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1 PILLSBURY WINTHROP SHAW PITTMAN LLP
LAWRENCE L. HOENIG 68337
2 CRAIG A. BECKER 130900
2550 Hanover Street
3 Palo Alto, CA 94304-1115
Telephone: (650) 233-4500
4 Facsimile: (650) 233-4545
5 PILLSBURY WINTHROP SHAW PITTMAN LLP
RICHARD E. NIELSEN 72104
6 50 Fremont Street
Post Office Box 7880
7 San Francisco, CA 94120-7880
Telephone: (415) 983-1000
8 Facsimile: (415) 983-1200
9 WATSON, HOFFE & HASS
PETER A. HASS 127591
10 3700 Barrett Avenue
Post Office Box 5001
11 Richmond, CA 94805-2297
Telephone: (510) 237-3700
12 Facsimile: (510) 237-3714
13 Attorneys for Plaintiffs and Petitioners
CHEVRON U.S.A. INC. and
14 CHEVRON CORPORATION
15
16 SUPERIOR COURT OF THE STATE OF CALIFORNIA
17 IN AND FOR THE COUNTY OF CONTRA COSTA
18 UNLIMITED CIVIL JURISDICTION
19 )
CHEVRON U.S.A. INC. and CHEVRON ) No.
20 CORPORATION, )
)
21 Plaintiffs and Petitioners, ) COMPLAINT FOR REFUND OF
) PROPERTY TAXES AND VERIFIED
22 vs. ) PETITION FOR WRITS OF
) MANDATE
23 COUNTY OF CONTRA COSTA, )
) (Rev. & Tax. Code § 5140;
24 Defendant, ) Code of Civ. Proc. §§ 1085, 1094.5)
)
25 COUNTY OF CONTRA COSTA )
ASSESSMENT APPEALS BOARD and )
26 CONTRA COSTA COUNTY ASSESSOR, )
)
27 Respondents. )
28
703908223v1
COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 Plaintiff Chevron U.S.A. Inc. (“CUSA”) and Plaintiff Chevron Corporation
2 (collectively, “Chevron”, “Plaintiffs” or “Petitioners”) allege as follows:
3 PARTIES
4 1. Plaintiff CUSA is now, and at all times relevant hereto was, a Pennsylvania
5 Corporation qualified to do and doing business in the State of California, with its principal
6 place of business located at 6001 Bollinger Canyon Road, San Ramon, California. CUSA
7 does now own and operate, and at all times relevant hereto has owned and operated, the
8 Chevron Richmond Refinery (“Refinery”) located at 841 Chevron Way, Richmond, Contra
9 Costa County, California. That property is also described as Assessor’s Parcel Numbers
10 (“APNs”) 561-100-003, 561-100-013, 561-100-040 and, depending on the tax year, up to
11 about 43 other APNs.
12 2. Plaintiff Chevron Corporation is now, and at all times relevant hereto was, a
13 Delaware Corporation qualified to do and doing business in the State of California, with its
14 principal place of business located at 6001 Bollinger Canyon Road, San Ramon, California.
15 Chevron Corporation is the indirect parent corporation of CUSA and is a party affected by
16 these proceedings.
17 3. Defendant Contra Costa County (“County”) is now, and at all times relevant
18 hereto was, a political subdivision of the State of California. The County collected the
19 property taxes paid with respect to the Refinery that are the subject of this action.
20 4. Respondents are the Contra Costa County Assessment Appeals Board (the
21 “Board”) and the Contra Costa County Assessor (the “Assessor”). Chevron is informed and
22 believes and thereon alleges that the Board was established by County ordinance and
23 derives its power from the California Constitution, Article XIII, § 16 and is a constitutional
24 agency and is duly charged pursuant thereto with equalizing the property tax assessment
25 rolls of Contra Costa County by reducing or increasing individual assessments. Chevron is
26 informed and believes and thereon alleges that, by law, the Assessor is charged with the
27
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 duty to assess property located within Contra Costa County, a political subdivision of the
2 State of California.
3 5. The Assessor assessed the Refinery for the tax years 2007, 2008 and 2009.
4 JURISDICTION
5 6. Jurisdiction of this action is vested in this Court pursuant to Revenue and
6 Taxation Code (“R&TC”) §§ 5140 and 5141(a). This property tax matter is entitled to
7 precedence over most other civil actions under R&TC § 5149. This Court also has
8 jurisdiction under the California Code of Civil Procedure (“CCP”) §§ 1085 or 1094.5 to
9 issue a writ or writs of mandate.
10 7. Venue is proper in this County pursuant to R&TC § 5140 and CCP § 394
11 because the parties are situated in this County and the events giving rise to the claims in this
12 matter arose in this County.
13 FACTUAL BACKGROUND
14 The Original Regular Roll and Supplemental Assessments
for Tax Years 2007-2009.
15
16 8. The Assessor erroneously determined and enrolled certain taxable values for
17 the property located at the Refinery (the “Refinery Property”) for each of the tax years from
18 2007 through 2009. For each of those years, the Assessor’s total taxable values enrolled for
19 the Refinery Property were:
20 2007: $3,413,229,044
21 2008: $3,430,295,188
22 2009: $3,105,612,000
23 9. The foregoing assessments (collectively, the “Regular Roll Assessments”)
24 each overstated the taxable value of the Refinery Property.
25
26
27
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 10. The taxes resulting from the Regular Roll Assessments were timely paid to
2 the tax collector of the County on or about the following dates:
3 Tax Year/Installment Payment Dates Amounts
4 2007 (First Installment) December 6, 2007 $21,748,938.81
5 2007 (Second Installment) April 7, 2008 $21,748,938.81
6 2008 (First Installment) December 5, 2008 $22,309,223.52
7 2008 (Second Installment) April 7, 2009 $22,309,223.52
8 2009 (First Installment) December 7, 2009 $20,948,936.88
9 2009 (Second Installment) April 7, 2010 $20,948,936.88
10 11. In 2009, the Assessor issued supplemental assessments against the Refinery
11 for tax years 2007 and 2008, respectively. In making those supplemental assessments, the
12 Assessor erroneously determined that the taxable values of fixture additions to the Refinery
13 Property for each of the 2007 and 2008 tax years were as follows:
14 2007: $11,260,358
15 2008: $41,010,310
16 12. Rather than follow California law and increase the assessed value as of the
17 specific date that each individual fixture addition was completed (requiring the tax collector
18 to pro-rate the taxes based on the date within the 2007 or 2008 fiscal year that the addition
19 was first put into place), the Assessor simply assumed that all such fixture additions were
20 completed as of December 31, 2007 and December 31, 2008. Applying this erroneous
21 assumption, the Assessor then enrolled fifty percent (50%) of his total value determination
22 for the 2007 and 2008 new construction additions and the tax collector applied a full twelve
23 months of property tax to the resultant 50% determination.
24 13. As a result, the total taxable enrolled values for these additions to the
25 Refinery Property for each of the 2007 and 2008 fiscal years were the following amounts,
26 reflecting fifty percent (50%) of the Assessor’s full value determination:
27
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 2007: $ 5,630,179
2 2008: $20,505,155
3 14. Each of the full cash value determinations of the fixture additions for the
4 2007 and 2008 years, as stated in paragraphs 11 and 13 (collectively, the “Supplemental
5 Assessments”), overstated the taxable value of the pertinent fixture additions to the
6 Refinery Property for the 2007 and 2008 tax years.
7 15. The taxes resulting from the Supplemental Assessments were timely paid to
8 the tax collector of the County on or about the following dates:
9 Payment Dates Amounts
10 December 9, 2009 $ 35,810.75
11 January 8, 2010 $130,197.48
12 April 7, 2010 $ 35,810.75
13 April 7, 2010 $130,197.48
14 16. In the Regular Roll and Supplemental Assessments, the Assessor
15 overassessed the Refinery Property which resulted in excessive levies of property tax and
16 substantial overpayments of tax for tax years 2007, 2008 and 2009.
17 The 2007-2009 Appeals.
18 17. CUSA filed verified Applications for Changed Assessment concerning the
19 Regular Roll Assessments (collectively, the “Regular Roll Applications”) and Supplemental
20 Assessments (collectively, the “Supplemental Assessment Applications”) with the Board
21 pursuant to the provisions of R&TC §§ 1603 and 1605. The Regular Roll Applications
22 were filed on or about November 29, 2007, November 24, 2008 and November 25, 2009 for
23 the tax years 2007, 2008 and 2009, respectively. The Supplemental Assessment
24 Applications were filed on or about November 25, 2009 for the 2008 tax year and on or
25 about December 2, 2009 for the 2007 tax year.
26 18. The Regular Roll Applications were assigned appeal numbers 2007-2194
27 through 2007-2256, 2008-5206 through 2008-5272, 2009-6108 through 2009-6115, and
28
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 2009-6117 through 2009-6159. For the Regular Roll Assessments, CUSA filed an
2 application each year showing the combined amounts for all parcels (“Master Application”)
3 as well as subsidiary applications for the individual parcels. On or about November 30,
4 2009, CUSA submitted a revised Master Application to replace the 2009 Master
5 Application it had previously filed on November 25, 2009.
6 19. CUSA subsequently filed revised/amended applications for the tax years
7 2007, 2008 and 2009 as requested by the Board and/or the Clerk of the Board. Specifically,
8 on or about March 4, 2010, CUSA filed revised/amended applications for the 2009 tax year.
9 On or about March 9, 2011, CUSA filed revised/amended applications for 2007 and 2008
10 tax years. This set of revised/amended applications detailed in this paragraph will
11 hereinafter be referred to collectively as the “First Amended Applications.” Excerpts from
12 the Master Applications for tax years 2007-2009 (as filed with the First Amended
13 Applications) are collectively attached hereto as Exhibit “A” and made a part hereof.
14 20. The Supplemental Assessment Applications were assigned appeal numbers
15 2009-3692 and 2009-5746. Copies of the Supplemental Assessment Applications are
16 collectively attached hereto as Exhibit “B” and made a part hereof.
17 21. On or about January 4, 2012, CUSA and Chevron Corporation filed
18 amended 2007-2009 applications for both the Regular Roll and Supplemental Assessments
19 with the Board (collectively, the “Second Amended Applications”). Relevant excerpts
20 from the Master Applications filed on January 4, 2012 are collectively attached hereto as
21 Exhibit “C” and made a part hereof.
22 22. Hereinafter, CUSA and Chevron Corporation will sometimes be collectively
23 referred to as the “Applicants.”
24 The Board Hearings and Decisions on the 2007-2009 Appeals.
25 23. The Board conducted hearings on all of the above-described applications in
26 2011 and 2012.
27
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 24. On April 2, 2012, the Board issued its Findings and Decision with respect to
2 the Regular Roll Assessments. A copy of the Board’s Findings and Decision on the
3 Regular Roll Assessments is attached hereto as Exhibit “D ” and made a part hereof. The
4 Board determined values in excess of the fair market values and the factored base year
5 values of the Refinery Property on each of the pertinent valuation dates.
6 25. The Board also issued its Findings and Decision with respect to the
7 Supplemental Assessments on April 2, 2012. A copy of the Board’s Findings and Decision
8 on the Supplemental Assessments is attached hereto as Exhibit “E” and made a part hereof.
9 The Board determined fair market values in excess of the assessable market values of the
10 assets on the pertinent valuation dates. The Findings and Decisions described in paragraphs
11 24 and 25 (as well as in Exhibits D and E hereto) will be hereinafter collectively referred to
12 as the “Findings.”
13 26. The Findings denied the Regular Roll Applications, the Supplemental
14 Assessment Applications, the First Amended Applications and the Second Amended
15 Applications (collectively, the “2007-2009 Applications”).
16 27. The 2007-2009 Applications were also designated as claims for refund
17 pursuant to R&TC § 5097(b) (collectively, the “Claims for Refunds”). By denying the
18 2007-2009 Applications, the Board also denied the Applicants’ Claims for Refund pursuant
19 to R&TC § 5141(c).
20 28. The Board erred and/or abused its discretion because the values determined
21 by the Board are unsupported by the administrative record, are excessive, arbitrary, illegal,
22 void, an abuse of discretion and/or violate the standards prescribed by law. In acting upon
23 the 2007-2009 Applications, the Board made numerous legal and other procedural errors.
24 As shown in the administrative record as well as in the pleadings, claims, documents and
25 arguments made during the administrative proceedings, these errors include, but are not
26 limited to, setting fair market values for the Refinery Property that are too high, failing to
27 conduct a substantive hearing on the base year value and factored base year value disputes
28
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 raised by the Applicants, overvaluing certain Refinery additions and taxing certain Refinery
2 additions that should not be assessed. The Board’s Findings are deficient. They are not
3 supported by substantial evidence.
4 29. The Board’s conduct denied the Applicants due process under the Due
5 Process Clauses of the United States and California Constitutions. Such due process
6 violations included, but were not limited to, arbitrary, capricious, erroneous and illegal
7 rulings on base year value and factored base year value issues; permitting the Assessor to
8 present evidence of values higher than the roll values without first issuing a raise letter
9 pursuant to R&TC § 1609.4; allowing the Assessor to present testimony and evidence of
10 witnesses not certified by the California State Board of Equalization; abusing its discretion
11 by excluding many exhibits (or excluding portions of such exhibits) and substantial
12 testimony offered by the Applicants, including relevant valuation evidence; and numerous
13 other arbitrary and erroneous rulings of law, evidence and procedure.
14 30. The Board’s assumptions and methods used to value the Refinery Property
15 are invalid, arbitrary, an abuse of discretion, and in violation of the standards prescribed by
16 law.
17 31. To the extent the Findings (or any later decision or order issued by the
18 Board) set taxable values that are in excess of the originally enrolled assessed values for the
19 Refinery Property, as set forth in paragraph 8, any resulting assessment and tax increase is
20 void where it is barred by the statute of limitations. See R&TC §§ 532, 4831. The four-
21 year statute of limitations applicable to assessing and collecting any additional property
22 taxes from Applicants for the 2007 tax year expired on June 30, 2011. The statute of
23 limitations for the 2008 tax year expired on June 30, 2012.
24 32. Here, the Findings in this matter were not issued until April 2, 2012, after
25 the four-year statute of limitations for escape assessments and/or roll corrections on the
26 2007 tax year had expired. See R&TC §§ 532, 4831. Therefore, no escape assessments or
27 roll corrections may be validly issued based on such April 2, 2012 Findings.
28
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 33. In addition to the statute of limitation applicable to assessment and
2 collection of taxes, the Board was also required to issue a final decision on the 2007, 2008
3 and 2009 tax years no later than July 1, 2012 pursuant to the parties’ October 13, 2011
4 stipulation to extend the R&TC § 1604(c) deadline for the issuance of a final Board
5 decision to such July 1, 2012 date. Notwithstanding such deadline, and as detailed herein,
6 the Board failed to issue a final order on or before July 1, 2012.
7 34. Several weeks after the Findings were issued and on or about April 30, 2012,
8 the Assessor enrolled certain escape assessments for the 2007, 2008 and 2009 tax years
9 attempting to implement the Board’s Findings. The Applicants objected to the Assessor’s
10 Escape Assessment Enrollments (the “Objections”) for various reasons, and the Board held
11 a hearing with respect to the Objections on June 28, 2012.
12 35. On September 28, 2012, the Board issued a further order entitled “Orders on
13 Chevron USA’s Objections to the Assessor’s Escape Assessment Enrollments and
14 Allocations of Base Year Values” (the “September 28, 2012 Order”) attached hereto as
15 Exhibit “F” and made a part hereof. The September 28, 2012 Order, among other things,
16 confirms that the Board’s April 2, 2012 Findings were not final. The Board, for instance,
17 intends to hold further hearings in this matter to determine additional adjustments that may
18 be necessary to address the Applicants’ challenges to the 2007, 2008 and 2009 factored
19 base year value amounts. More importantly, and for the first time, the September 28, 2012
20 Order set the taxable values (i.e., the lesser of fair market value and factored base year
21 value) for the Refinery Property for tax years 2007, 2008 and 2009. Specifically, the
22 taxable value for 2008 is described as a factored base year value and the taxable values for
23 2007 and 2009 are described as fair market values. As detailed below, the Board never held
24 a hearing to address either Chevron’s base year value or factored base year value claims
25 and there is no basis or support stated in the September 28, 2012 Order for the 2008
26 factored base year value.
27
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 36. No additional taxes may be collected based on the September 28, 2012
2 Order as to the 2007 and 2008 tax years because the increased assessments and/or roll
3 corrections needed to effect the Order were barred by the R&TC §§ 532 and 4831 statutes
4 of limitations as of June 30, 2011 and June 30, 2012, respectively. Moreover, in the
5 absence of a final Board decision within the required R&TC § 1604(c) timeframe (i.e., on
6 or before July 1, 2012), the Applicants’ opinions of value as stated on the 2007-2009
7 Applications will become, as a matter of law, the taxable values for each of the respective
8 2007-2009 tax years.
9 37. The Refinery Property has been overassessed and the taxes on such property
10 have been overpaid for all three tax years (including the taxes paid on the Supplemental
11 Assessments) in an amount to be established at trial according to proof.
12 Wherefore, CUSA and Chevron Corporation pray judgment as hereinafter set forth.
13 FIRST CAUSE OF ACTION
14 (Complaint for Refund by CUSA Against the County)
15 38. CUSA incorporates by reference the allegations in paragraphs 1 through 37
16 above as though fully set forth herein.
17 39. The payments referenced in paragraphs 10 and 15 above were paid to the
18 County by CUSA from a bank account owned by CUSA on the respective dates.
19 40. No refund of taxes paid with respect to the Regular Roll Assessments and
20 Supplemental Assessments being challenged in this action, or any part thereof, has been
21 made to CUSA and/or to anyone acting on its behalf.
22 41. CUSA has exhausted all available administrative remedies required to be
23 pursued by it, in that it has employed every available procedure for relief before the Board
24 and County.
25 42. CUSA has timely filed this suit for refund pursuant to R&TC § 5141(c).
26 43. The Board’s decisions and actions in denying the 2007-2009 Applications
27 were arbitrary, capricious, an abuse of discretion and in disregard of the clear weight of the
28
703908223v1 -9-
COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 evidence and the law, entitling the Applicants to an award of reasonable attorneys’ fees
2 under Government Code § 800, CCP § 1021.5, and R&TC § 538. The Board’s Findings
3 were also deficient, thereby entitling the Applicants to an award of reasonable attorneys’
4 fees under R&TC § 1611.6.
5 Wherefore, CUSA prays judgment as hereinafter set forth.
6 SECOND CAUSE OF ACTION
7 (Complaint for Refund by Chevron Corporation Against the County)
8 44. Chevron Corporation incorporates by reference the allegations in paragraphs
9 1 through 37 above as though fully set forth herein.
10 45. To the extent the evidence ultimately establishes that CUSA did not make
11 one or more of the payments to the County referenced in paragraphs 10 and 15 above,
12 Chevron Corporation alleges that it made those particular payments to the County.
13 46. No refund of taxes paid with respect to the Regular Roll Assessments and
14 Supplemental Assessments being challenged in this action, or any part thereof, has been
15 made to Chevron Corporation and/or to anyone acting on its behalf.
16 47. Chevron Corporation has exhausted all available administrative remedies
17 required to be pursued by it, in that it has employed every available procedure for relief
18 before the Board and County.
19 48. Chevron Corporation has timely filed this suit for refund pursuant to
20 R&TC § 5141(c).
21 49. The Board’s decisions and actions in denying the 2007-2009 Applications
22 were arbitrary, capricious and in disregard of the clear weight of the evidence and the law,
23 entitling the Applicants to an award of reasonable attorneys’ fees under Government Code
24 § 800, CCP § 1021.5, and R&TC § 538. The Board’s Findings were also deficient, thereby
25 entitling the Applicants to an award of reasonable attorneys’ fees under R&TC § 1611.6.
26 Wherefore, Chevron Corporation prays judgment as hereinafter set forth.
27
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 THIRD CAUSE OF ACTION
2 (Petition for Writ of Mandate Under CCP §§ 1085/1094.5 Against the Board)
3 50. CUSA and Chevron Corporation incorporate by reference the allegations in
4 paragraphs 1 through 49 above as though fully set forth herein. Chevron Corporation joins
5 in the third and fourth causes of action set forth herein to the extent the evidence ultimately
6 establishes that CUSA did not make one or more of the payments to the County referenced
7 in paragraphs 10 and 15 above and that Chevron Corporation made those particular
8 payments to the County. In light of this joinder, CUSA and Chevron Corporation are
9 jointly referenced herein as the “Petitioners.”
10 51. Petitioners bring this cause of action pursuant to CCP §§ 1085 or 1094.5 to
11 have the Court direct Respondent Board to afford due process and conduct a complete
12 hearing on all issues in this matter. Specifically, the Board has (i) refused to conduct a
13 hearing on the base year value and factored base year value claims raised by Petitioners
14 both in the 2007-2009 Applications and during the administrative hearing; (ii) refused to
15 undertake the additional hearings necessary to make the determinations required to
16 complete the Board’s obligations to set the taxable values; and (iii) failed to make
17 allocations to correctly allocate the total amounts of taxable value to specific parcels and to
18 specific types of property (e.g., land, structures and fixtures).
19 52. As noted above, the Board issued an order on September 28, 2012 that set
20 the taxable values for 2007-2009. The taxable values for 2007 and 2009 were based on the
21 fair market values determined by the Board during the hearing. The taxable value for 2008
22 was based on a factored base year value set by the Assessor. No hearing has been held by
23 the Board on the relevant base year determinations value or on the factored base year
24 values for tax years 2007-2009.
25 53. California Code of Civil Procedure § 1085 specifies that this Court is
26 empowered to issue the requested Writ of Mandate, ordering compliance by Respondent
27 Board with the pertinent provisions of the California Constitution and the R&TC noted
28
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 herein, since compliance with the relevant section(s) is a statutory duty of Respondent
2 Board.
3 In the Proceedings Before the Board’s April 2, 2012 Findings,
4 the Board Improperly Denied Petitioners a Hearing on
Base Year Value Determinations and Factored Base Year Values.
5
6 54. The administrative record in this matter contains extensive pleadings setting
7 forth the Petitioners’ demand for base year value and factored base year value hearings.
8 Prior to the administrative hearing, Petitioners specifically asked the Board to determine
9 base year values for assets added to the Refinery during the tax years under appeal (i.e.,
10 assets added to the Refinery after the January 1, 2006 lien date), assets added to the
11 Refinery between January 1, 2003 and January 1, 2006 and assets added to the Refinery
12 before the January 1, 2003 lien date. See CUSA’s Motion for the Board to Take
13 Jurisdiction of the Base Year Value Claims, dated July 28, 2011; CUSA’s Reply to the
14 Contra Costa County Assessor’s Motion for Decision on Base Year Value, dated August 4,
15 2011. Petitioners further asked the Board to do its duty to set the taxable value of the
16 Refinery Property at the lesser of the fair market value or the factored base year value.
17 Each of Petitioners’ demands was wrongly denied by the Board prior to the start of the
18 administrative hearing. See Decision on CUSA’s Applications for Change in Base Year
19 Values, dated September 15, 2011.
20 55. The Board’s April 2, 2012 Findings on the fair market value of the Refinery
21 Property incorporated and reaffirmed the Board’s September 15, 2011 denial of all of
22 Petitioners’ base year value and factored base year value claims.
23 56. Because the Board denied the appeals of the base year values and factored
24 base year values and otherwise failed to make any substantive determinations of any base
25 year value claim or any substantive determination of factored base year values for any tax
26 year, its Findings are incomplete and fail to provide proper determinations of taxable
27
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 values (i.e., the lesser of factored base year value or current fair market value) for any
2 Refinery Property for any of the tax years at issue.
3 57. The Board’s failure to conduct a complete hearing on all issues denied
4 Petitioners’ due process of law and violated the Board’s constitutional duty to set the
5 taxable value of the Refinery Property at the lesser of the fair market value or the factored
6 base year value.
7 58. Petitioners have repeatedly objected and demanded a substantive hearing on
8 the above base year value and factored base year value claims. The Board, however, has
9 continually refused to conduct any such hearing. Petitioners have exhausted all available
10 administrative remedies. To the extent that the Court finds that any administrative remedy
11 was not fully exhausted, Petitioners submit that any attempt by Petitioners to further
12 exhaust administrative remedies would be futile under the circumstances and would cause
13 further delay in the resolution of this matter.
14 In the Proceedings After the April 2, 2012 Findings,
15 the Board Has Failed to Fulfill its Statutory Obligation to
Determine the Factored Base Year Value of the Refinery Property.
16
17 59. As noted above, the Board failed to make any substantive factored base year
18 value determinations, which is a precondition to determining the taxable value, before or
19 during the hearing. After the fair market value hearing the Board wrongly, and without
20 legal basis, has still refused to address and substantively determine the 2007-2009 factored
21 base year values of the Refinery Property.
22 60. On April 2 or April 16, 2012, the Board delegated its duty to set the taxable
23 values (including the factored base year values) to the Assessor. As a result of the Board’s
24 improper delegation of its duties to the Assessor (after the hearing), the Assessor
25 proceeded to unilaterally set the taxable values for 2007, 2008 and 2009 at the lesser of the
26 Board-determined fair market values (as set forth in the Findings) and the Assessor-
27 determined factored base year values issued in July 2011 (the “July 2011 Revised
28
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 Factored Base Year Values”). The Assessor, in turn, issued escape assessments based on
2 his taxable value determinations. The Assessor’s determinations of factored base year
3 values used in making the escape assessments and establishing taxable values were never
4 reviewed or approved by the Board.
5 61. The delegation of the Board’s powers to the Assessor was illegal and an
6 improper abdication of the Board’s duty to determine the taxable values. The Board’s
7 failure to fully perform its constitutional and statutory duties resulted in an adversarial
8 party to the proceedings (i.e., the Assessor) using his discretion to set the taxable values of
9 the Refinery Property without any hearing on the merits of the factored base year values
10 utilized by the Assessor to determine the taxable values.
11 62. The Petitioners brought the Assessor’s post-hearing improper usurping of
12 the Board’s duties and authority to the Board’s attention. See e.g., Objections re
13 Enrollment and Allocations, dated May 22, 2012; Reply re the Assessor’s Erroneous
14 Escape Assessments and Allocations, dated June 26, 2012. Specifically, the Petitioners
15 requested that rather than accepting the Assessor’s July 2011 Revised Factored Base Year
16 Values, the Board should re-open the hearing and make its own determinations of factored
17 base year values. The Board would then be correctly applying Propositions 8 and 13 to
18 find the taxable values for each year (at the lesser of the Board-determined factored base
19 year values or the Board-determined fair market values).
20 63. Petitioners also noted in the May 22, 2012 Objections and in the June 28,
21 2012 hearing that they had appealed the July 27, 2011 Revised Factored Base Year Values
22 issued by the Assessor. These particular appeals were filed with the Clerk of the Board on
23 or about September 26, 2011 (Appeal Nos. 2011-0378 to 2011-0421). Said appeals have
24 never been heard by the Board. Accordingly, Petitioners suggested that in order to set the
25 correct factored base year values, the Board could either re-open the hearing on the 2007-
26 2009 Applications or the Board could instead or in addition, schedule hearings on the
27
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COMPLAINT FOR REFUND OF PROPERTY TAXES AND VERIFIED PETITION FOR WRITS OF MANDATE
1 September 2011 appeals during which it could determine correct base year values and
2 factored base year values.
3 64. All of these suggestions were presented to the Board at the June 28, 2012
4 hearing. As described above, the September 28, 2012 Order, in part, supposedly addressed
5 the objections raised at the hearing. See September 28, 2012 Order (Exhibit F hereto).
6 Among other things, the Order based the taxable value for 2008 on the Assessor’s factored
7 base year value. Petitioners have never been granted a hearing to contest any factored base
8 year values, including the factored base year value that is set forth as the taxable value for
9 2008 in the Board’s September 28, 2012 Order. Nothing in the Order resolves the fact that
10 the Petitioners have never been granted a hearing on their base year value and factored
11 base year value claims.
12 65. The Board’s failure and refusal to conduct a complete hearing on all issues
13 as alleged herein and to fully perform its duties to set the taxable values of the Refinery
14 Property, denied Petitioners’ due process, constitutes an abuse of discretion and is
15 otherwise contrary to law. The Board is required, under the California Constitution (Art.
16 XIIIA, § 2), the Revenue and Taxation Code (§ 51(a)) and the Property Tax Rules (Cal.
17 Code Regs. Title 18, § 313 et seq.) (hereinafter all Title 18 sections will be referred to as
18 “Rules” or “Property Tax Rules”), to take jurisdiction of the claims in the Applications for
19 the 2007-2009 tax years and to hold full and fair hearings to determine the taxable values
20 of the Refinery Property at the lesser of the fair market value or the factored base year
21 value. The Board’s failure and refusal to, inter alia, conduct such hearings render the
22 Board’s Findings incomplete and deny Petitioners important due process and other
23 constitutional rights.
24 66. Petitioners have repeatedly objected to the Board’s failure and refusal to act
25 as alleged above. The Board’s orders do not address or resolve the dispute that the
26 Petitioners have never been granted a hearing on their base year value and factored base
27 year value claims. Petitioners have exhausted all available administrative remedies. To
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1 the extent that the Court finds that any administrative remedy was not fully exhausted,
2 Petitioners submit that any attempt by Petitioners to further exhaust administrative
3 remedies would be futile under the circumstances and would cause further delay in the
4 resolution of this matter.
5 In the Event the Findings Are Upheld, Petitioners
6 Alternatively Request that the Court Order the Board
to Issue Allocations in Accordance with the Law.
7
8 67. In violation of Rule 302, the Board failed to make the proper allocations of
9 the alleged taxable values. While it appears that the Board evidently intended its
10 September 28, 2012 Order to address the Petitioners’ Objections filed before the Board on
11 May 22, 2012, the allocations currently set forth in the Board’s September 28, 2012 Order
12 are still erroneous in that, among other things, such allocations: (i) fail to reflect the
13 specific Refinery land value determinations made by the Board in its Findings, both in
14 total and as applied to specific parcels, (ii) fail to reflect the specific Refinery fixture value
15 determinations made by the Board in its Findings, both in total and as applied to specific
16 parcels, and (iii) fail to take into account certain Refinery assets that have been separately
17 assessed and taxed through alternative means (e.g., vehicles subject to property tax through
18 DMV licensing fees). See e.g., Objections re Enrollment and Allocations, dated May 22,
19 2012; Reply re the Assessor’s Erroneous Escape Assessments and Allocations, dated June
20 26, 2012.
21 68. In the event the Court ultimately determines that the Board’s orders comport
22 with the law and denies Petitioners the other relief sought herein, Petitioners bring this
23 cause of action pursuant to CCP §§ 1085 or 1094.5 to have the Court direct the Board to
24 issue allocations consistent with the Board’s Findings and the September 28, 2012 Order
25 as required by Rule 302(a)(5).
26 69. Petitioners have exhausted all available administrative remedies in this
27 matter. To the extent that the Court finds that any administrative remedy was not fully
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1 exhausted, Petitioners submit that any attempt by Petitioners to further exhaust
2 administrative remedies would be futile under the circumstances and would cause further
3 delay in the resolution of this matter.
4 Wherefore, Petitioners pray judgment as hereinafter set forth.
5 FOURTH CAUSE OF ACTION
6 (Petition for Writ of Mandate Under CCP §§ 1085/1094.5 Against the Assessor)
7 70. Petitioners CUSA and Chevron Corporation incorporate by reference the
8 allegations in paragraphs 1 through 69 above as though fully set forth herein.
9 71. California Code of Civil Procedure § 1085 specifies that this Court is
10 empowered to issue the requested Writ of Mandate, ordering Respondent Assessor to
11 perform his legal duties under the California Constitution and the R&TC.
12 72. California law (R&TC §§ 110.1 and 75.10(a)) requires assessors to make
13 base year value determinations for each of the real property additions (including fixtures)
14 acquired or constructed at a facility (including refineries) each year. Each assessor is also
15 required to enroll such base year value determinations on the roll for the lien date
16 following the completion of such new construction. See e.g., R&TC § 50. In making such
17 base year value determinations, assessors are required to determine whether the asset
18 addition was assessable under the pertinent R&TC provisions and Rules. To the extent the
19 asset was assessable, an assessor is also required to determine the value added to the
20 underlying property.
21 73. After making such base year value determinations each year, the Assessor is
22 required to keep track of the factored base year value of each asset, which is equal to the
23 base year value determined for such asset at the completion date, increased by an indexing
24 factor under Proposition 13 of up to two percent per year. See R&TC §§ 51(a) and
25 110.1(f). By looking at the factored base year value of all assets in the facility and
26 summing them, each assessor is supposed to determine the factored base year value of all
27 the assets in the appraisal unit. Then, Propositions 8 and 13 requires assessors to set the
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1 taxable value for each lien date at the lesser of the current lien date fair market value or
2 factored base year value of all assets in the appraisal unit.
3 74. With limited exceptions, the Assessor has not provided Petitioners with
4 evidence that he made base year value determinations for the majority of new additions to
5 the Refinery Property for many years prior to 2007. Without such determinations, an
6 assessor would be unable to annually track the factored base year value calculation for any
7 property.
8 75. In 2007, the Assessor issued a purported factored base year value calculation
9 for the Refinery Property to CUSA. The 2007 factored base year value calculation was
10 factually and legally insufficient in various respects. Among other things, it failed to set
11 forth the base year value determinations for each asset that was included in the Assessor’s
12 factored base year value calculation and it does not appear that the Assessor made a
13 determination as to whether each of the included assets were, in fact, assessable.
14 76. This method of calculating the factored base year values is inconsistent with
15 and contrary to the pertinent California laws described above. Similarly deficient factored
16 base year value calculations were issued for tax years 2008 and 2009.
17 77. The Assessor’s failings with respect to base year value determinations and
18 factored base year value calculations are being contested in the Superior Court refund suit
19 regarding the 2004-2006 tax years (Case No. MSC10-01390).
20 78. For 2007-2009, the Assessor issued assessment notices to the taxpayer in
21 June or July of each of those tax years that included purported factored base year value
22 amounts for the Refinery Property as follows:
23 Tax Year Original Factored Base Year Value
24 2007 $4,094,817,542
25 2008 $4,410,546,661
26 2009 $4,875,244,711
27
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1 79. On July 27, 2011, the Assessor filed with the Board his July 2011 Revised
2 Factored Base Year Values, as follows:
3 Tax Year Revised Factored Base Year Value
4 2007 $4,094,549,829
5 2008 $4,332,418,230
6 2009 $4,568,974,960
7 80. On or about September 26, 2011, Petitioners filed applications for changed
8 assessments to appeal the July 2011 Revised Factored Base Year Values (the “September
9 2011 FBYV Appeals”). The September 2011 FBYV Appeals have never been decided by
10 the Board.
11 81. On or about April 30, 2012, and notwithstanding the pending September
12 2011 FBYV Appeals, the Assessor issued escape assessments to supposedly implement the
13 Board’s April 2, 2012 Findings. The Assessor used his July 2011 Revised Factored Base
14 Year Values (see paragraph 79 above) in preparing his escape assessments instead of using
15 the factored base year value amounts stated on the original assessment notices (see
16 paragraph 78 above).
17 82. At no time has the Assessor’s Office provided Petitioners with information
18 sufficient to establish that any of the factored base year value amounts (i.e., the factored
19 base year value amounts shown in the original assessment notices or the Revised July 2011
20 Factored Base Year Values) set for the Refinery Property were issued in a manner that is
21 factually correct and complies with the law.
22 83. It is necessary that the Court or the Board order the Assessor to calculate
23 factored base year value amounts in a manner that is consistent with California law. The
24 Board which heard the 2004-2006 tax years and the Board which heard the 2007-2009 tax
25 years have refused to force the Assessor’s Office to follow the California law in
26 calculating the factored base year value amounts or to review such factored base year
27 value methodology or the resulting factored base year value amounts.
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1 84. Unless this Court requires the Assessor’s Office to follow the pertinent
2 California law regarding determining base year values and calculating factored base year
3 values, the Board will likely continue to reject any taxpayer attempt to rectify the situation
4 in future Board hearings. Using a correct factored base year value is the only way in
5 which the Refinery Property will be correctly assessed at the lesser of the factored base
6 year value or the fair market value as California law requires. Using correct factored base
7 year value amounts will also likely change and improve the scope, focus and direction of
8 future Assessment Appeals Board hearings with respect to the Refinery Property (in that
9 the parties will actually know before the hearing—instead of many years later after Court
10 review—whether they should focus on the factored base year value or fair market values
11 or both). Allowing the Assessor to continue issuing erroneous factored base year value
12 calculations is likely to produce a waste of all parties’ resources if they are required to
13 proceed with future Assessment Appeals Board hearings before obtaining resolution of the
14 issues raised for the 2004-2006 tax years and the 2007-2009 tax years.
15 85. Petitioners ask this Court to require the Assessor to follow California law in
16 calculating the factored base year values for the years 2004-2006, 2007-2009 and all future
17 years. Petitioners also ask this Court to stay any further Assessment Appeals Board
18 proceedings for the 2010 and 2011 tax years until the Assessor’s Office issues corrected
19 factored base year value calculations with supporting detail showing that it has indeed
20 followed California law in calculating the same.
21 86. Petitioners have exhausted all available administrative remedies in this
22 matter.
23 Wherefore, Petitioners pray for judgment as hereinafter set forth.
24 REQUEST FOR STAY
25 87. The issues presented by this suit for refund and writs are not unique to tax
26 years 2007-2009. As of this filing, six (6) years of taxes concerning the Refinery Property
27 are at issue and for each of these years, the Board has made numerous errors, including its
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1 failure and refusal to conduct substantive base year value and factored base year value
2 determination hearings. A refund action concerning the Board’s decisions on the earlier
3 tax years (2004-2006), including the Board’s refusal to take jurisdiction over CUSA’s base
4 year value and factored base year value claims for 2004 through 2006, is already pending
5 before this Court (Case No. MSC10-01390) (“2004-2006 Refund Action”). Trial of that
6 refund action is not expected until sometime in 2013.
7 88. The number of tax years in dispute continues to expand. The Board has set a
8 prehearing conference in January 2013 to commence hearings on at least two new tax
9 years (i.e., 2010 and 2011). Further administrative proceedings in this matter will be
10 wasteful for both the parties and the Board until the issues set forth herein as well as the
11 2004-2006 Refund Action are resolved. To avoid further waste of time and resources and
12 allow time for the issues raised herein to be resolved, Petitioners request that all
13 administrative proceedings be stayed pending the resolution of the instant
14 complaint/petition as well as in the 2004-2006 Refund Action.
15 89. As set out in the Fourth Cause of Action above, the Assessor’s Office has
16 failed to calculate the factored base year value of the Refinery Property in accordance with
17 California law. This failure has already consumed significant time and resources of the
18 parties, the Board and this Court for both the 2004-2006 and the 2007-2009 tax years, and
19 it is very likely that, unless and until the Assessor is forced to calculate factored base year
20 values in accordance with California law, these issues will unnecessarily continue to waste
21 time and resources during the upcoming administrative hearings for tax years 2010 and
22 2011. Petitioners believe this Court should intervene to stay the Board’s proceedings as to
23 any further tax years until the Assessor’s Office issues corrected factored base year
24 calculations with supporting detail showing that it has indeed followed California law in
25 calculating the same.
26 90. Another issue pending before the Court in the 2004-2006 Refund Action and
27 the instant action is Petitioners’ challenge to the validity of Title 18 of the California Code
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1 of Regulations § 474. Rule 474 concerns the valuation of petroleum refineries and
2 provides, among other things, that refineries shall be valued as a single appraisal unit
3 comprised of land, structures and fixtures. Rule 474 conflicts with R&TC §51 and Rule
4 461(e), which provide that land and structures collectively comprise one appraisal unit and
5 fixtures comprise a second appraisal unit for which the Assessor is required to make
6 separate base year value determinations. Rule 474 was declared invalid in proceedings
7 before the Los Angeles Superior Court in the matter of Western States Petroleum
8 Association v. California State Board of Equalization (No. BC403167) (“Western States”).
9 The decision in Western States was affirmed in full by the Court of Appeals, Second
10 Appellate District (No. B225932), and the petition for review to the Supreme Court was
11 granted in May 2012 (No. S200475). Because the ultimate ruling on the validity of Rule
12 474 may have a material impact on both the proceedings before this Court as well as the
13 administrative proceedings, Petitioners believe that this is another ground upon which to
14 grant the requested stay.
15 WHEREFORE, CUSA and Chevron Corporation pray for judgment as
16 follows:
17 1. That to the extent the evidence establishes that CUSA paid the tax described
18 herein and such tax was overpaid, CUSA receive judgment against Contra
19 Costa County (to be satisfied in the form of a lump sum payment, credits, or
20 other terms mutually agreed to by the parties);
21 2. That to the extent the evidence establishes that Chevron Corporation paid the
22 tax described herein and such tax was overpaid, Chevron Corporation
23 receive judgment against Contra Costa County (to be satisfied in the form of
24 a lump sum payment, credits, or other terms mutually agreed to by the
25 parties);
26
27
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1 3. That the Court determine that the Board erred and remand the matter with
2 specific instructions to re-determine the taxable value of the Refinery
3 Property in accordance with the Court’s Findings;
4 4. That said remand be to a new and neutral board that is comprised of
5 assessment appeals board members from counties that are not involved in
6 this dispute;
7 5. That the Court retain jurisdiction pending conclusion of the remand
8 proceedings to render judgment for the amount of taxes paid on that portion
9 of assessments found to be void;
10 6. For interest on any such refunds resulting from the corrected roll as provided
11 by law;
12 7. For attorneys’ fees pursuant Government Code §800, CCP § 1021.5 as well
13 as R&TC §§ 538 and 1611.6;
14 8. For a peremptory writ of mandate compelling Respondents as follows:
15 a. Compelling the Board as follows:
16 i. to conduct a full and fair hearing, as required by statute, on the
17 challenged 2007-2009 assessments, on Petitioners’ base year value
18 and factored base year value claims raised by Petitioners in their
19 Applications and during the administrative hearing; and
20 ii. to undertake the additional hearings and/or make determinations
21 required to complete the Board’s obligations to set the taxable values
22 on all parcels and types of property on each parcel.
23 b. In the event the Court ultimately determines that the Board’s Findings
24 comport with the law and denies Petitioners the other relief sought herein,
25 Petitioners request that the Court direct the Board to issue allocations
26 consistent with the Board’s Findings as required by Rule 302(a)(5);
27
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EXHIBIT
A
EXHIBIT
B
000004
EXHIBIT
C
EXHIBIT
D
EXHIBIT
E
EXHIBIT
F
