Opinion
C089429
04-21-2020
JON VIRGIL ELLIS, Plaintiff and Appellant, v. COUNTY OF CALAVERAS et al., Defendants and Respondents.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 17CV42323)
Plaintiff Jon Virgil Ellis inherited his father's property in January 2013 upon the latter's death. The property included a partially constructed residence. Ellis asserted an exemption from reassessment of the value of the property by virtue of the intergenerational transfer; the claim for exclusion was granted. After the issuance of a final construction permit for the residence in January 2014, defendants County of Calaveras (County) and its assessor (which we generally include collectively when we reference defendant County) determined the structure was 95 percent complete and issued a supplemental assessment of the value of the property, in which it determined the present market value of the completed structure was significantly higher than its inherited incomplete value dating back to 2009. The County applied the higher value in the subsequent tax year as well. After Ellis filed an unsuccessful administrative challenge to these decisions, he brought the present action in April 2017 to overturn them. The parties filed cross-motions for summary judgment. The trial court granted the County's motion and denied the motion of Ellis, entering a judgment of dismissal in favor of the County in February 2019.
On appeal, Ellis reasserts his arguments in favor of his motion and seeks an award of attorney fees. We shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Given that the material facts are not in dispute and the question is one of law, we depart from the three-part paradigm for our de novo review of motions for summary judgment on appeal. (County of Sacramento v. Superior Court (2012) 209 Cal.App.4th 776, 778-779.)
The real property is located south of Arnold in Calaveras County. It is part of a subdivision that Ellis is developing. Ellis's father had held title to the property in a trust, of which Ellis was the beneficiary. The father had apparently halted construction of a residence in 2009 in the midst of adverse economic conditions. Ellis's father died in January 2013. The assessed value at that time of the partially completed structure for property tax based on the father's ownership was $140,000. In July 2013, Ellis filed a deed transferring title to himself, and filed a form for exclusion of any reassessment of the property value because it was an intergenerational transfer. (Rev. & Tax. Code, § 63.1; Empire Properties v. County of Los Angeles (1996) 44 Cal.App.4th 781, 789 [intergenerational transfer excluded from definition of " 'change in ownership' " that ordinarily triggers reassessment of property value].) The County assessor granted the claim for exclusion, and the assessed value of the partially completed residence remained $140,000 after the transfer in title.
Undesignated statutory references are to the Revenue and Taxation Code.
After acquiring title, Ellis decided to finish the construction of the residence on the property in order to sell it. He completed construction in December 2013 at a cost of about $15,000, and he received a final permit for occupancy in January 2014. A supplementary assessment on the completion of new construction assigned a $340,000 value to the residence in February 2014. (§ 71 [requiring reassessment of property tax for newly constructed structures].) In July 2014, the County assessor determined the residence had been only 95 percent complete as of the lien date of January 1, 2014, because it lacked floor coverings, and therefore set an assessment value of the structure for tax year 2014-2015 at $323,000. Ellis promptly challenged the assessment, paying the two installments of his property taxes as they came due and seeking a refund.
In February 2015, the assessor determined the property was still only 95 percent complete. The assessed value for the 2015-2016 tax year thus remained $323,000. Ellis again challenged this valuation and sought a refund, paying the installments of his property taxes as they came due.
In August and September 2016, the County's Assessment Appeals Board (not a defendant, and as defendant County does not raise this as an issue we disregard it) held hearings on Ellis's consolidated refund requests. It issued preliminary orders in August, pending a hearing on valuation in September. In October 2016, this board served Ellis its final findings. For the 2014-2015 challenge, the board concluded that Ellis stood in his father's shoes as of the date of death; as the owner of an incomplete residence after the intergenerational transfer, reassessment was triggered upon the 2014 issuance of the final permit. This board also concluded that because no further completion of construction took place that resulted in a supplementary assessment for the 2015-2016 challenge, it was "unripe" and dismissed it on that basis. Ellis timely brought this action within six months of the notice of the final rulings. The trial court agreed that the critical factor was not the intergenerational transfer, but instead was the completion of the structure on the property, affirming the administrative ruling.
Ellis challenges the conclusion that the 2015-2016 challenge was unripe. However, if we affirm the revaluation in the 2014-2015 tax year at the same valuation, a challenge to the 2015-2016 tax year is simply moot.
The County now contends the action was untimely because the interim ruling in August was more than six months before Ellis filed his complaint. The County does not provide any authority for piecemealing the board's rulings in this fashion for purposes of judicial review.
DISCUSSION
We set out the applicable law.
Under our state charter, property taxes are limited to one percent of the "full cash value," i.e, the assessed value in the historic 1975-1976 tax year, with adjustments for inflation of up to two percent. (Cal. Const., art. XIII A, §§ 1, 2, subd. (a).) Reassessment is nonetheless permitted at "the appraised value of real property when purchased, newly constructed, or [when] a change in ownership has occurred after the 1975 assessment." (Id., § 2, subd. (a), italics added.) The Legislature and the Board of Equalization have implemented these constitutional provisions. These enactments are entitled to " 'great weight.' " (Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, 1322.)
"A 'change in ownership' means a transfer of a present interest in real property, including the beneficial use thereof, . . ." (§ 60.) However, a change in ownership does not include the "transfer . . . of full cash value . . . between parents and their children." (§ 63.1, subd. (a)(2), implementing Cal. Const., art. XIII A, § 2, subd. (h)(1).) " 'Newly constructed' . . . means: [¶] (1) Any addition to real property . . . since the last lien date; and [¶] (2) Any . . . improvement . . . since the last lien date . . . ." (§ 70, subd. (a).) "The assessor shall determine the new base year value for the portion of any taxable real property which has been newly constructed. The base year value of the remainder of the property assessed, which did not undergo new construction, shall not be changed. New construction in progress on the lien date shall be appraised at its full value on that date and each lien date thereafter until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full value, and that value shall be the base year value. New construction in progress shall not acquire a base year value on each lien date." (§ 71.)
"The assessment year 1975-76 serves as the original base year. Thereafter, any assessment year in which real property . . . is purchased, is newly constructed, or changes ownership shall become the base year used in determining the full value for such real property." (Cal. Code Regs., tit. 18, § 460, subd. (b)(1).) "The 'full cash value' . . . [is] as of the date such real property is purchased, is newly constructed, or changes ownership after the 1975 lien date." (Id., subd. (b)(2)(A)(2).) "When real property . . . is newly constructed after the 1975 lien date, the assessor shall ascertain the full value of such 'newly constructed property' as of the date of completion. This will establish a new base year full value for only that portion of the property which is newly constructed . . . ." (Id., § 463, subd. (a), italics added.) "For purposes of this regulation, the date of completion is the date the property . . . is available for use. In determining whether the real property . . . is available for use, consideration shall be given to the date of the final inspection . . . or, in the absence of such inspection, the date the prime contractor fulfilled all of his contract obligations." (Id., subd. (e), italics added.) "New construction in progress on the lien date shall be appraised at its full value on such date and each lien date thereafter until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full value." (Id., subd. (d), italics added.) "The date of completion of new construction . . . shall be . . . the date upon which the new construction is available for use by the owner . . . ." (Id., § 463.500, subd. (b).) " 'Available for use' means that the property . . . has been inspected and approved for occupancy . . . or, in the absence of such inspection and approval procedures, when the prime contractor has fulfilled all of the contractual obligations." (Id., subd. (c)(4), italics added.)
Given these undisputed principles of law and regulation, it is difficult to see why Ellis could hope to prevail on appeal. Although he seems to suggest that his inheritance from his father was a "change in ownership" within the technical meaning of the various provisions we have quoted above, it was merely a change in title that was not a "change in ownership" in 2013 for purposes of a reassessment to a new base value because it was an intergenerational transfer. And although he argues that the property should be subject only to an increase reflecting the costs of his work on the residence, as the holder of an incomplete residence on the property in 2013 (as opposed to someone adding some other structure to the property), he is subject to the provisions under which any incomplete structure retains its assessed value only until further completion, at which point it is assessed at its then present value (in this case, 95 percent of its final value) when it was "available for use" upon the issuance of the final permit. As we held in Ellis v. County of Calaveras (2016) 245 Cal.App.4th 64 (Ellis), "our conclusion that the assessment of the partially completed construction as of [a prior] lien date was a base[-]year value does not, contrary to Ellis's contention, necessarily mean that value had to be used in each subsequent year subject only to inflationary adjustment until construction was complete. Rather, it is clear that where construction is not complete as of the lien date, the '[n]ew construction in progress on the lien date shall be appraised at its full value on such date and each lien date thereafter until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full value.' " (Id. at p. 72, some italics added.) The setting of a base value for incomplete construction does not lock it into the restriction to increases only for inflation. Each and every lien date while a structure is under construction subjects it to further reassessment; "[c]ontrary to Ellis's assertion, there does not appear to be any exclusion where the construction in progress has been stalled so that no additional work has been done since the prior lien date but construction is still incomplete." (Ibid.)
Ellis does not provide any authority to contradict the explicit terms of the statutes and regulations quoted above under which the issuance of the final permit deemed the residence available for use; he instead relies on inapposite authority where even though there was a " 'final o.k.' by the building inspector," the property was not functionally available for use because an additional $30,000 was required to remediate issues with the bathrooms, floors, and stairs. (Georgiev v. County of Santa Clara (2007) 151 Cal.App.4th 1428, 1439, 1440.) No such evidence is present in this appeal.
Thus, the assessor was not bound by the value of an incomplete house in 2009 during the economic downturn as a perpetual base value that can be increased annually only by two percent. The meager case authority Ellis purportedly cites to the contrary is inapposite, and we thus do not need to distinguish it. As for his citation to a handbook that the Board of Equalization issues, we have advised Ellis before that "[a]n agency's interpretation of its own regulations merits due deference; nonetheless the ultimate interpretation and legality of a statute or regulation are questions of law for courts to resolve. [Citation.] . . . [T]hough the Assessors' Handbook ' "is considered an authoritative expression of official State Board staff opinions and given weight by the courts" ' [citation], it ' "do[es] not possess the force of law." ' " (Ellis, supra, 245 Cal.App.4th at p. 72; accord, City of Anaheim v. Bosler (2019) 42 Cal.App.5th 603, 608 [only "weak" deference to agency interpretations of their governing statutes and regulations].)
DISPOSITION
The judgment is affirmed. The County is awarded its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
/s/_________
BUTZ, Acting P. J. We concur: /s/_________
MURRAY, J. /s/_________
RENNER, J.