to establish a probability of success on the merits . . . [by showing that] ‘the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.’” Fleishman v. Superior Court, 102 Cal.App.4th 350, 355 (2002) (internal citation omitted). “The plaintiff cannot rely on the allegations of the complaint, but must produce evidence that would be admissible at trial.” Integrated Healthcare Holdings, Inc. v. Fitzgibbons, 140 Cal.App.4th 515, 527 (2006). Therefore, to establish a probability of prevailing, the plaintiff “‘must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.’” Id. The defendant has the burden in the first step, and the plaintiff has the burden on the second. Kajima Engineering & Construction, Inc. v. City of Los Angeles, 95 Cal.app.4th 921, 928 (2002). In making both determinations, the trial court considers “the pleadings, and opposing affidavits stating the facts upon which the liability or defense is based.” Equilon Enterprises, LLC v. Consumer Cause, Inc., 29 Cal.4th 53, 67 (2002).

2. Demurrer

Where pleadings are defective, a party may raise the defect by way of a demurrer. Coyne v. Krempels, 36 Cal.2d 257 (1950). A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. Code Civil Procedure section 430.30(a); Blank v. Kirwan, 39 Cal.3d 311, 318 (1985). A demurrer may be sustained without leave to amend when there is no reasonable possibility that the defect can be cured by amendment. Blank v. Kirwan, 39 Cal.3d 311, 318 (1985). Indeed, where the facts are not in dispute and the nature of the plaintiff’s claim is clear, but no liability exists under substantive law and no amendment would change the result, the sustaining of a demurrer without leave to amend is proper. City of Ceres v. City of Modesto, 274 Cal. App. 2d 545, 554 (1969). The burden is on the plaintiff to show how the complaint might be amended so as to cure the defect. Ass’n of Community Orgs. for Reform Now v. Dept. of Industrial Relations, 41 Cal.App.4th 298, 302 (1995).

Analysis

1. Anti-SLAPP

a. Whether Plaintiff’s First Cause of Action Arises from Defendant Invesco’s Free Speech or Petition Rights

Invesco argues that the special motion to strike should be granted because Plaintiff’s First Cause of Action arises from Invesco’s right to petition. Specifically, Invesco contends that the First Cause of Action arises out of its right to administratively appeal the allocation of nominal values to the Parking Structures before the AAB.

The Court finds that the principal thrust or gravamen of Plaintiff’s First Cause of Action does not arise of out Invesco’s right to petition. Westfield’s First Cause of Action alleges a claim for declaratory relief requesting that the Court interpret Proposition 13 and Revenue and Taxation Code Sections 65.1(b) and 2811.5(a) in a manner that requires the Assessor to allocate nominal values to commercial common areas, such as the Parking Structures. (Complaint ¶¶ 41-49, Complaint Prayer, ¶ 1). The First Cause of Action does not allege that Westfield is challenging Invesco’s filing of its administrative appeal. For example, the First Cause of Action alleges:

An actual controversy has arisen and now exists between Westfield and the Assessor, on one hand, and Invesco, on the other hand, concerning the interpretation and application of Proposition 13, Revenue and Taxation Code section 2188.5(a). and Revenue and Taxation Code section 65.1(b), concerning the validity and application of the Assessor’s policy for assessing shopping centers with common area and concerning the application of the Court of Appeal’s decision to the Assessor.

(Complaint ¶ 42).

While this claim was filed after Invesco initiated its administrative appeal and raises an issue that may affect the AAB’s ruling in that appeal, i.e., the proper application of those statutes to Invesco’s appeal, the claim does not challenge Invesco’s filing of its administrative appeal with AAB. See Kajima Engineering and Const., Inc. v. City of Los Angeles, 95 Cal.App.4th 921, 924 (2002) (an” independent lawsuit filed in response to, or in retaliation for, threatened or actual litigation is not subject to the anti-SLAPP statute simply because it may be viewed as an oppressive litigation tactic”). In other words, Invesco’s filing of its administrative appeal is not the act underlying Westfield’s First Cause of Action; rather, the parties’ dispute as to the proper construction of Proposition 13 and Revenue and Tax Code sections 61.5(b) and 2188.5(a) as they apply to the Assessor’s policy of allocating value to commercial common areas is the “act” that Westfield’s declaratory relief claim arises out of. Such a claim does is not subject to an Anti-SLAPP motion. See City of Cotati v. Cashman, 29 Cal.4th 69, 79-81 (2002) (city’s declaratory relief claim in state court seeking declaration that city ordinance is valid filed after defendants sued the city in federal court for damages, declaratory relief, and injunctive relief arising out of the city’s enactment of the ordinance did not arise out of the defendant’s filing of the federal claim; rather, the city’s state suit arose out of the parties’ opposing interpretations of the challenged ordinance). For this reason, the Court finds that Defendant Invesco has not satisfied the Anti-SLAPP statute’s first requirement.

Because Invesco has not established that the principal thrust of Westfield’s First Cause of Action arises out of Invesco’s filing of its administrative appeal, the Court does not need to reach the Anti-SLAPP statute’s second prong. See City of Cotati v. Cashman, 29 Cal.4th 69, 80-81 (2002). However, for the reasons set forth below, Plaintiff has met its burden under the second prong.

2. Demurrer

a. The Court May Decide Plaintiff’s Declaratory Relief Cause of Action

Invesco contends that Westfield’s First Cause of Action should be dismissed because only the AAB, and not the Court, retains original jurisdiction to decide how the Parking Structures’ values should be assessed. The Court disagrees.

As noted above, Westfield’s First Cause of Action does not challenge Invesco’s filing of its administrative appeal with the AAB. Further, while the Court’s ruling on the declaratory relief cause of action may affect the way AAB decides Invesco’s appeal, Westfield does not ask the Court to perform the AAB’s task of assessing the Parking Structures and allocating value to them for tax purposes. See Norby Lumber Co. v. County of Madera, 202 Cal.App.3d 1352, 1362 (1988) (“The function of a county board of equalization is to determine the value of property for assessments by making all assessments as equal and fair as practicable and to apply the same ratio to market value uniformly within a county”). Rather, Westfield requests that the Court issue a declaration as to the correct interpretation and application of the statutes in connection with the Assessor’s valuation of the Parking Structures—a function that falls exclusively within the Court’s jurisdiction. See Richman v. Santa Monica Rent Control Bd., 7 Cal.App.4th 1457, 1463-64 (1992) (“It is elementary that the construction of a statute (or ordinance) and its applicability is solely a question of law. . . . The ultimate resolution of such legal questions rests with the courts. . . . Thus, the final determination of the applicability of the [challenged statutes] is outside the Board’s jurisdiction”); see also TRW Space & Defense Sector v. County of Los Angeles 50 Cal.App.4th 1703, 1710 (1996) (where operative facts are not in dispute and claim centers on issue of law, “[r]esolution of that dispute [does] not fall within the jurisdiction of the Los Angeles County Assessment Appeals Board”).

Further, the Court finds that Plaintiff is not precluded from bringing its declaratory relief claim on exhaustion of administrative remedies grounds. Plaintiff already initiated an administrative action before the AAB seeking an assessment consistent with Plaintiff’s interpretation of the Revenue and Tax Code as it applies to the Parking Structures. (Complaint 39, Exhibit A). This appeal was dismissed early this year. (Alderfer Decl., ¶ 9, Exhibit E [pp. 8-9]). A party who is denied the opportunity to seek relief at the administrative level is not required to continue pursuing that that relief at the administrative level before bringing its claim before the courts. See Southern Pacific Transportation Co. v. State Bd. of Equalization, 191 Cal.App.3d 938, 945 (1987) (“A remedy ostensibly available is not in fact available where the administrative agency has denied the taxpayer a meaningful opportunity to pursue it”); Gaumer v. Tehama County, 247 Cal.App.2d 548, 553(1967) (plaintiffs exhausted administrative remedies where they brought claims before the applicable administrative agency but were denied relief).

b. An Actual Controversy Exists with Respect to the Proper Interpretation of the Relevant Revenue and Taxation Code Sections

Invesco next contends that Westfield’s declaratory relief cause of action should be dismissed because it is not ripe for judicial review. Again, the Court disagrees.

“A two-pronged test is used to determine the ripeness of a controversy: (1) whether the dispute is sufficiently concrete so that declaratory relief is appropriate; and (2) whether the parties will suffer hardship if judicial consideration is withheld.” City of Santa Monica v. Stewart, 126 Cal.App.4th 43, 64 (2005). “A controversy becomes ‘ripe’ once it reaches, ‘but has not passed, the point that the facts have sufficiently congealed to permit an intelligent and useful decision to be made.’ [Citation.]” Id., at p. 59.

Here, Westfield’s declaratory relief claim is ripe for judicial review and sets forth a viable claim for relief. First, the claim is sufficiently concrete in that neither party disputes the underlying facts. In other words, Westfield and Invesco agree that their use of, and payments relating to, the Parking Structures are governed by the REA. The parties also do not dispute that the amounts of the payments Westfield must make to Invesco for its use of the Parking Structures under the REA is dependent on the value assigned to the structures by the Assessor. Thus, the only issue that remains is what is the proper interpretation and application of Revenue and Tax Code sections 61.5(b) and 2188.5(a) as they relate to the Assessor’s allocation of value to the Parking Structures. This is a question of law that will not be affected by further development of the facts. Ludgate Ins. Co. v. Lockheed Martin Corp., 82 Cal.App.4th 592, 606 (2000) (“All that Code of Civil Procedure section 1060 requires is that there be actual controversy relating to the legal rights and duties of the respective parties”). Second, Westfield will suffer hardship should the Court dismiss its declaratory relief cause of action. Westfield’s interests in the REA and the Parking Structures will be directly affected by the AAB’s application of the Revenue and Tax Code sections applicable to the Assessor’s allocation of value to the Parking Structures. Should the AAB apply those statutes in a manner contrary to the way Westfield interprets them, Westfield’s payments under the REA will increase.

Finally, in an action for declaratory relief, the complaint is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties and requests that the rights and duties be adjudged. Jefferson, Inc. v. City of Torrance, 266 Cal. App. 2d 300, 302 (1968). On demurrer, it is immaterial whether or not the facts alleged establish that the plaintiff is entitled to a favorable declaration. Ibid. “The sufficiency of the complaint to state facts which entitle the plaintiff to a declaration in his favor is not an issue that can be raised by demurrer, but can properly be raised only by answer.” Ibid. Thus, a demurrer is rarely an appropriate pleading for the defendant to file in an action for declaratory relief. Ibid. Here, Plaintiff has established the existence of an actual controversy that should be adjudicated by the Court. Among other things, the Court has been asked to determine whether the AAB properly refused to exercise jurisdiction over Plaintiff’s appeal and the validity of the Assessor’s policy of assigning nominal values to certain common areas.

Disposition

Defendant Invesco’s Anti-SLAPP motion is denied. Defendant Invesco’s demurrer is overruled.