Filed 11/30/18

                            CERTIFIED FOR PUBLICATION

             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              SIXTH APPELLATE DISTRICT

MIMI K. KARAS DURANTE,                               H041620
                                                    (Santa Clara County
        Plaintiff and Appellant,                     Super. Ct. No. 1-12-CV-217681)

        v.

COUNTY OF SANTA CLARA,

        Defendant and Respondent.


        Plaintiff Mimi Karas Durante appeals from a defense judgment after trial in a tax
refund action she brought against the County of Santa Clara. Plaintiff alleged an
entitlement to a property tax refund because the County incorrectly determined there was
a change in ownership of a house she co-owns with her sister, which triggered a
reassessment of its value. The trial court concluded there was a change in ownership
which allowed for reassessment. We find no error in that decision and will affirm the
judgment.
                                     I.    BACKGROUND
        Plaintiff and her sister inherited a house in San Jose when their mother died in
2003. They took title as tenants-in-common. A recorded deed reflected that each owned
an undivided 50 percent interest in the property. Plaintiff lived in the home; her sister did
not.
        In 2009, plaintiff’s sister granted her a life estate in the 50 percent interest that
plaintiff did not already own. The deed reflecting that transfer was recorded. The 2009
transfer resulted in plaintiff having sole ownership rights for the rest of her life, with her
sister regaining a 50 percent interest in the property on plaintiff’s death.
       Based on the 2009 transfer, the County reassessed the property’s value under a
statute allowing for recalculation of a property’s tax basis upon a change in ownership.
The new valuation was significantly higher, resulting in a commensurately higher
property tax bill. Plaintiff asked the County for a revised assessment on the ground that
the creation of a life estate did not effect a change in ownership. After conducting an
administrative hearing, the County denied the request.
       Plaintiff then sued the County seeking a property tax refund. The complaint
alleged a refund was due based on no change in ownership. The case was tried to the
court, with the parties submitting documentary evidence only.1 The trial court issued a
statement of decision containing its findings and conclusions. The court found that the
2009 deed granting plaintiff a life estate constituted a change in ownership and the
reassessment was in conformity with the law. Judgment was entered for the County.
                                     II.   DISCUSSION
       Plaintiff’s lawsuit is authorized by Revenue and Taxation Code section 5140,
which allows a person who overpaid property tax to bring a refund action in superior
court, if the agency that collected the tax refused to refund the money after proper
request. Plaintiff’s suit was resolved by trial and the judgment is based on a statement of
decision. In reviewing a judgment based upon a statement of decision following a bench
trial, we review questions of law de novo, and we review the trial court’s findings of fact
for substantial evidence. “Under this deferential standard of review, findings of fact are
liberally construed to support the judgment and we consider the evidence in the light
most favorable to the prevailing party, drawing all reasonable inferences in support of the
findings.” (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.)

       1
          One witness (a supervisor in the County Assessor’s office) testified at trial, but
the parties later stipulated that her entire testimony would be stricken from the record.
                                               2
       This appeal presents two questions, one legal and one factual. The legal question
we must resolve is whether granting a co-tenant a life estate in a tenancy-in-common
interest is a “change in ownership” as that term is defined in the statutes governing
property taxation. The trial court decided it is, but we review the issue using our
independent judgment. The other question is whether plaintiff was in fact granted a life
estate in her sister’s tenancy-in-common interest; in other words, whether the scenario
described in the legal question is present here. The trial court found that it is, and on that
factual question we must defer to the trial court’s finding so long as substantial evidence
supports it.
       We turn to the legal question first. A California property’s value for property tax
purposes is determined by its appraised value when it is purchased, newly constructed,
or––as relevant here––a change in ownership has occurred. (Cal. Const. art. XIII A, § 2,
subd. (a).) “Change in ownership” is defined by Revenue and Taxation Code section 60:
“A ‘change in ownership’ means a transfer of a present interest in real property, including
the beneficial use thereof, the value of which is substantially equal to the value of the fee
interest.” The purported change in ownership here was the transfer of a life estate in one
co-tenant’s interest in the property to the other co-tenant. “The creation, transfer, or
termination of any tenancy-in-common interest” is expressly included within the statutory
definition of a change in ownership. (Rev. & Tax. Code, § 61, subd. (f).) And the
tenancy-in-common interest transferred to plaintiff––a life estate––is a present interest in
real property, carrying with it all the beneficial use of the property. (Civ. Code, § 818
[“The owner of a life estate may use the land in the same manner as the owner of a fee
simple, except that he must do no act to the injury of the inheritance.”]; see also Faus v.
City of Los Angeles (1967) 67 Cal.2d 350, 362, fn. 9 [“[A] life tenant … enjoys a right to
the use of the property which is restricted only by the rules against waste.”].) The
remaining test under Revenue and Taxation Code section 60 is whether the interest
transferred, here a life estate, is “substantially equal to the value of the fee interest” of the
                                                3
property. Under Leckie v. County of Orange (1998) 65 Cal.App.4th 334, 339, reasoning
that a life tenant receives a “present interest in the property, the beneficial use of the
property and the primary interest” in the property to meet the statute’s value equivalency
test, we conclude that such a transfer qualifies as a change in ownership.
       Plaintiff argues that to the extent she received anything in 2009, it was personal
property, not real property. She characterizes her life estate in her sister’s interest in the
property as merely an assignment of the right to bring an action for monetary damages.
But a life estate in real property is considered an interest in fee simple. (Civ. Code,
§ 765; Auerbach v. Assessment Appeals Board No. 1 (2006) 39 Cal.4th 153, 162.) The
transfer of a life estate as reflected by the 2009 deed is therefore an interest in real, not
personal, property.
       Having decided that the transfer to plaintiff of a life estate in her co-tenant’s
interest would qualify as a change in ownership for purposes of Revenue and Taxation
Code section 60, we must determine whether that is what occurred here. More precisely,
we must decide whether sufficient evidence supports the trial court’s affirmative finding
on that point. Plaintiff argues that the 2009 deed indicating her sister granted her a life
estate did nothing more than memorialize a situation already in existence: that her
mother intended to allow plaintiff to occupy the property for life, as evidenced by the fact
that plaintiff resided there (and her sister did not). According to plaintiff, at the time of
the inheritance, she had the exclusive right to possess the property and her sister had no
right to possession. (Plaintiff acknowledges the 2003 deed showing she and her sister
received equal interests to the property, but suggests undue influence exerted by the sister
caused their mother to revise her trust just before death.) All of this, plaintiff contends,
leads to the conclusion that the true intent of the parties was for her to have an exclusive
right to possess the property for life, and the 2009 deed simply perfected her existing title
rather than transferring any property interest at all. The essence of plaintiff’s argument is
that, as a factual matter, she received nothing in 2009 that she did not already have.
                                               4
       The trial court found otherwise. In its statement of decision, the court found that
“until [the sister] transferred the life estate, she also had the right to beneficial use of the
Subject Property even though plaintiff and her husband were living there. [The sister]
legally relinquished her rights to use the property when she conve[y]ed the life estate[.]”
(Bold italics in original.) That finding is supported by substantial evidence––most
significantly, the recorded deeds in the property’s chain of title, which reflect exactly
what the court found: beginning in 2003, plaintiff and her sister each had a 50 percent
undivided interest in the property as tenants-in-common with equal rights of possession;
then, in 2009, the sister transferred to plaintiff a life estate in the 50 percent interest
plaintiff did not already own, giving plaintiff full ownership of the property and exclusive
right to possession for life. Since sufficient evidence supports the trial court’s finding,
we will not disturb it on appeal.
       Plaintiff advances emphatic arguments relating to the County’s administrative
hearing process on her application for a changed assessment. She argues that the hearing
was unfair and that she was denied due process. She characterizes certain aspects of the
process as violating the California Constitution. And she asserts that the hearing officer’s
factual findings and legal conclusions were erroneous. But none of her arguments
regarding the administrative hearing process bears on our review of the decision after
trial in superior court. The law allows a party aggrieved by a county’s erroneous
imposition of property taxes to pursue an action for a refund under Revenue and Taxation
Code section 5140. (Schoenberg v. County of Los Angeles Assessment Appeals Bd.
(2009) 179 Cal.App.4th 1347, 1355.) Plaintiff availed herself of that remedy when she
filed her lawsuit. At that point––regardless of what the County had done in making its
determination that plaintiff was not entitled to a refund––it was for the trial court to
decide whether plaintiff owes the property tax. Plaintiff received a trial de novo on that
issue. On appeal from the resulting judgment, our role is to determine only whether the
trial court erred in its decision. We find it did not.
                                                5
       Plaintiff also asserts that the County’s method of valuing the property is
inaccurate, and that the County improperly refused to disclose how it reached the
valuation. Plaintiff argues that without knowing whether the County accurately appraised
the property, it cannot be determined that the transferred interest (a life estate) is
“substantially equal to the value of the fee interest” in the property, as required for a
change of ownership under Revenue and Taxation Code section 60. That argument fails
because no matter the monetary value of the property, the value of a life estate is
substantially equal to the remainder interest for purposes of Revenue and Taxation Code
section 60. We also note that whether the County correctly determined the value of the
property is an issue outside the scope of this case. We must determine only whether the
trial court correctly decided reassessment of the property was allowed by law; we express
no opinion on whether the value produced in that reassessment is accurate.
       The constitutional and statutory framework governing property taxation in
California allows for reassessment of property due to change of ownership only upon a
true change of ownership of the fee interest or an interest substantially equivalent to the
fee interest. It does not allow for reassessment when a transfer merely effectuates a
change in the method of holding title to the property. Here, the record contains sufficient
evidence that a life estate––which is an interest substantially equivalent to the fee
interest––actually changed hands when it was transferred to plaintiff from her sister. The
trial court therefore did not err when it determined the reassessment of plaintiff’s
property was allowed by law.
                                   III.    DISPOSITION
       The judgment is affirmed. The parties shall bear their own costs on appeal.




                                               6
                                        ____________________________________
                                        Grover, J.




WE CONCUR:




____________________________
Greenwood, P. J.




____________________________
Premo, J.




H041620 - Durante v. County of Santa Clara
Trial Court:                           Santa Clara County Superior Court
                                       Superior Court No. 1-12-CV-217681


Trial Judge:                           Hon. Erica R. Yew


Counsel for Plaintiff/Appellant Mimi   Joseph Durante
K. Karas Durate                        Law Office of Joseph Durante


Counsel for Defendant/Respondent       James R. Williams, County Counsel
County of Santa Clara                  Danny Y. Chou, Assistant County
                                        Counsel
                                       Javier Serrano, Deputy Cunty Counsel
                                       Office of the County Counsel
                                       County of Santa Clara




H041620 – Durante v County of Santa Clara
