Filed 12/22/15 Purple Hat Dwarf v. County of Los Angeles CA2/2
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.


              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                  DIVISION TWO


PURPLE HAT DWARF, LLC,                                               B259499

         Plaintiff and Appellant,                                    (Los Angeles County
                                                                     Super. Ct. No. BC499763)
         v.

COUNTY OF LOS ANGELES,

         Defendant and Respondent.



         APPEAL from a judgment of the Superior Court of Los Angeles County.
Malcolm H. Mackey, Judge. Affirmed.


         Law Office of Lloyd K. Chapman, Lloyd Chapman for Plaintiff and Appellant.


         Mark J. Saladino, County Counsel, Mary C. Wickham, Interim County Counsel,
Sayuj Panicker, Deputy County Counsel, for Defendant and Respondent.


                  ___________________________________________________
       Appellant contends that the trial court improperly adopted a settled statement of
trial proceedings, erred by finding in favor of respondent at trial, and should have allowed
a jury to make factual determinations. None of these contentions holds merit.
Accordingly, we affirm.
                                      BACKGROUND
       Plaintiff and appellant Purple Hat Dwarf, LLC (Dwarf), filed a complaint against
defendant and respondent County of Los Angeles (the County) in January 2013. In its
operative first amended complaint (FAC), Dwarf alleged that, after it purchased
commercial real property in the City of Los Angeles in February 2010, the County billed
excessive property taxes. According to the FAC, Dwarf paid these taxes while
simultaneously notifying the County that the tax charges were incorrect. Even though the
parties engaged in numerous meetings and discussions, the County continued to seek
alleged deficiencies, as well as penalties and interest. Dwarf’s FAC sought a refund of
over $100,000 in penalties, costs, and interest.
Judgment
       A bench trial was held in July 2014. At the conclusion of the trial, the court found
in favor of the County, determining that “tax penalties and interest were not arbitrary or
capricious.” The court further found that when Dwarf purchased the property, taxes on
the property were delinquent, a situation that could be remedied only by payment of the
delinquent taxes or a sale of the property by the County for nonpayment. Dwarf failed to
make timely payment and did not show that its failure was due to reasonable cause and
circumstances beyond Dwarf’s control, or that it exercised ordinary care. Accordingly,
Dwarf was not entitled to a refund.
       Judgment was entered in favor of the County on August 1, 2014. Dwarf filed a
notice of appeal from the judgment.
Settled statement
       More than a month after filing its notice of appeal, Dwarf filed a notice
designating the record on appeal, as well as a motion to use a settled statement in lieu of a



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reporter’s transcript, as the trial proceedings were not transcribed. Attached to the
motion was a proposed settled statement of the trial proceedings prepared by Dwarf.
       The trial court granted the motion to use a settled statement on December 12,
2014. That same day, the County filed an objection to the proposed settled statement
submitted by Dwarf, arguing that it was prematurely filed. Dwarf responded that the
County’s objection was untimely and that the proposed statement should be adopted as
the settled statement. On December 23, 2014, the trial court issued an order deeming
Dwarf’s proposed statement to be filed on December 15, 2014, and allowing the County
to file objections and proposed amendments to the proposed statement.
       The County submitted proposed amendments on January 5, 2015. On February 5,
2015, Dwarf filed objections to the proposed amendments. The next day, the trial court
ordered that the record of the proceedings be settled in the manner proposed by the
County.
       In pertinent part, the adopted settled statement described the trial proceedings as
follows:
Jeff Katofsky
       Jeff Katofsky, the managing member of Dwarf, testified that Dwarf purchased the
property in February 2010 for slightly less than $1 million. At the time Dwarf bought the
property, it was not aware of any delinquent property taxes, and did not become aware of
the possibility of a delinquency until June 2010. Dwarf immediately made a $10,000
payment to the County and began investigating the claimed deficiency.
       Katofsky testified that Dwarf believed the County was required to reassess the
property based upon Dwarf’s 2010 purchase price and to impose taxes based on the
reassessment. Taxes charged to the previous owner were based on an assessment of $2.2
million, resulting in yearly taxes of $28,000. Dwarf believed that the new tax charge
should be approximately $12,000. Based on this understanding, Dwarf believed that tax
roll information was incorrect because it was based on the previous tax basis and that
$10,000 should be the approximate amount due for past taxes. On June 15, 2010, the
County inquired whether Dwarf’s $10,000 payment should be applied to “current taxes or

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delinquent taxes,” and Dwarf’s office manager purportedly replied “delinquent taxes.”
Katofsky testified that the County instead applied the payment to interest and penalties
and continued to charge interest and penalties on the tax delinquency.
        Dwarf believed that the County did not immediately reassess the property and
continued to set taxes using the prior owner’s assessment. When the county sent bills, a
Dwarf representative spoke with individuals at the County offices regarding the billing.
Katofsky testified that Dwarf was promised that mistakes would be corrected and that it
could ignore the incorrect billing. Katofsky believed that the County reassessed the
property in October 2010, retroactive to the date of purchase, at $980,000.
        Katofsky further testified that Dwarf received two checks in November 2010 for
“‘refunds of overpaid property taxes’” in the amounts of $15,361.44 and $5,090.70.
Upon receiving these refunds, Dwarf believed that the County had corrected all errors,
balanced the books, and refunded all overpaid taxes. At that point, Dwarf believed that it
was fully current on all tax obligations.
        Dwarf made additional payments in September 2011, notating on the checks that
they were for payment of property taxes only and not for payment of disputed penalties
and interest. The County, however, applied those payments to penalties and interest and
not property taxes, and then imposed penalties and interest on the outstanding tax
liability.
        In April 2012, the County sent a bill of $63,000 for purported back taxes. It also
sent a letter to the prior owner demanding payment of back taxes, giving notice that the
property would be sold unless the delinquency was paid. Katofsky testified that Dwarf
received no notice of sale.
        Katofsky went to the County offices in April 2012. An employee in the
Assessor’s Office verified that the property was reassessed in October 2010. Katofsky
then filed a claim in the “special investigations” unit and was told that all payments
would be applied to penalties first, not delinquent or owing taxes. He was further advised
that all money sent by Dwarf to the County was being applied to penalties. After meeting



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with other staff members, he was told that the billing would be corrected and all
payments properly applied, leaving Dwarf with a credit balance.
       In August 2012, Dwarf received a recorded notice to sell the property for tax
default. To try to stop the default process, Katofsky submitted an application for
redemption by installment plan, but the application was rejected. He then filed with the
County a claim for damages.
       Katofsky subsequently received another notice from the County, still billing 2009-
2010 and 2010-2011 taxes at an assessed property value of approximately $2.3 million.
Katofsky spoke with a County claims department employee, who advised him that
previously billed taxes would be moved to the unsecured tax roll, resulting in billing
being revised and a credit and/or refund issued to Dwarf. Katofsky was subsequently
told, however, that the transfer to the unsecured tax roll would not be allowed.
Furthermore, in October 2012, the County rejected Dwarf’s claim for damages.
       Dwarf paid all amounts demanded by the County. Katofsky calculated that it
overpaid the County more than $78,000, but claimed that Dwarf never received a refund.
       Under cross-examination, Katofsky acknowledged that shortly after Dwarf bought
the property, it received documents from the County stating that delinquent taxes were
owing on the property. Katofsky also admitted that Dwarf paid less than amounts
demanded in property tax bills, but said that Dwarf did not pay the full amounts because
it believed the bills were erroneous.
Susan Huff
       Susan Huff, assessment appeals chief with the County, testified on behalf of the
County. Huff performed a search to determine whether Dwarf appealed the valuation
assessment of $980,000 after its purchase of the property, and could find no record of an
appeal.
Kenneth Press
       Kenneth Press, operations chief in the secured property division, also testified on
behalf of the County. He stated that tax payments are generally due on December 10 and
April 10 of any given tax year and are considered defaulted if not paid by July 1. If

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payments are not made on time a 10 percent penalty is assessed, and if taxes are not paid
in full after a default, redemption penalties accrue at a rate of 1.5 percent per month.
The only way to cure a default is to pay in full the “redemption amount,” i.e. all
delinquent taxes, penalties, interest, and costs. Any payment less than the redemption
amount is treated as a partial payment and is applied to penalties and interest first before
any remaining amount is applied to the principal balance.
       The subject property became tax-defaulted in July 2009. The property was not
redeemed until January 2013.
       Press further testified that taxpayers can check the tax status of their property by
contacting the County tax collector by phone, e-mail, or in person, or by checking the tax
collector’s website for tax status information. A property owner can request a
cancellation of tax penalties, and the tax collector may cancel penalties and associated
interest pursuant to Revenue and Taxation Code section 4985.2. Dwarf made a request
for cancellation of penalties.
       Finally, Press testified regarding a letter the County sent to Dwarf in September
2013. The letter referenced an application by Dwarf to transfer property taxes to the
previous owner. The letter stated that a transfer of taxes was not proper because the tax
deficiency existed at the time Dwarf purchased the property.
       After summarizing the testimony, the settled statement concluded by reiterating
the trial court’s findings, stating: “Plaintiff presented no facts or evidence which show
that Plaintiff’s failure to make a timely payment is due to reasonable cause and
circumstances beyond Plaintiff’s control, and occurred notwithstanding the exercise of
ordinary care in the absence of willful neglect. All the allegations show is that when
Plaintiff purchased the Property, the taxes were delinquent. Under Revenue and Taxation
Code Sections 2187 and 2194, the taxes remained [a] lien on the property which could
only be removed by payment of the taxes, or sale by the County for nonpayment, hence
no refund.”




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                                       DISCUSSION
I. The settled statement was properly entered
       Dwarf argues that the statement of proceedings was improperly settled. Dwarf
contends that, by filing a proposed settled statement in conjunction with its motion to use
a settled statement, it forced the County’s hand, requiring it to object to Dwarf’s proposed
settled statement prior to the hearing on the motion to use a settled statement. Because
the County did not timely object to Dwarf’s proposed settled statement, Dwarf asserts,
the trial court had no choice but to deem Dwarf’s proposed statement the final settled
statement.
       Dwarf’s argument relies on a misreading of California Rules of Court, rule 8.137
(rule 8.137). Rule 8.137(b)(1) states, in pertinent part: “Within 30 days after the superior
court clerk mails, or a party serves, an order granting a motion to use a settled statement,
the appellant must serve and file in superior court a condensed narrative of the oral
proceedings that the appellant believes necessary for the appeal.” This rule means what it
says: an appellant must serve and file its proposed settled statement after the trial court
grants the motion to use a settled statement. Dwarf’s contention that it could submit its
proposed settled statement prior to the time the trial court heard its motion, and that this
submission started the clock on the County’s right to object to the proposed statement, is
directly contrary to the language of rule 8.137(b)(1).
       Dwarf is also incorrect that the County did not comply with rule 8.137(b)(4),
which provides that, within 20 days after the appellant serves its proposed statement, a
respondent may serve and file proposed amendments. Consistent with its inherent power
to exercise reasonable control of proceedings (see Elkins v. Superior Court (2007) 41
Cal.4th 1337, 1351), the trial court deemed the proposed statement submitted on
December 15, 2014. The County’s filing of amendments on Monday, January 5, 2015,




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was therefore timely. Furthermore, Dwarf does not show that it suffered any harm in
connection with the trial court’s setting of a date for the settlement hearing.1
II. Dwarf does not establish it is owed $14,408.80
       Dwarf contends that it was undisputed at trial that it paid $14,408.80 to the County
but was never credited for this payment. As the appellant, it is Dwarf’s burden to
demonstrate, by a sufficient record, that the trial court erred in refusing to award damages
for this asserted payment. (Code Civ. Proc., § 475; Estrada v. Ramirez (1999) 71
Cal.App.4th 618, 620, fn. 1; Vo v. Las Virgenes Municipal Water Dist. (2000) 79
Cal.App.4th 440, 448.)
       In its opening brief, Dwarf points to an exhibit—a copy of a cancelled check to the
County in the subject amount—that was received into evidence at trial. Dwarf avers that
the check did not appear on any accounting by the County or its documents prepared for
trial, and that the County offered no explanation on how this check was allocated or
handled.
       This argument is insufficient to demonstrate trial court error. The settled
statement contains no mention of the asserted payment. It is entirely possible that the
payment was properly allocated in a manner not reflected in the exhibits, or that trial
testimony otherwise established that no credit was due. Without a thorough record of
how (or if) the asserted payment was addressed at trial, we are in no position to reverse.
III. The trial court properly denied a refund
       Dwarf argues that it was entitled to a refund of tax penalties and interest. It
contends that, when it purchased the property in 2010, it did not have knowledge of tax



1      The issue of whether the settling of the statement is properly before the Court was
not briefed by the parties. Separately appealable postjudgment orders are not reviewable
on appeal from a judgment. (See Filbin v. Fitzgerald (2012) 211 Cal.App.4th 154, 173;
DeZerega v. Meggs (2000) 83 Cal.App.4th 28, 43.) Another issue not raised by the
parties is that Dwarf’s motion to use a settled statement appears to have been untimely
under rules 8.137 and 8.121. We need not address the effect of either of these
deficiencies, however, since Dwarf’s argument fails for the reasons stated above.


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deficiencies assessed in 2009, which were the fault of the previous owner. It further
contends that it attempted to pay the delinquent taxes with a $10,000 check, and that it
repeatedly spoke to County staff, who promised that the issue would be resolved.
       Dwarf’s request for a refund of penalties and interest was governed by Revenue
and Taxation Code section 4985.2, subdivision (a) (section 4985.2), which states, in
pertinent part: “Any penalty, costs, or other charges resulting from tax delinquency may
be canceled by the auditor or the tax collector upon a finding of any of the following: [¶]
(a) Failure to make a timely payment is due to reasonable cause and circumstances
beyond the taxpayer’s control, and occurred notwithstanding the exercise of ordinary care
in the absence of willful neglect . . . .” Thus, to obtain a cancelation of penalties, Dwarf
was required to show four criteria were met: “the delay in payment (1) was ‘due to
reasonable cause,’ (2) was due to ‘circumstances beyond the taxpayer’s control,’ (3)
occurred ‘notwithstanding the exercise of ordinary care,’ and (4) occurred ‘in the absence
of willful neglect.’” (First American Commercial Real Estate Services, Inc. v. County of
San Diego (2011) 196 Cal.App.4th 218, 225 (First American).)
       A challenge to a tax official’s decision denying cancellation under section 4985.2
is made by a Code of Civil Procedure section 1085 petition for traditional mandamus.
(People ex rel. Strumpfer v. Westoaks Investment #27 (2006) 139 Cal.App.4th 1038,
1050; Ashlan Park Center LLC v. Crow (2015) 233 Cal.App.4th 1274, 1278 (Ashlan
Park).) In a mandamus action, the trial court determines whether the local entity’s action
was “arbitrary or palpably unreasonable.” (County of Del Norte v. City of Crescent City
(1999) 71 Cal.App.4th 965, 973.) On an appeal from the judgment, we “‘review the trial
court’s findings of fact for substantial evidence, and review its legal conclusions,
including its interpretation of statutory provisions, under a de novo standard of review.’”
(Ashlan Park, supra, 233 Cal.App.4th at p. 1278.)
       A decision denying cancellation of a tax penalty is not lightly overturned. In
ZC Real Estate Tax Solutions Ltd. v. Ford (2010) 191 Cal.App.4th 378, the plaintiff
initially sent payment to the wrong county’s tax collector; by the time the payment
reached the correct tax collector, it was two days past the delinquency date. (Id. at p.

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381.) The county refused to cancel the tax penalty. In concluding the evidence did not
establish reasonable cause, circumstances beyond the plaintiff’s control, or exercise of
ordinary care, the court found that the plaintiff’s act of placing checks in an envelope
addressed incorrectly was a circumstance within the plaintiff’s control and was not
indicative of ordinary care. (Id. at pp. 384-385.) In First American, a similar mistake led
to payment being one day late. Again, the court refused to cancel the penalty imposed,
finding that, although the mistake was clearly inadvertent, it was within the plaintiff’s
control and was avoidable. (First American, supra, 196 Cal.App.4th 218, 225-227.)
Likewise, in AvalonBay Communities, Inc. v. County of Los Angeles (2011) 197
Cal.App.4th 890, 901 (AvalonBay), the court found that employee error and a lack of
control mechanisms, which led to a payment being late by two days, were matters within
the plaintiff’s control.
       Here, we see no reason to disturb the trial court’s finding that Dwarf did not
establish that its failure to make timely payment was due to reasonable cause and
circumstances beyond its control, and that it occurred notwithstanding the exercise of
ordinary care and in the absence of willful neglect. In contrast to the aforementioned
cases, in which payment was made one or two days late, the property here was not
redeemed until January 2013, even though default occurred in July 2009. Furthermore,
Dwarf did not show that it exercised ordinary care and that the late payment was due to
circumstances beyond its control. By its own admission, Dwarf was aware that
delinquent taxes were owing on the property soon after purchase. And, in any event, the
County presented evidence that it is relatively simple to check the tax status of a property,
so Dwarf had no valid reason not to discover and remediate the delinquency earlier.
       Indeed, the evidence shows that Dwarf’s failure to make timely payment was not
due to an inadvertent omission or circumstances beyond its control; it was a deliberate
choice. Dwarf believed it owed less than the amount billed, so it made partial payments
and attempted to negotiate a credit with County staff. These were acts clearly within
Dwarf’s control. If Dwarf made immediate payment upon discovering the tax deficiency,
it might have had a better argument regarding cancellation or refund. Instead, it

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consistently refused to pay the full amount billed and only corrected the default nearly
three years after it purchased the property.2 Under these circumstances, the trial court
was clearly justified in denying Dwarf’s request for cancellation or refund.
IV. Dwarf had no right to a jury trial
       Dwarf argues that it was entitled to a jury trial and that the trial court’s refusal to
empanel a jury was reversible error. The authority that Dwarf cites, however, directly
contradicts this argument. In AvalonBay, the court noted, “Although ‘[t]here is no right
to a jury trial in a mandamus proceeding . . . ,’ [Code of Civil Procedure] section 1090
permits the trial court ‘to grant one if there is an issue of fact essential to resolution of the
case.’” (AvalonBay, supra, 197 Cal. App. 4th 890, 905.) Code of Civil Procedure
section 1090 makes clear that the trial court’s decision whether to order a question of fact
tried to a jury in a mandamus action is within “its discretion.” The trial court here
exercised its discretion to have all matters tried before the court. Dwarf does not show
that the trial court erred by doing so.
                                          DISPOSITION
       The judgment is affirmed.
       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.


                                             BOREN, P.J.
We concur:


       ASHMANN-GERST, J.                     HOFFSTADT, J.




2     Moreover, the record does not demonstrate that Dwarf even attempted to
demonstrate that the default occurring under the prior owner, in July 2009, was
excusable. Without a showing that penalties imposed at that time should be cancelled,
Dwarf could not possibly prove its case. (See Ashlan Park, supra, 233 Cal.App.4th 1274,
1282-1283 [plaintiff’s argument that prior owner was unable to pay taxes due to
economic recession did not provide grounds to cancel penalties].)


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