Metropolitan News-Enterprise


Friday, July 14, 2023


Page 1


C.A. Orders Reinstatement of Lawsuit Seeking Refund of $1.2 Million Paid in Property Taxes

State Says It Owns Property, County of Los Angeles Had No Right to Sell It; Seeks to Quiet Title


By a MetNews Staff Writer


A company that bought a parcel of property in 2012 and has paid more than $1.2 million in property taxes, penalties, and interest to the County of Los Angeles in connection with that property, might be able to recover those funds if it can produce an adequately pled third amended cross-complaint, the Court of Appeal declared yesterday.

The Malibu property was sold by the county in 1968 to satisfy unpaid bond assessment, and went through various ownerships until Litchfield Capital, LLC purchased it. However, in 2017, the State of California brought an action to quiet title, asserting that the county never had entitlement to sell the property because the state owns it.

Presiding Justice Lee Edmon authored the unpublished opinion. It agrees with Los Angeles Superior Court Judge Monica Bachner that the county is not a necessary party inasmuch as it makes no claim of ownership, that the county is not obliged to provide “just compensation” for a taking because the state, not it, is seeking title; and that Litchfield Capital cannot pursue common law remedies for the return of moneys it paid to the county because it has a potential statutory remedy.

Potential Claim

Edmon said that while Bachner properly sustained a demurrer to the second amended complaint (after granting judgment on the pleadings), a judgment of dismissal should not have been entered; rather, leave to amend should have been granted. She explained that “there is a reasonable possibility” that Litchfield “can state a claim” under Revenue and Taxation Code §5096.

The presiding justice said that if the state succeeds in its quiet-title action, “then the Property is tax-exempt” under Art. III, §3(a) of the state Constitution. Lichfield contends that if so, it is entitled to a tax refund under §5096 which provides, in part:

“Any taxes paid before or after delinquency shall be refunded if they were: [¶]….[¶] {(b) Erroneously or illegally collected. [¶] (c) Illegally assessed or levied.”

Merits Not Addressed

Edmon noted:

“Of course, we don’t decide the issue on the merits—that is, that Litchfield is entitled to a refund; rather, we merely decide Litchfield is entitled on remand to attempt to state a claim for a refund pursuant to section 5096.”

The case is Litchfield Capital v. County of Los Angeles, B317586.

Ryan C. Squire, Scott B. Mahler, and Heather A. McConnell of the Pasadena firm of Garrett & Tully acted for Lichfield. The county was represented by former Los Angeles County Counsel Lloyd W. Pellman, along with Brendan Macaulay, Jennifer L. Meeker, and Raven McGuane of Nossaman. Staff counsel Tucker Wisdom-Stack was the attorney for the state Department of Transportation.


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