Abtahi v. Los AngelesCounty Tax Collector

Filed 4/24/07 Abtahi v. Los Angeles County Tax Collector CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Judith C. Chirlin, Judge. Affirmed.

The Law Offices of Thomas A. Nitti and Thomas A. Nitti for Plaintiff and Appellant.

Raymond G. Fortner, Jr., County Counsel, Ralph L. Rosato, Assistant County Counsel, Emery El Habiby, Deputy County Counsel, for Defendant and Respondent.

INTRODUCTION

Appellant Khosrow Abtahi appeals from a judgment of dismissal, entered after the trial court sustained the general demurrer of the Los Angeles County Tax Collector to his second amended complaint (SAC) without leave to amend. He contends the trial court erred in finding that the SAC failed to state a cause of action, and that the court erred in considering evidence improperly included in respondents papers in support of the demurrer. We conclude, without regard to extraneous facts, that the SAC failed to state a cause of action. Further, as appellant has not shown that the SAC could be amended to state a cause of action, we affirm the judgment of dismissal.

BACKGROUND

On August 26, 2005, appellant filed the SAC against the Los Angeles County Tax Collector, alleging that appellant was a registered bidder and the highest bidder for a tax-defaulted property auctioned August 12, 2003.[1] The original complaint alleged that the property was a 22-acre parcel in the Baldwin Hills neighborhood of Los Angeles.[2] The SAC also alleged that the minimum bid for the parcel the first day of the auction had been $576,684, but there were no bidders, and on the second day, the minimum bid for the same property was $400. Appellants bid of $500 was allegedly accepted, and upon payment of $514.30, which included fees and taxes, respondent issued a form alleged to be the Purchase Agreement. Attached to the SAC is a copy of the Bidder Registration Form, signed by appellant, a copy of a preprinted form entitled, Official Terms and Conditions of the Sale of Tax Defaulted Property (hereafter Official Terms), and a copy of the alleged purchase agreement issued by respondent, which is entitled, Auction Department Receipt. The SAC quoted the Official Terms as providing, ALL SALES ARE FINAL. It quoted the alleged purchase agreement as providing that [u]pon full payment of the purchase price, tax deeds will be recorded approximately one month after sale. The SAC further alleged that in September 2003, respondent notified appellant that the sale was rescinded due to an allegedly erroneous minimum bid, and respondent has since then refused to complete the sale of the property to appellant. A copy of the letter rescinding the sale, which is attached to the original complaint, states that a refund was enclosed with the letter.

The SAC set forth four causes of action, all based upon the same facts: the first count sought damages for breach of contract; the second count sought damages for a violation of Revenue and Taxation Code sections 3708 and 3708.1; the third prayed for specific performance; and the fourth sought to quiet title. Respondent generally demurred to the SAC and each cause of action on the ground that it did not state facts sufficient to constitute a cause of action. The demurrer to the entire SAC was sustained without leave to amend November 29, 2005, and appellant filed a notice of appeal December 30, 2005. After appellant was notified by this court that the order sustaining the demurrer was not an appealable order, appellant augmented the record with a judgment of dismissal, entered March 8, 2006. We treat the premature notice of appeal as having been taken immediately after entry of judgment.[3]

DISCUSSION

On appeal from a judgment of dismissal entered after a general demurrer is sustained, our review is de novo. (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 515.) We examine the allegations of the complaint to determine whether it states a cause of action, and if not, we determine whether there is a reasonable possibility that it could be amended to do so. (MacLeod v. Tribune Publishing Co. (1959) 52 Cal.2d 536, 542.) In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties. (Code Civ. Proc.,  452.) We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . [W]e give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) We may also consider matters that have been properly judicially noticed. (Ibid. at p. 318; see Evid. Code, 451-453.) However, a speaking demurrer which includes facts that are not properly the subject of judicial notice, is improper. (Mohlmann v. City of Burbank (1986) 179 Cal.App.3d 1037, 1041, fn. 2; Code Civ. Proc., 430.70.)[4]

[W]hen [a demurrer] is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff. [Citation.] (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) We review the propriety of sustaining the demurrer, but we are not concerned with the trial courts reasoning. (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) However, the judgment will be affirmed if any one of the several grounds of demurrer is well taken. [Citations.] (Longshore v. County of Ventura (1979) 25 Cal.3d 14, 21.)

Both parties contend that the outcome of this appeal depends upon the resolution of the disagreement between two appellate districts. Respondent cites Van Petten v. County of San Diego (1995) 38 Cal.App.4th 43 (Van Petten), which held that a purchaser seeking rescission due to an invalid or irregular tax sale is limited to the remedies provided by statute. (Id. at p. 51; see also Craland, Inc. v. State of California (1989) 214 Cal.App.3d 1400 (Craland).) Appellant relies upon Schultz v. County of Contra Costa (1984) 157 Cal.App.3d 242 (Schultz), which held that common law remedies remained available, and that a purchaser could rescind a tax sale due to a material mistake of fact. (Id. at pp. 245-246.) The California Supreme Court has since suggested that Van Petten and Craland were correctly decided.[5] However, we need not determine whether the Revenue and Taxation Code provides appellant with a remedy or whether any such remedy is exclusive of common law remedies, because the SAC fails to state a cause of action, whether statutory or common law.

The elements of a cause of action upon a contract are the existence of the contract, plaintiffs performance or excuse for nonperformance, defendants breach and damages. (First Commercial Mortgage Co. v. Reece (2001) 89 Cal.App.4th 731, 745.) The SAC alleged: By executing the Purchase Agreement, the parties entered into a binding agreement whereby Defendants promised to sell to Plaintiff the Baldwin Hills Property for the sum of $514.30.[6] Because a copy of the alleged contract is made a part of the complaint, we examine it and treat any conflicting averments as surplusage. (Alphonzo E. Bell Corp. v. Bell etc. Synd. (1941) 46 Cal.App.2d 684, 691.) The title of the document is not Purchase Agreement, as alleged in the SAC, but Auction Department Receipt.[7] Respondent based the demurrer in part upon the following consent to rescission in the Auction Department Receipt:

I agree, as a condition of purchasing tax-defaulted property in the County of Los Angeles, that if the County subsequently determines that a property sold by the Tax Collector should not have been sold because it was County property, not in tax-default, or for any other legal reason, that I, as the successful bidder(s), consent to the rescission of the sale as provided in [Revenue and Taxation Code section] 3731. If the erroneous sale is discovered after the tax deed has been recorded, I further agree to sign all required forms to cancel and rescind the erroneous sale and understand that the County will refund only the purchase amount paid and that the Tax Collector and the County of Los Angeles have no further liability in the matter.

Appellants signature appears under the consent. Nearly identical language appears in the Bidder Registration Form and the Official Terms.

Termination of a contract may be conditioned upon the happening of a future event. (Asmus v. Pacific Bell (2000) 23 Cal.4th 1, 16-17.) Appellant contends that the facts establishing the condition cannot be resolved on demurrer. We disagree. A condition terminating the contract upon the happening of a later event is a condition subsequent, and ordinarily, the operation of a condition subsequent to a contract is an affirmative defense. (McDonald v. Filice (1967) 252 Cal.App.2d 613, 625, fn. 2; see Civ. Code, 708, 1434.) However, [a] general demurrer will lie where the complaint has included allegations that clearly disclose some defense or bar to recovery. [Citation.] Thus, a demurrer based on an affirmative defense will be sustained . . . where the face of the complaint discloses that the action is necessarily barred by the defense. [Citation.] (Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 183.)

The SAC alleged: On or about September 30, 2003, Plaintiff received a letter informing him that the sale of the Baldwin Hills Property was being rescinded due to an allegedly erroneous minimum bid. The consent in the Auction Department Receipt permits rescission for any legal reason. A mistake in consenting to a contract is one such reason. (Civ. Code,  1689, subd. (b)(1); see Civ. Code, 1577.) Indeed, rescission due to a material mistake in calculating a bid is frequently upheld. (White v. Berrenda Mesa Water Dist. (1970) 7 Cal.App.3d 894, 902.) Where the complaints allegations or judicially noticeable facts reveal the existence of an affirmative defense, the plaintiff must plead around the defense, by alleging specific facts that would avoid the apparent defense. Absent such allegations, the complaint is subject to demurrer for failure to state a cause of action . . . . [Citations.] (Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816, 824-825.) The SAC fails to allege facts showing the rescission to have been unjustified, and the conclusory allegation that respondent breached the contract does not cure this defect.

The contracting parties consent to rescission may also justify the rescission of a contract. (Civ. Code, 1689, subd. (a).) Agreeing in advance to certain defenses to the enforcement of a legal obligation is permitted, so long as it does not violate public policy. (Cf. Freedland v. Greco (1955) 45 Cal.2d 462, 467 [anti-deficiency cannot be waived in advance]; Allen v. Smith (2002) 94 Cal.App.4th 1270, 1278 [parties may agree to liquidated damages]; Paralift, Inc. v. Superior Court (1993) 23 Cal.App.4th 748, 755 [express assumption of risk].) Here, the consent to rescind not only does not violate public policy, it comports with public policy, as the Revenue and Taxation Code provides that the Los Angeles County Board of Supervisors must approve sales and reductions in minimum bids and may rescind improper sales even after a deed is recorded by the purchaser. (See Rev. & Tax. Code, 3694, 3706, 3731.) As the SAC alleged that respondent rescinded the contract due to an allegedly erroneous minimum bid, and failed to allege facts contradicting the asserted basis for the rescission, the pleading is left with an affirmative allegation that the contract has been rescinded.

[R]escission is a statutorily governed event that extinguishes a contract as if it never existed. (Asmus v. Pacific Bell, supra, 23 Cal.4th at p. 6, fn. 2.) [T]he existence of a contract is a necessary element to an action based on contract, regardless whether the plaintiff seeks specific performance or damages for breach of contract. [Citations.] (Roth v. Malson (1998) 67 Cal.App.4th 552, 557.) As there is no contract, the demurrers to the first and second causes of action, for breach of contract and specific performance, were properly sustained.

With no analysis, appellant contends that the third cause of action sufficiently alleges that the Revenue and Taxation Code gives him the right to require respondent to execute and record a deed in his favor. Appellants only authority consists of sections 3708 and 3708.1, which state: On receiving the full purchase price at any sale under this chapter, the tax collector shall, without charge, execute a deed to the purchaser; and Upon execution the tax collector shall immediately record the deed with the county recorder and pay the recording fees. . . . These provisions relate to time limits. (See Code Com. Notes, 59B Wests Ann. Rev. & Tax. Code (1998 ed.) foll. 3708 [Under a contract of sale, this provision has been interpreted to mean that a deed does not issue until all payments are made].) As appellant has failed to show that the statutory language or history indicates a legislative intent to create a cause of action where no binding contract exists, we cannot read one into it. (See Moradi-Shalal v. Firemans Fund Ins. Companies (1988) 46 Cal.3d 287, 294-295, 300.)

Equally without analysis, appellant contends that the fourth cause of action adequately pleads a cause of action for quiet title. In general, the plaintiff must have title at the time of commencing a quiet title action. (Reed v. Hayward (1943) 23 Cal.2d 336, 340.) Where, as here, the allegations of the complaint show the plaintiff has no right to title, no cause of action is stated. (See Stafford v. Ballinger (1962) 199 Cal.App.2d 289, 294-295.)

We conclude that respondents general demurrers to the SAC were properly sustained. As appellant does not claim that the SAC may be amended to state a good cause of action, we need not consider the possibility of amendment. (See Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 42-44.)

DISPOSITION

The judgment is affirmed. Respondent shall have costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

MANELLA, J.

We concur:

WILLHITE, Acting P. J.

SUZUKAWA, J.

Publication Courtesy of San Diego County Legal Resource Directory.

Analysis and review provided by El Cajon Property line attorney.

[1] Respondent demurred to the first two complaints, but the courts rulings have not been made part of the record on appeal. The comments of appellants counsel at hearing on the third demurrer indicated that the demurrer to the first amended complaint was sustained with leave to amend.

[2] Some of the relevant facts appear in previous complaints, but were omitted from the SAC without explanation. For purposes of the demurrer, we read any relevant omitted facts into the SAC. (See Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 383-384.)

[3] See California Rules of Court, rule 8.104(e)(2).

[4] Respondent contends that we may take judicial notice of the value of the Baldwin Hills property, in order to deduce that $400 was an obvious mistake justifying rescission. We do not disagree with the authorities upon which respondents rely, so far as they go. (See, e.g., Alexander v. State Capital Co. (1937) 9 Cal.2d 304, 310 [judicial notice taken in 1937 of the great depression and declining real estate values]; Holmes v. Southern Cal. Edison Co. (1947) 78 Cal.App.2d 43, 51 [judicial notice taken that land values started to improve toward the end of World War II].) However, these cases hold only that courts may judicially notice economic and political effects upon real property values in general. Courts are not authorized to evaluate specific parcels of land through judicial notice. (San Luis Obispo Bay Properties, Inc. v. Pacific Gas & Elec. Co. (1972) 28 Cal.App.3d 556, 564.) The record does not reflect that the trial court took judicial notice of the value of the property, and we decline to do so.

[5] See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 40-41 (In People v. Chambers (1951) 37 Cal.2d 552, 561, this court held that where a tax statute provides a remedy, that remedy is exclusive. Chambers was followed in Van Petten and in [Craland], where the Court of Appeal concluded that a purchaser at a tax sale is limited to the remedies provided by the Revenue and Taxation Code and has no right to common law remedies for defects in the tax sale proceeding).

[6] We disregard the legal conclusion that the agreement was binding. (See Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)

[7] The body of the document does contain the language, Purchase Agreement and sets forth the purchasers promise to pay within a certain time.