Filed 6/25/14 Pershadsingh v. County of Los Angeles CA2/4
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                   SECOND APPELLATE DISTRICT

                                                DIVISION FOUR


RAJENDRA PERSHADSINGH,                                               B247727

         Plaintiff and Appellant,                                    (Los Angeles County
                                                                      Super. Ct. No. BC456526)
         v.

THE COUNTY OF LOS ANGELES,

         Defendant and Respondent.




         APPEAL from a judgment of the Superior Court of Los Angeles County,
Elihu M. Berle, Judge. Affirmed.
         Huskinson, Brown & Heidenreich, David W.T. Brown and Paul E.
Heidenreich for Plaintiff and Appellant.
         Nossaman, Lloyd W. Pellman, Winfield D. Wilson and Stephen P. Wiman
for Defendant and Respondent.
       In 1991, the County of Los Angeles (County) implemented a 2 percent
increase in the Transient Occupancy Tax (tax) applicable to hotel stays in the
County. After a one-night hotel stay for which he was billed for the tax, appellant
Rajendra Pershadsingh, in his own name and on behalf of similarly situated payers
of the tax, filed a claim for a refund and damages with the County under
Government Code section 910 (a provision of the Government Claims Act; Gov.
Code, § 900 et seq.)1, on the ground that the 1991 increase violated the voter
approval requirements of Proposition 62, because the increase was passed by the
Board of Supervisors and not submitted to the electorate.2 After the County denied
the claim, appellant filed a putative class action challenging the 1991 increase and
moved for class certification. However, although appellant made his section 910
claim with the County using his name alone, the evidence disclosed that
appellant’s closely held corporation, not appellant, actually paid the tax.
Therefore, the trial court ruled appellant had no standing to challenge the 1991
increase and denied class certification on the ground that appellant could not
adequately represent the proposed class. Appellant then moved to amend the


1
       All further statutory references are to the Government Code unless otherwise
specified.
2
        “In 1986, California voters approved Proposition 62, which added sections 53720
through 53730 to the Government Code. . . . [¶] The voter approval requirements are set
forth in Government Code sections 53722 and 53723. Section 53722 provides that a
local government or district may not impose ‘any special tax unless and until such special
tax is submitted to the electorate of the local government, or district and approved by a
two-thirds vote of the voters voting in an election on the issue.’ Section 53723 provides
that ‘[n]o local government, or district, whether or not authorized to levy a property tax,
may impose any general tax unless and until such general tax is submitted to the
electorate of the local government, or district and approved by a majority vote of the
voters voting in an election on the issue.’” (Neilson v. City of California City (2005) 133
Cal.App.4th 1296, 1306-1307, italics deleted.)

                                             2
complaint to name his closely held corporation as class representative. But the
corporation never submitted a claim for a refund with the County, and therefore, it,
too, lacked standing to challenge the tax. Thus, the trial court denied the motion to
amend. The parties stipulated to entry of judgment in favor of the County in order
to facilitate this appeal. On appeal, appellant contends that the court erred in
denying his motion to amend. We disagree and therefore affirm.


               FACTUAL AND PROCEDURAL BACKGROUND
       The tax on hotel stays was initially imposed in 1964. (L.A. County Code,
§ 4.72.010.) In December 1990, the County increased the tax from 10 percent to
12 percent, effective January 18, 1991. (L.A. County Ord. No. 90-0180, § 1
(1990); L.A. County Code, § 4.72.040.) It is this 1991 increase that is the basis of
appellant’s putative class action, on the ground that it violates the voter approval
provisions of Proposition 62.3
       On December 15, 2010, appellant spent one night at the Ritz Carlton Hotel
in Marina del Rey. The total bill was $380.35, including the tax of $34.08. In
paying the bill, appellant used a debit card for the account belonging to Realty
Dynamic Inc. (Realty), a subchapter S corporation of which appellant is the Chief
Executive Officer, Secretary, Chief Financial Officer and the only director.
       Realty never submitted a claim with the County regarding payment of the
tax or an application for leave to file a late claim. Rather, on January 10, 2011,


3
        In June 2012, a ballot proposition passed by the voters ratified the 12 percent tax
retroactively. (L.A. County Ord. No. 2012-0041, § 1 (2012), found at
http://file.lacounty.gov/bos/supdocs/71815.pdf.) Although the parties argue extensively
as to whether the retroactive approval by the voters vitiates appellant’s challenge to the
tax on the merits and renders the appeal moot, we need not decide the issue because, as
we discuss below, we resolve the appeal on different grounds.

                                             3
appellant, through counsel, sent a letter to the Los Angeles County Board of
Supervisors, asserting a claim in appellant’s name alone, as an individual and on
behalf of similarly situated taxpayers, seeking damages and a refund of the amount
of the tax reflecting the 1991 increase. The letter stated that appellant “was billed”
for the tax and that the portion related to the 1991 increase was “illegally and
improperly collected.” But the letter did not state that appellant himself paid the
bill, including the tax.4 The County responded in a January 27, 2011 letter,
denying the claim on the ground, in substance, that each purported class member
was required to file an individual claim by section 910 and Los Angeles County
Code sections 4.72.310 and 4.72.340.5 Appellant was directed to consult sections

4
       The letter stated: “While staying at the Ritz Carlton Hotel [on the specified date],
he [appellant] was billed for the County’s Transient Occupancy Tax at a rate of 12% of
the entire bill, for a total of $34.08. It is believed that 3 (three) percentage [sic] of this
bill was therefore illegally and improperly collected because that is the portion . . . that
was increased after Proposition 62 was enacted.”
5
        The County’s denial letter stated that “[t]he claim is insufficient for the following
reasons: [¶] 1. The claim fails to name each and every taxpayer for whom the claim is
filed. [¶] 2. A claim is required to be filed by each separate claimant. [¶] 3. Each
claim is required to be signed and verified by each claimant. [¶] 4. Each claim must
include the name and post office address of each separate claimant. [¶] 5. Each claim
must state the amount of the refund claimed as of the date of the presentation of the
claim.”
        We note that under McWilliams v. City of Long Beach (2013) 56 Cal.4th 613
(McWilliams), decided after the trial court’s denial of appellant’s motion to amend in
November 2012, the County’s grounds for denial of the claim were invalid. McWilliams
interpreted the Supreme Court’s earlier decision in Ardon v. City of Los Angeles (2011)
52 Cal.4th 241, 251 (Ardon), which authorized class claims against local governments for
a refund of a tax under the Government Claims Act, absent a specific refund procedure
that bars class claims “in an applicable governing claims statute.” (Italics added.)
McWilliams held that a municipal ordinance setting forth a claims procedure that bars
class claims for a tax refund is not a “statute” within the meaning of the Government
Code, and therefore the general claims procedures of section 910, which permits class
claims, governs. (McWilliams, supra, 56 Cal.4th at pp. 616-618, 629.) Under
McWilliams, in denying appellant’s claim, the County improperly relied on its ordinance
                                               4
910, 910.2, 910.4, 910.8, and Los Angeles County Code sections 4.72.310 and
4.72.340, and then resubmit his claim within 15 calendar days.
       Appellant did not resubmit or amend his claim. By letter dated February 23,
2011, the County informed appellant that his purported claim had been rejected on
February 14, 2011, because he failed to provide the County with the requested
information. On March 4, 2011, appellant filed suit against the County,
challenging the 1991 increase on the ground that, as here relevant, it violated
Proposition 62.6 He later moved for class certification in December 2011.7 The
court held several hearings on the class certification motion, continuing the hearing
in order to allow appellant to present evidence that he actually paid the tax. On
October 3, 2012, the court denied appellant’s motion for class certification on the
basis that appellant did not have standing because he did not pay the tax himself
and therefore could not adequately represent the putative class. The denial was




that purports to require each claimant to file an individual claim for a tax refund.
However, the invalidity of the grounds on which County denied appellant’s claim does
not affect our resolution of this appeal.
6
        Appellant initially alleged the following causes of action on behalf of himself and
a purported class of other persons similarly situated: (1) violation of Proposition 62;
(2) deprivation of due process under federal law; (3) violation of the federal takings
clause; (4) conversion; and (5) declaratory relief. The County demurred to all the causes
of action. The trial court sustained the demurrer without leave to amend as to all except
the first cause of action, a violation of Proposition 62, as to which it overruled the
demurrer. Appellant indicated that he would proceed on the first cause of action and
would not seek leave to amend the complaint as to the other causes of action. The
County answered the complaint, denying the allegations and asserting numerous
affirmative defenses.
7
       He also moved for summary adjudication. The court deferred that motion pending
a ruling on class certification.

                                             5
without prejudice to allow appellant to amend his complaint to name an adequate
class representative.
      Appellant moved to amend the complaint, proposing to add Realty as an
additional named plaintiff. The trial court denied the motion to amend, reasoning
that Realty had not filed a claim for a refund with the County. The court rejected
appellant’s arguments that Realty could simply step into appellant’s shoes or that a
claim filed by a putative class representative who did not have standing (appellant)
was sufficient to represent the class members.
      The parties stipulated to entry of judgment against appellant and in favor of
the County in order to facilitate an appeal. (See Harrington-Wisely v. State of
California (2007) 156 Cal.App.4th 1488, 1495 [although a stipulated judgment
generally is not appealable, an appeal is permitted “‘“[i]f consent was merely given
to facilitate an appeal following adverse determination of a critical issue”’”].) The
court entered judgment against appellant and in favor of the County, ordered that
appellant take nothing by his complaint, and dismissed the action in its entirety
with prejudice, awarding costs to the County. Appellant filed a notice of appeal.


                                   DISCUSSION
      Appellant contends that the trial court erred in denying his motion to amend
his complaint to add Realty as the class plaintiff. We conclude that the trial court
correctly found that appellant did not have standing to challenge the tax because he
did not pay it, and that Realty did not have standing because it did not file a claim
as required by the Act. We therefore affirm the court’s denial of appellant’s
motion to amend the complaint.
      We review the trial court’s ruling on a motion to amend a pleading for an
abuse of discretion. (Emerald Bay Community Assn. v. Golden Eagle Ins. Corp.

                                          6
(2005) 130 Cal.App.4th 1078, 1097.) However, “‘[s]tanding is a question of law
that we review de novo.’ [Citation.]” (Marler v. E.M. Johansing, LLC (2011) 199
Cal.App.4th 1450, 1467.)
       As a claim for money or damages against a government entity, appellant’s
claim challenging the tax required compliance with the Government Claims Act
(§ 810 et seq.). “According to the Act, ‘all claims for money or damages against
local public entities’ are to be presented ‘in accordance with Chapter 1
(commencing with Section 900) and Chapter 2 (commencing with Section 910),’
except as provided in section 905. (§ 905.) One of the exceptions in section 905 is
for ‘[c]laims under the Revenue and Taxation Code or other statute prescribing
procedures for the refund . . . of any tax . . . or any portion thereof . . . .’ (§ 905,
subd. (a).) When a claim is excepted from the Act by section 905 and is ‘not
governed by any other statutes or regulations expressly relating thereto,’ the claim
‘shall be governed by the procedure prescribed in any charter, ordinance or
regulation adopted by the local public entity.’ (§ 935, subd. (a).)” (McWilliams,
supra, 56 Cal.4th at p. 619.)
       In the instant case, Los Angeles County Code section 4.72.340 provides that
“[a] transient or other guest of a hotel may obtain a refund of taxes overpaid or
paid more than once or erroneously or illegally collected or received by the county
by filing a claim in the manner provided in Section 4.72.310, if the tax was paid by
the transient or other guest directly to the tax collector, or if the transient or other
guest has paid the tax to the operator, and establishes to the satisfaction of the tax
collector that the transient or other guest has been unable to obtain a refund from
the operator who collected the tax.”8 As for the procedural requirement of a claim,


8
        Los Angeles County Code section 4.72.310 states: “Whenever the amount of any
tax, interest or penalty has been overpaid or paid more than once or has been erroneously
                                              7
section 910 controls. (See Los Angeles County Code, § 4.04.020 [a claim against
the County for money or damages may not be brought unless a claim that satisfies
section 910 has been submitted and denied]9; McWilliams, supra, 56 Cal.4th at p.
616 [the general procedure for the presentation of claims for money or damages
against a local government entity is prescribed by the Government Claims Act];
Ardon, supra, 52 Cal.4th at p. 247 [“Section 910 does not specifically apply to tax
refunds, but to all claims against governmental entities”].)10



or illegally collected or received by the county under this chapter, the operator so paying
may have such amount applied to subsequent taxes due, or it may be refunded as
provided in Sections 4.72.310 through 4.72.350 of this chapter if, within three years after
the date of payment, the operator files with the tax collector in writing a claim therefor.
In such claim the operator shall state, under penalty of perjury, the specific grounds and
specific facts upon which the claim is founded. The claims shall be on forms furnished by
the tax collector.”
9
       Los Angeles County Code section 4.04.020 provides: “No suit for money,
damages, or tax refunds may be brought against the county on a cause of action for which
this chapter requires a claim to be presented until a written claim therefor has been filed
and acted upon in conformity with this chapter and Sections 945.4 and 945.6 of the
Government Code.” “[Section] 945.4 simply states that no action may be commenced
against a public entity unless a claim that satisfies [section] 910 [citation] has been
submitted and denied.” (3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 254, p. 337.)
10
        Section 910 provides: “A claim shall be presented by the claimant or by a person
acting on his or her behalf and shall show all of the following: [¶] (a) The name and
post office address of the claimant. [¶] (b) The post office address to which the person
presenting the claim desires notices to be sent. [¶] (c) The date, place and other
circumstances of the occurrence or transaction which gave rise to the claim asserted. [¶]
(d) A general description of the indebtedness, obligation, injury, damage or loss incurred
so far as it may be known at the time of presentation of the claim. [¶] (e) The name or
names of the public employee or employees causing the injury, damage, or loss, if
known. [¶] (f) The amount claimed if it totals less than ten thousand dollars ($10,000)
as of the date of presentation of the claim, including the estimated amount of any
prospective injury, damage, or loss, insofar as it may be known at the time of the
presentation of the claim, together with the basis of computation of the amount claimed.
If the amount claimed exceeds ten thousand dollars ($10,000), no dollar amount shall be
                                               8
       Compliance with the Government Claims Act is a mandatory requirement
before filing suit. “‘The failure to timely present a claim to the public entity bars
the claimant from filing a lawsuit against that public entity. [Citation.] Moreover,
because the purpose of the claim is not “to prevent surprise [but rather] is to
provide the public entity sufficient information to enable it to adequately
investigate claims and to settle them, if appropriate, without the expense of
litigation . . . [citations][,] . . . [i]t is well-settled that claims statutes must be
satisfied even in face of the public entity’s actual knowledge of the circumstances
surrounding the claim. . . .” [Citation.]’ [Citation.]” (J.J. v. County of San Diego
(2014) 223 Cal.App.4th 1214, 1219 (J.J.).)
       In the present case, appellant attempted to comply with the claims statute by
making a personal claim against the County for a refund of the tax. But the
undisputed evidence shows that he did not pay the tax. Rather, he used a debit
card for an account belonging to Realty. Having not suffered any injury or
violation of his legally protected interests, appellant lacks personal standing to
bring a court action for a refund of the tax. (See Sipple v. City of Hayward (2014)
225 Cal.App.4th 349, 359 [standing requires that a party have an interest that is
“‘concrete and actual,’” not “‘conjectural or hypothetical’”]; Great Lakes
Construction, Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1356 [“Standing
generally requires that the plaintiff be able to allege injury, that is, an invasion of a
legally protected interest.”].) Because he cannot seek a refund of the tax, he is not
an appropriate class representative. “Whether the issue is framed as one of
standing to prosecute a refund action or as one authorizing recovery in the action,
the effect is the same: Only those persons who paid the disputed tax may recover

included in the claim. However, it shall indicate whether the claim would be a limited
civil case.”

                                               9
their excess payments in a refund action. [Citations.]” (Parmar v. Board of
Equalization (2011) 196 Cal.App.4th 705, 716.)
      Conceding that Realty, not he, paid the tax, appellant contends that Realty is
an appropriate class representative, and that he should have been allowed to amend
to name Realty as a plaintiff. But Realty never filed a claim with the County, and
therefore it cannot bring a court action for a refund of the tax. (J.J., supra, 223
Cal.App.4th at p. 1219.) Appellant’s various arguments to the contrary are not
persuasive.
      Appellant relies on a series of decisions relevant to the viability of class
actions when, as in the instant case, the claim requirements of section 910 govern.
(See Ardon, supra, 52 Cal.4th at pp. 247-251, discussing, among others, City of
San Jose v. Superior Court (1974) 12 Cal.3d 447 (San Jose), Woosley v. State of
California (1992) 3 Cal.4th 758, and County of Los Angeles v. Superior Court
(Oronoz) (2008) 159 Cal.App.4th 353; see also McWilliams, supra, 56 Cal.4th at p.
619.) As here applicable, the thread of this line of decisions is that a representative
plaintiff can file a claim on behalf of a class under section 910; each class member
need not file an individual claim. The sufficiency of a such a class claim under
section 910 is judged by a two-part test: “Is there some compliance with all of the
statutory requirements; and, if so, is this compliance sufficient to constitute
substantial compliance?” (San Jose, supra, 12 Cal.3d at pp. 456-457.) As to the
“some compliance” prong, “the class claim must provide the name, address, and
other specified information concerning the representative plaintiff and then
sufficient information to identify and make ascertainable the class itself.” (Id. at p.
457, italics added.) As to the “substantial compliance” prong, the adequacy of the
identifying information must be judged by whether it states enough information “to
reasonably enable the public entity to make an adequate investigation of the merits

                                          10
of the claim and to settle it without the expense of a lawsuit.” (Id. at p. 456; see
Ardon, supra, 52 Cal.4th at p. 248.)
      Here, appellant’s personal claim did not satisfy the “some compliance”
prong for him as an individual, because he is not a representative plaintiff, in that
he did not pay the tax. It also cannot satisfy the “some compliance” prong as a
purported claim on behalf of Realty, because it fails to identify Realty.
      Further, it cannot meet the “substantial compliance” prong on behalf of
Realty. Appellant’s claim stated that appellant, not Realty, “was billed” for the
tax. It stated that the portion relating to the 1991 increase was collected illegally,
but it did not state that Realty – or anyone else, for that matter – actually paid the
tax. To the contrary, on its face, the claim was phrased in such a manner as to
suggest, without expressly stating, that appellant personally paid the tax. In short,
appellant’s claim can only be construed as a claim on his personal behalf. Realty
never filed a claim, and “‘[s]ubstantial compliance cannot be predicated upon no
compliance.’ [Citations.]” (San Jose, supra, 12 Cal.3d at p. 456; see California
Restaurant Management Systems v. City of San Diego (2011) 195 Cal.App.4th
1581, 1597 [“[A] plaintiff must ordinarily file his or her own claim and may not
sue to recover for his or her own injury in reliance on a claim filed by another
injured party, even if the plaintiff’s injury was caused by the same transaction that
injured the other party.”].)
      Appellant contends that given Realty’s status as a subchapter S corporation,
his personal claim was sufficient to constitute a claim by Realty because Realty’s
expenses flow from the corporation to him, and that, as the “representative” of
Realty, he has the legal right to file the claim as Realty’s representative. We
disagree.



                                           11
      “S corporations . . . give small businesses the benefits of the corporate form,
such as limited liability for shareholders, without the disadvantages of corporate
taxation. [Citations.]” (Durando v. U.S. (9th Cir. 1995) 70 F.3d 548, 551.) The
subchapter S corporate form does not permit an individual shareholder to ignore
the corporation’s existence and assert claims in the shareholder’s name that
actually belong to the corporation. Appellant relies on general principles of S
corporations to argue that Realty’s expenses “flow from the corporation to the
owner.” However, in his numerous filings in the trial court seeking to add Realty
as a plaintiff, appellant never presented evidence regarding Realty’s income or
expenses.11 Indeed, he never raised the subchapter S argument at all. “Factual
matters that are not part of the appellate record will not be considered on appeal
and such matters should not be referred to in the briefs. [Citations.]” (Lona v.
Citibank, N.A. (2011) 202 Cal.App.4th 89, 102.)
      Nor does the alter ego doctrine support appellant’s contention. That doctrine
applies “‘when a plaintiff comes into court claiming that an opposing party is using
the corporate form unjustly and in derogation of the plaintiff’s interests.
[Citation.]’ [Citation.]” (Grotenhuis v. County of Santa Barbara (2010) 182
Cal.App.4th 1158, 1164 (Grotenhuis).) It does not apply to permit a shareholder to
pierce the corporate veil so as to assert a personal claim when the corporation,
which has a separate existence, is injured. (See Postal Instant Press, Inc. v. Kaswa
Corp. (2008) 162 Cal.App.4th 1510, 1518 [“The alter ego doctrine traditionally is
applied to pierce the corporate veil so that a shareholder may be held liable for the
debts or conduct of the corporation.”]; Leek v. Cooper (2011) 194 Cal.App.4th

11
      These filings include his Notice of Motion to Add New Plaintiff, Reply Brief re
Class Action Issues, Brief Regarding Class Action Issues, and Reply to Opposition to
Motion for Class Certification.

                                          12
399, 406 [“The essence of the alter ego doctrine is not that the individual
shareholder becomes the corporation, but that the individual shareholder is liable
for the actions of the corporation. [Citation.]” .)
      We find Grotenhuis, on which the trial court relied, instructive. There, the
plaintiff attempted to claim a homeowner’s property tax exemption and transfer the
base year value of a former residence to a new residence, even though a closely
held corporation was the owner of record of both residences. The court of appeal
held that the trial court erred in using an alter ego theory to confer standing on the
plaintiff so as to permit him to claim the tax exemption. (Grotenhuis, supra, 182
Cal.App.4th at p. 1164.) The appellate court reasoned that the plaintiff “elected the
corporate form for business reasons unrelated to tax. ‘He who takes the benefit
must bear the burden.’ (Civ. Code, § 3521.) [Plaintiff] should not be able to
weave in and out of corporate status when it suits the business objective of the
day.” (Ibid.)
      As in Grotenhuis, in the present case, appellant “has come to court claiming
that the very corporation he formed should have its veil pierced so that he, as an
individual, can obtain a tax advantage. ‘The essence of the alter ego doctrine is
that justice be done.’ [Citation.] There is no injustice here.” (Grotenhuis, supra,
182 Cal.App.4th at p. 1164.)
      For the foregoing reasons, the trial court properly denied the motion to
amend.12




12
     Because we resolve the appeal on this ground, we need not address the other
arguments raised by the parties.
                                         13
                              DISPOSITION
          The judgment is affirmed. The County shall recover its costs on
appeal.
          NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS




                                          WILLHITE, J.




          We concur:




          EPSTEIN, P. J.




          MANELLA, J.




                                     14
