Calif. App. The Court (District 4) upholds the dismissal of the challenge to the PACE Loan.

The California Court of Appeals, District 4 recently sued a private company to challenge the assessment of taxes charged under the state’s Property Assessment Clean Energy Program (PACE) by a group of senior consumers. Previously, we determined that administrative relief should be pursued.

In its ruling, District 4 reversed the first-instance court’s dismissal of a putative class action complaint seeking “tax refunds, injunctions against future taxation, and elimination of tax retention rights” related to PACE loans. supported.

a copy of the opinion of Morgan v. Ygrene Energy Fund, Inc. is available at: Link to Opinion.

California enacted PACE as a way for homeowners to fund improvements in energy and water conservation. PACE debt is created by contract and protected by improved property. However, like taxes, installments are billed and paid as special valuations for improved properties, with an overriding tax lien in the event of default.

A class of consumers aged 65 and over who have participated in multiple putative class action lawsuits entered into PACE agreements may be entitled to provide consumers with PACE loans, be assigned the right to pay, or administer the PACE program for local governments. I sued a private company that did. Consumers argued that the PACE loan was actually a secured home improvement loan and should have been treated as such. The consumer also alleged that the company engaged in unfair and deceptive business practices by violating consumer protection laws, including California Civil Code Section 1804.1(j).

The defendants contested the complaint on the sole ground that they did not allege that consumers had exhausted their administrative remedies in the first place.

Generally, “a party must exhaust its administrative remedies before resorting to court.” Plantier v. Ramona Municipal Water Authority, (2019) 7 Cal.5th 372, 383. In addition, the California Constitution gives Congress exclusive control over the procedures by which taxpayers may recover certain tax amounts. Article 13.32 provides that: Also,”

Taxpayers have the right to challenge an inaccurate or illegal tax assessment and claim a tax refund. The process begins with an application for an assessment reduction under subdivision (a) of Section 1603 of the Civil Code. . Submit a verified written application to the county commission showing the facts of the alleged reduction and the applicant’s opinion as to the full value of the property. Under Section 1610.8, the Board “may cancel.[ ] Inappropriate rating. A refund order cannot be issued unless a verified claim is filed under Section 5097. Finally, taxpayers can sue in higher courts to recover taxes that the Board has refused to refund after a duly filed claim. § 5140.

The court of first instance agreed with the defendant’s allegations, supported the opponents without permission, and rendered a judgment of dismissal. Consumers appealed in a timely manner.

On appeal, consumers argued primarily that they did not need to pursue administrative relief because they sued only private companies and did not contest the relevant local tax proceedings. At the time, the complaint sought tax refunds, injunctions against future tax assessments, and repeal of tax retention rights.rely on Oakland vs California Construction Company, (1940) 15 Cal.2d 573 (Oakland), the consumer argued for “a request by a private owner for the return of money paid under a void contractual obligation” that: did. [is] It is not a challenge to an assessed lien,” so there is no need to exhaust administrative remedies first.

District 4 disagreed and determined that the PACE assessment could only be treated as a tax for purposes of applying the exhaustion rule. This is because under Section 4801 of the Revenue and Taxation Code, “taxes” includes “assessments collected at the same time and in the same manner as county taxes.” §4801; see Kahan vs City of Richmond(2019) 35 Cal.App.5th 721, 737. Thus, despite arguments to the contrary, the Supreme Court concluded that the consumer challenged the property tax assessment.

The Fourth District also issued a California Supreme Court decision. Auckland The case did not involve any tax challenges and was therefore substantially distinguishable. Rather, the City of Auckland sought to void the road improvement contract based on allegations of contractor fraud during the bidding process. Auckland, above15 Cal.2d at pp.574–575.

Consumers also argued that the exhaustion rule applies only to actions against the government. I have found support for this view, which provides that you are authorized to bring a refund action against a “county or city” to do so.

However, the District 4 held that claim was stayed by the California Supreme Court’s ruling. LoefflerIn that case, the court ruled that before filing a lawsuit under the Unfair Competition Act to challenge a retailer’s misrepresentation as to whether the sale of hot coffee is subject to sales tax, consumers must first seek administrative It ruled that the above tax relief measures must be exhausted. Loeffler58 Cal.4th at pp. 1092, 1134. The California Supreme Court explained that taxability issues must first be administratively determined, followed by judicial review of the agency’s decision. Ditto. at p. 1127. An injunction prohibiting retailers from collecting sales tax is related to the policy that the Exhaustion Rule is intended to address because it “may indirectly reduce future tax revenue streams.” I was. Ditto. at p. 1131.

Again, District 4 concluded that consumer PACE ratings are undoubtedly affected by complaints rulings. The consumer argued that the PACE loan was “originally invalid because it was illegal” and that the resulting security interest (i.e. property tax lien) was also illegal and “null” . Because taxes are based solely on the validity of his PACE loan, a determination that the debt and security interest are illegal and void negates the sole basis for tax assessment.

Consumers have also responded, on the grounds of “failure to serve”, by requesting the Board to consider the purely legal question of whether consumer protection laws apply to these PACE loans. He called on District 4 to apply broad exceptions to depletion.

Limited exceptions to the exhaustion rule are generally permitted “when the agency is unable to provide adequate remedies” and “when the subject matter of the dispute is outside the jurisdiction of the agency.” Williams and Fickett, above, 2 Cal. concluded that it existed. § 5096, subds. (b), (c).

Finally, the consumer argued that District 4 should still decide whether it makes a valid case on the merits. However, because the challenger was limited to whether the consumer failed to exhaust administrative remedies, the Court of Appeal decided that the question of whether the consumer’s substantive claim had merit was resolved. I decided not.

Accordingly, the fourth district court affirmed the judgment of the first instance.

Leave a Comment