Reset A A Font size: Print

Court of Appeal, Fifth District, California.

Robert L. SMITH, et al., as Executors, etc., Plaintiffs and Appellants, v. COUNTY OF FRESNO, Defendant and Respondent. CALIFORNIA ACADEMY OF SCIENCES, Real Party in Interest and Appellant.

No. F011078.

Decided: April 05, 1990

Albin C. Koch, Horgan, Rosen, Beckman & Coren, Toluca Lake, Robin M. Shapiro, Philip M. Moreman, Morrison & Foerster, Los Angeles, for plaintiffs, appellants and real party in interest. Max E. Robinson, County Counsel, Pamela A. Stone, Deputy County Counsel, Fresno, for defendant and respondent.


This is an appeal from the trial court's order denying executors and real party in interest California Academy of Sciences motion for an award of attorney's fees pursuant to either Revenue and Taxation Code section 5152 or Code of Civil Procedure section 1021.5.


William H. Noble was an agricultural businessman who at his death in 1973 left an estate, the real property portion of which was located partly in Fresno County, valued in excess of $49 million.   The California Academy of Sciences (the Academy) was a one-third residuary beneficiary under Noble's will and received over $7 million from the estate.

The Academy is a nonprofit corporation which enjoys exemption from ad valorem property taxation under article XIII, section 4, subdivision (c), of the California Constitution, and section 203.5 of the Revenue and Taxation Code for all real and personal property “owned by” it.

During the probate administration and for tax years 1974–1975 through 1977–1978, the Fresno County Assessor assessed taxes on the Fresno County (County) real property in the amount of $285,929.55.

Robert L. Smith, Burnham Enersen and Bank of America, NT & SA, as executors of Noble's will, prosecuted the underlying action on behalf of the Academy for a refund of the real property taxes paid to the County during the probate administration.

The issue in the tax refund action turned on the time at which the Academy became the owner of the real property under the will.   The executors claimed the Academy became the owner of a one-third interest in the property immediately upon decedent's death, which would make the Academy's interest exempt from taxation during probate administration.   The County, on the other hand, contended the Academy did not own the real property for tax exemption purposes until the administration of the estate was completed.   The County argued that because the land was sold during the estate's administration, the Academy never owned an interest in it and could not claim a tax exemption.

The trial court granted executors' motion for summary judgment, finding the Academy owned the real property at the time the taxes were assessed, and it ordered the County to refund taxes to the Academy in the amount of $478,321.42, including interest.   This court affirmed the trial court's judgment.   (California Academy of Sciences v. County of Fresno (1987) 192 Cal.App.3d 1436, 238 Cal.Rptr. 154.)   The County's petition for review by the Supreme Court was denied.  (Id. at p. 1443, 238 Cal.Rptr. 154.)

The executors then noticed a motion for costs, including attorney's fees in the sum of $205,956.08, as the prevailing party in the action.   Executors argued they were entitled to attorney's fees as well as costs under the provisions of section 5152 of the Revenue and Taxation Code and section 1021.5 of the Code of Civil Procedure.1

The trial court denied the request for attorney's fees.   It found, however, the executors should recover their costs from the County in the sum of $883.28.


I. The Academy is not entitled to recover attorney's fees under Revenue and Taxation Code section 5152.

 Statutes of 1978, chapter 1188, added sections 538 and 5152 to the Revenue and Taxation Code,2 effective September 26, 1978.  Section 538, subdivision (a) provides in pertinent part:

“If the assessor believes that a specific provision of the Constitution of the State of California, of this division, or of a rule or regulation of the board is unconstitutional or invalid, and as a result thereof concludes that property should be assessed in a manner contrary to such provision, or the assessor proposes to adopt general interpretation of a specific provision of the Constitution of the State of California, or this division, or of a rule or regulation of the board, that would result in a denial to five or more assessees in that county of an exemption, in whole or in part, of their property from property taxation, the assessor shall, in lieu of making such an assessment, bring an action for declaratory relief against the board under Section 1060 of the Code of Civil Procedure․”  (Emphasis added.)

Section 5152 reads in its entirety:

“In an action in which the recovery of taxes is allowed by the court, if the court finds that the void assessment or void portion of the assessment was made in violation of a specific provision of the Constitution of the State of California, of this division, or of a rule or regulation of the board, and the assessor should have followed the procedures set forth in Section 538 in lieu of making the assessment, the plaintiff shall be entitled to reasonable attorney's fees as costs in addition to the other allowable costs.   This section is ancillary only, and shall not be construed to create a new cause of action nor to be in lieu of any other provision of law.”  (Emphasis added.)

The effect of these statutes was twofold:  First, section 538 imposed a new requirement on the assessor—if an assessor believes that a provision of law is invalid or intends to interpret a statute to deny a property tax exemption to five or more assessees, the assessor is required to bring a declaratory relief action against the State Board of Equalization instead of assessing the property.   Second, if the assessor fails to follow the section 538 mandate and assesses the property rather than seeking declaratory relief, section 5152 entitles the taxpayer to recover reasonable attorney's fees as costs in any action in which the recovery of taxes is allowed by the court.

The meaning of section 5152 seems clear on its face.   Only if the section 538 procedures are in effect when the assessments are made would the assessor be under a duty to seek declaratory relief before making the assessment.   If the section 538 procedures are not in effect, it follows the assessor could make the assessment without risking sanctions for attorney's fees.

Appellants nevertheless argue they should be able to recover attorney's fees under section 5152 because the section was enacted to prevent “further potential harm” to taxpayers resulting from erroneous assessments made before its enactment.   In support of this argument they cite the legislative reasoning for enacting chapter 1188 as an urgency statute.

Section 4 of chapter 1188 of Statutes of 1978 provides:

“This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect.   The facts constituting such necessity are:  [¶] The Legislature has adopted urgency legislation in the past to prevent severe hardship that would be caused to various sectors of the state by the operation of the property tax laws.   Certain assessors have chosen not to follow such legislation, resulting in assessments causing the very hardship sought by the Legislature to be avoided.   This act must go into effect immediately to eliminate the further potential harm from such action by assessors, especially with respect to Sections 225 and 253.10 of the Revenue and Taxation Code.”  (Stats.1978, emphasis added.)

Section 225 (repealed by Stats.1984, ch. 678, § 10) related to an exemption for personalty brought into the state for transshipment outside the state or the United States.  Section 253.10 (repealed by Stats.1984, ch. 678, § 15) related to the method of claiming the personalty exemption.   The Supreme Court has noted that section 538 was the Legislature's “direct response to Los Angeles County's refusal to implement section 225's exemption.”  (Star–Kist Foods, Inc. v. County of Los Angeles (1986) 42 Cal.3d 1, 10, 227 Cal.Rptr. 391, 719 P.2d 987.)

Although the primary purpose of the urgency legislation was to forestall counties and their assessors from ignoring personal property exemptions when making their assessments, appellants nonetheless contend that in making sections 538 and 5152 effective immediately, the legislative concern was not only the prevention of future invalid assessments on real as well as personal property but also the prevention of future harm to taxpayers who would have to incur substantial expense in challenging erroneous assessments previously made.   In other words, the “future potential harm” from the erroneous assessments that had triggered the legislative action could only be eliminated, as the Legislature intended, if erroneous assessments of all property made prior to enactment of section 538 were included within the ambit of the statutes.   According to appellants, if the Legislature had only intended to prevent invalid future assessments it would have allowed the statutes to take effect in their ordinary course and not as an urgency statute.

While appellants' argument has some superficial appeal, it is not persuasive.   First, it ignores the premise based on a reasonable inference from the urgency language that section 538 was intended only to foreclose assessors from refusing to implement the personalty transshipment exemption as noted in Star–Kist Foods, Inc. v. County of Los Angeles, supra, 42 Cal.3d at page 10, 227 Cal.Rptr. 391, 719 P.2d 987.   Second, no matter how appellants' argument is phrased, it works a retroactive application of section 538, i.e., to assessments made before the effective date of the statute.   Although the Legislature may make a statute retroactive in effect, the intent to do so must be clearly expressed.  (Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148, 153, 233 Cal.Rptr. 308, 729 P.2d 743;  In re Cindy B. (1987) 192 Cal.App.3d 771, 779, 237 Cal.Rptr. 677.)   Here, the best that can be said of the urgency language cited by appellants is that if taken literally it may create some uncertainty as to retroactivity, but it does not create a legislative mandate for retroactivity.   Moreover, section 538 on its face clarifies any such uncertainty.   It speaks only of the assessor's duty to seek declaratory relief “in lieu of making such an assessment.”  (Emphasis added.)   Exercising our duty of declaring the meaning of a statute by reconciling its ambiguities, we hold the statute does not apply to assessments made before its effective date.

Appellants next contend that even if section 538 had not been enacted at the time the assessments were made, the section 538 action should have been filed by the county assessor when the refund claims were filed in 1979.   However, section 538 does not speak to nor involve any procedure to be followed when a refund claim has been filed.   It only addresses what the assessor should do if the assessor has a certain belief regarding a certain constitutional or statutory enactment;  the assessor should file the declaratory relief action in lieu of making an assessment.   Since all of the assessments were made before the effective date of section 538, the assessor was under no mandate to file a declaratory relief action in lieu of making the assessment.

II. The Academy is not entitled to its fees as a private attorney general under California Code of Civil Procedure section 1021.5.

 The Academy has also argued that it is entitled to attorney's fees under Code of Civil Procedure section 1021.5, the private attorney general theory.

Code of Civil Procedure section 1021.5 provides in relevant part,

“Upon motion, a court may award attorneys' fees to a successful party ․ in any action which has resulted in the enforcement of an important right affecting the public interest if:  (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.   With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities․”

Appellants argue that the victory they won in California Academy of Sciences v. County of Fresno, supra, 192 Cal.App.3d 1436, 238 Cal.Rptr. 154, conferred and will confer a significant benefit on the general public because the Academy is a charitable institution which, through its museum and educational programs, makes its services and facilities available to well over a million people annually.   Appellants say the litigation will benefit the general public “in at least two respects.   First, the recovery of the taxes paid, plus interest, will immediately benefit the public through the Academy's use of those funds to further its charitable purpose of advancing science and maintaining a museum.   Second, the Academy has protected its tax exempt status and the tax exempt status of the other charitable organizations enumerated in Revenue and Taxation Code Section 203.5.”

The trial court concluded this “benefit” was not the kind of benefit envisioned or appropriate under section 1021.5.

Serrano v. Priest (1977) 20 Cal.3d 25, 141 Cal.Rptr. 315, 569 P.2d 1303 sets forth three basic factors which must be considered in an award of attorney's fees under section 1021.5:

“(1) the strength or societal importance of the public policy vindicated by the litigation, (2) the necessity for private enforcement and the magnitude of the resultant burden on the plaintiff, (3) the number of people standing to benefit from the decision.”  (Id. at p. 45, 141 Cal.Rptr. 315, 569 P.2d 1303.)

“The doctrine rests upon the recognition that privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions, and that, without some mechanism authorizing the award of attorney fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible.”  (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 933, 154 Cal.Rptr. 503, 593 P.2d 200.)

County points out the type of cases where attorney's fees have been awarded under section 1021.5 which vindicate an important public policy benefiting a large class of persons.   For example, the method of financing schools through ad valorem property taxes was violative of equal protection as it discriminated on the basis of wealth (Serrano v. Priest, supra, 20 Cal.3d 25, 141 Cal.Rptr. 315, 569 P.2d 1303);  a person's right to privacy includes the right to refuse medical treatment even if to do so results in death (Bouvia v. Superior Court (1986) 179 Cal.App.3d 1127, 225 Cal.Rptr. 297);  upholding a person's right to attend school regardless of his immigration status (Maria P. v. Riles (1987) 43 Cal.3d 1281, 240 Cal.Rptr. 872, 743 P.2d 932).

In contrast, the present case does not significantly benefit a large class of people except indirectly through the services that the Academy provides as a charitable institution.   Only four entities are directly benefited by our previous ruling, i.e., California School of Mechanical Arts, California Academy of Sciences, Cogswell Polytechnical College and the Huntington Library and Art Gallery.   Further, the litigation does not benefit these four entities in general but only when they are named as a residuary beneficiary of a will, the residue of which contains real property.

Finally, an award of attorney's fees is not warranted in light of the necessity and financial burden of private enforcement.  “ ‘An award on the “private attorney general” theory is appropriate when the cost of the claimant's legal victory transcends his personal interest, that is, when the necessity for pursuing the lawsuit placed a burden on the plaintiff “out of proportion to his individual stake in the matter.”  [Citation.]’ ”  (Woodland Hills Residents Assn., Inc. v. City Council, supra, 23 Cal.3d 917, 941, 154 Cal.Rptr. 503, 593 P.2d 200.)

A reasonable inference arises that the Academy's own economic interest motivated the action, and the Academy obtained a judgment including interest of over $500,000.   Any litigation costs incurred in obtaining the tax refund are outweighed by the Academy's financial interest in the refund itself.   Thus, the Academy has not demonstrated that its financial burden in pursuing this litigation is disproportionate to the value of the private benefits gained.   (Beach Colony II v. California Coastal Com. (1985) 166 Cal.App.3d 106, 112, 212 Cal.Rptr. 485.)

The judgment is affirmed.   The County to recover its costs on appeal.


1.   Appellants have requested this court to take judicial notice of California Academy of Sciences v. County of Fresno, Fresno County Superior Court case No. 405356–7.   That case involves tax issues regarding real property bequeathed to appellants under the will of Helen Willis.Although that request was not timely made, at oral argument we allowed the parties to argue the relevancy of the material.   We are not convinced appellants “relied upon or adequately raised a substantive issue to which these documents relate in the trial court” and decline to grant the request for judicial notice.  (People v. Preslie (1977) 70 Cal.App.3d 486, 494, 138 Cal.Rptr. 828.)

2.   All statutory references are to the Revenue and Taxation Code unless otherwise indicated.

FRANSON, Presiding Justice.

BEST and STONE (WM. A.), JJ., concur.