Stanford Law School - Robert Crown Law Library

Filed 7/17/06

IN THE SUPREME COURT OF CALIFORNIA

RICK AUERBACH, as Assessor, etc.,
Plaintiff and Appellant,
S134920
v.
Ct.App. 2/1 B173649
ASSESSMENT APPEALS BOARD NO. 1 )
FOR THE COUNTY OF LOS ANGELES, )
Los Angeles County
Super. Ct. No. BS084737
Defendant and Respondent;
NORTHERN TRUST BANK OF
CALIFORNIA, as Trustee, etc.,
Real Party in Interest and
Respondent.

Proposition 13, adopted in 1978, limits the amount that the assessed value
of real property may be increased to reflect increases in the property’s actual
market value. When ownership of the property changes, however, the property
may be reassessed at its current market value. (See Pacific Southwest Realty Co.
v. County of Los Angeles (1991) 1 Cal.4th 155 (Pacific Southwest).) Changing the
assessed value of real property to its current market value can result in a
substantial increase in the tax on that property. Thus, determining whether and
when a change of ownership has occurred can have significant tax consequences.
Here, the ownership of land subject to a 20-year lease has changed. We
must decide whether a building on that land, constructed after the lease had
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commenced, has also changed ownership. The answer depends on who owns the
fee or equivalent interest in the building for these purposes—the lessor or the
lessee. We conclude that, for purposes of Proposition 13, the lessor owns the
building as well as the land. Accordingly, the change in ownership of the land
also changed ownership of the building. We affirm the judgment of the Court of
Appeal, which reached a similar conclusion.
I. FACTS AND PROCEDURAL HISTORY
Robert and Electra Anderson (the grandchildren) are the grandchildren of
Stanley and Marguerite Anderson (the grandparents). Each grandchild is the
beneficiary of one of two trusts that together hold a 50 percent interest in property
on North Rodeo Drive in Beverly Hills. Real party in interest Northern Trust
Bank of California (Northern Trust) is the cotrustee of the trusts. In February
1996, the trusts, along with two other trusts not involved in this litigation, leased
the property to Tommy Hilfiger Retail, Inc. (Hilfiger) for 10 years with two five-
year options to extend the term. At the time the parties entered the lease, the
property was improved with a retail building.
The written lease defined the premises being leased as including the
improvements. Paragraph 7.4(a) of the lease, captioned “Ownership,” provided:
“Subject to Lessor’s right to require their removal or become the owner thereof as
hereinafter provided in this Paragraph 7.4, all Alterations and Utility Additions
made to the Premises by Lessee shall be the property of and owned by Lessee, but
considered a part of the Premises.” Paragraph 7.4(c) required Hilfiger to
“surrender the Premises by the end of the last day of the Lease term or any earlier
termination date, with all of the improvements, parts and surfaces thereof clean
and free of debris and in good operating order, condition and state of repair,
ordinary wear and tear excepted.” A provision in an addendum to the lease, also
captioned “Ownership,” stated: “During the term of this Lease, the Improvements
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shall be the property of and owned by Lessee but considered a part of the
Premises. The Improvements shall, at the expiration or earlier termination of this
Lease, become the property of Lessor and remain upon and be surrendered by
Lessee with the Premises.” Another lease provision gave the lessor authority to
eject Hilfiger from the premises for a breach of the lease. Under the lease, any
proceeds from the taking of any part of the premises by eminent domain belonged
to the lessor.
The lease required Hilfiger either to renovate the existing retail building on
the property with a minimum expenditure of $2 million or to demolish it and build
a new one with a minimum expenditure of $4 million. It provided for certain rent
credits depending on which of these options Hilfiger chose. It also stated that
“[a]ll monetary obligations of Lessee to Lessor under the terms of this Lease are
deemed to be rent.” It gave the trusts, as the lessor, certain control over changes to
the existing building, including approval of any architectural plans, alterations, or
construction of new improvements. It also recognized that Hilfiger intended to
construct a “ ‘Flagship’ location” on the premises and stated that the lessor agreed
to cooperate in this regard. The lease also required the lessor’s consent for
Hilfiger to mortgage or encumber the improvements, or to assign or transfer the
leasehold.
The lease contemplated that the lessor would have authority “to finance,
refinance, or sell the Premises, any part thereof, or the building of which the
Premises are a part . . . .” It required Hilfiger to pay the real property taxes, but
required the lessor to pay any increase in real property taxes due to, or resulting
from, the sale of the premises. It also required Hilfiger to repair any damage to the
property at its expense, but required the lessor to make any insurance proceeds
available to Hilfiger for the repairs. The lease did not specifically state whether
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the monthly rent was for the land or the building, or both, but the evidence
established that Hilfiger paid rent for the land, and not for the building.
Hilfiger chose to demolish the existing building and build a new one, at a
cost of $20 million. It completed and occupied the new building in late 1997. The
new building was assessed as new construction at that time. Thereafter, Hilfiger
paid all expenses associated with the building.
On June 16, 1999, John Anderson, the grandchildren’s father, died. The
parties agree that under the terms of the trusts, this event transferred ownership of
the trusts’ interests in the property from the grandparents to the grandchildren.
The grandchildren applied for the $1 million grandparent-grandchild reassessment
exclusion under Revenue and Taxation Code section 63.1.1 Rick Auerbach, the
Los Angeles County Assessor (Assessor) granted the exclusion. However, taking
the position that the trusts owned the building as well as the land for property tax
purposes, the Assessor applied the exclusion to both on a pro rata basis. It
allocated approximately 92 percent of the exclusion to the building and 8 percent
to the land. Northern Trust, as trustee for the grandchildren, contested this
allocation before the Los Angeles County Assessment Appeals Board No. 1
(Board). It contended that the trusts owned only the land and not the building, and
thus the entire exclusion applied to the land.
After holding an evidentiary hearing, the Board ruled in the grandchildren’s
favor. It concluded that Hilfiger, rather than the trusts, owned the building and
directed the Assessor to apply the exclusion solely to the land. It relied on the

1
All further statutory references are to the Revenue and Taxation Code
unless otherwise indicated.

Section 63.1 provides, in relevant part, that when grandparents transfer
ownership of real property that is not their principal residence to their
grandchildren, the first $1 million of its value is excluded from reassessment if the
grandchildren’s parents are deceased.
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following facts to support this conclusion: “The Agreement [i.e., the lease] states
that ownership of the new improvements was held by Hilfiger once the new
improvements were completed in 1997. Other provisions in the Agreement
support the conclusion that the Trusts and Hilfiger intended the new improvements
to be owned by Hilfiger for as long as Hilfiger was leasing the land on which the
new improvements were located. For example, the elimination of all references in
the Agreement to lessor ownership of improvements, the provisions relating to
payment of rent only for the use of the land, and the requirement that insurance
loss proceeds received by the Trusts for any damage to the improvements be
forwarded to Hilfiger all demonstrate that Hilfiger owned the new improvements
constructed at the Property.
“The actions and practices of the Trusts, [the grandchildren], and Hilfiger
also support the conclusion that Hilfiger owned the new improvements as of June
16, 1999. First, Hilfiger built the new improvements at its own cost. Second,
Hilfiger paid all expenses related to operation of the new improvements. Third,
the Trusts [the grandchildren] had no right or claim to possess or occupy the new
improvements in 1999, nor did they do so at any time. All benefits associated
with the use and occupancy of the new improvements went to Hilfiger, and not to
the Trusts or to [the grandchildren]. This is most clearly supported by the absence
of any rental payments by Hilfiger for the new improvements.”
The Assessor filed a petition for writ of mandate in the superior court
challenging the Board’s decision. The court agreed with the Board and denied the
petition. The Assessor appealed. A divided Court of Appeal reversed the
judgment. In an opinion authored by Acting Presiding Justice Mallano, the
majority concluded that “notwithstanding the lessee’s construction of the
improvements, both the land and the improvements are subject to, and included in
the calculation of, the grandparent-to-grandchild exclusion.” Justice Vogel
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dissented, concluding that the Board and superior court reached the correct
decision. We granted Northern Trust’s petition for review.
II. DISCUSSION
Proposition 13 generally limits the maximum amount of any ad valorem tax
on real property to 1 percent of its “full cash value.” (Cal. Const., art. XIII A, § 1,
subd. (a).) The Constitution defines “full cash value” as the county assessor’s
valuation of the property on the 1975-1976 tax bill “or, thereafter, the appraised
value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment.” (Id., § 2, subd. (a), italics
added.) This appraised value may be adjusted for inflation from year to year but
only at a maximum rate of 2 percent per year. (Id., § 2, subd. (b).)
The issue in this case is to what extent a “change in ownership” (Cal.
Const., art. XIII A, § 2, subd. (a)) occurred when the trusts’ interest in the property
on North Rodeo Drive changed from the grandparents to the grandchildren. The
parties agree that the land changed ownership, but they disagree whether the
change in ownership included the building as well. Northern Trust contends that
Hilfiger now owns the building for real property tax purposes under the California
Constitution (Cal. Const., art. XIII A, § 2, subd. (a)), and thus the change in
ownership of the trusts’ interest in the property did not include the building. The
Assessor contends that, for these purposes, the trusts continue to own the building
as well as the land, and thus the change in ownership included both. The
difference in these positions has substantial practical significance. The
grandparent-grandchild reassessment exclusion of section 63.1 permits the first $1
million of the value of the property that changed ownership to be excluded from
the reassessment. The land and building together obviously have far greater value
than the land alone. Under Northern Trust’s position, the entire $1 million
exclusion would apply to the value of the land. Under the Assessor’s position, the
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$1 million exclusion would have to be prorated between the value of both the land
and the building, resulting in a far greater reassessment than if the entire exclusion
applied to the land.
This issue is governed by statute. In Pacific Southwest, supra, 1 Cal.4th
155, we explained the relevant statutory and analytical framework for deciding
this issue. Proposition 13 did not itself define “change in ownership,” so it fell to
the Legislature to do so. A broad-based 35-member task force studied the matter.
“The panel’s work culminated in the Report of the Task Force on Property Tax
Administration (hereafter task force report), which was submitted to the Assembly
Committee on Revenue and Taxation on January 22, 1979.” (Pacific Southwest,
supra, at p. 161.) The task force report made various recommendations, which
resulted in the enactment of the Revenue and Taxation Code provisions at issue
here. The key provisions relevant here are section 60, which contains the basic
change-in-ownership test; section 61, which contains examples of what is a change
in ownership; and section 62, which contains examples of what is not a change in
ownership. (See Pacific Southwest, supra, at pp. 161-162.)
“The task force report drafters stressed the need for uniformity and
consistency in the application of section 60’s general rule.” (Pacific Southwest,
supra, 1 Cal.4th at p. 161.) Accordingly, it recommended that this general
definition control all transfers. The task force also recommended giving specific
examples of what is and is not a change in ownership, which are set forth in
sections 61 and 62. It stressed, however, that these examples must be consistent
with section 60’s general test. “ ‘The entire statutory design would be destroyed
by providing statutory treatment for specific transfers which are inconsistent with
the general test. In that case, the general test would be overruled by the specific
rules and the entire statutory design might be held invalid because of the lack of
any consistent, rational interpretation of the constitutional phrase, “change in
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ownership.” ’ ” (Pacific Southwest, supra, at pp. 161-162, quoting the task force
report.) “Because the Legislature, in enacting section 60, adopted its language
verbatim after reviewing the task force report, it is evident that the Legislature
intended for section 60 to contain the overarching definition of a ‘change in
ownership’ for reassessment purposes.” (Id. at p. 162.) Accordingly, we turn to
section 60 to determine whether the building changed ownership for reassessment
purposes.
Section 60 provides: “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.” Its “governing test
contains three parts: ‘A “change in ownership” means [1] a transfer of a present
interest in real property, [2] including the beneficial use thereof, [3] the value of
which is substantially equal to the value of the fee interest.’ To determine whether
the transaction in the case at bar worked a change in ownership under Proposition
13, we begin with that test.” (Pacific Southwest, supra, 1 Cal.4th at p. 162.) In
Pacific Southwest, we found that the transaction at issue (a sale and leaseback) met
section 60’s test and, hence, that it resulted in a change of ownership. (Pacific
Southwest, supra, at p. 166.) As we explain, we reach a similar conclusion
regarding the building here.
The parties agree that the trusts own the land, and thus have a present
interest in it, even though it is currently being leased to Hilfiger. The question
here solely concerns who owns the building. Before entering into the lease with
Hilfiger, the trusts clearly owned the then existing building as well as the land. If,
as the Assessor argues, the trusts also own the newly constructed building, then a
change of ownership of that building has occurred. But Northern Trust argues that
Hilfiger owns the new building. It relies primarily on the facts that the lease
provides that Hilfiger “own[s]” the building during the term of the lease, Hilfiger
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built it at its own expense, and Hilfiger pays no rent for it. If Northern Trust is
correct, the change of the trusts’ interest in the property from the grandparents to
the grandchildren did not change ownership of the building.
The general purpose of section 60, evident from its three subdivisions, is to
ensure that it is the fee interest, or its equivalent value, that is generally subject to
property taxation, and that tax reassessment follows the fee interest or its
equivalent through various changes in ownership. In this case, for purposes of a
section 60 change in ownership, Hilfiger does not own the fee interest in the
building, or its equivalent, but owns an estate of lesser value. The trusts owned
the fee interest in the entire premises before they entered into the lease, and they
still own the fee interest.
The lease states that Hilfiger “own[s]” the building during the term of the
lease. Whatever this might mean for other purposes, this statement is not
dispositive for purposes of section 60’s change-of-ownership test, which is all that
we are deciding here. The lease also provides that the building will become the
lessor’s property at the end of the lease. It made Hilfiger’s ownership “[s]ubject
to” the requirement that Hilfiger surrender the improvements to the lessor when
the lease ended, as well as circumscribed by the lessor’s authority to eject Hilfiger
from possession for a breach of the lease. Hence, for purposes of Proposition 13,
Hilfiger has a leasehold interest in the building or at most a possessory interest in
an estate for years, not ownership of the fee interest. The fee interest in the entire
premises, including the building, remains with the trusts. As we explained in
Pacific Southwest, “A freehold estate is distinguished from other forms of estates
in that it is of indeterminate duration [citations]. But an estate for years . . . is not
a freehold estate. (Civ. Code, § 765.) Indeed, under California law an estate for
years is not real property at all but rather a chattel real—a form of personalty—
even though the substance of the estate, being land, is real property. (Id., §§ 761,
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765 . . . .) [¶] Notwithstanding the fact that a lease is a present possessory interest
in land, there is no question that as a nonfreehold estate it is a different species of
interest from a freehold estate in fee simple. . . . A leasehold is not an ownership
interest, unlike the possession of land in fee simple . . . . It is for that reason that
common parlance refers to the ‘owner’ of a freehold estate, encumbered or
unencumbered, but to the ‘holder’ of a lease; the freeholder is seised of land,
whereas the leaseholder is not.” (Pacific Southwest, supra, 1 Cal.4th at pp. 162-
163, italics added.)
Other provisions of the lease support the conclusion that, for purposes of
section 60, the trusts have a present interest in the building. The trusts retained the
right to sell the premises, including the building. Although the lease made the
lessees responsible for paying property tax, it provided that the lessor would pay
any increase in that tax caused by the lessor’s sale of the property. The lease
required Hilfiger to either remodel or replace the building at its own expense, but
it provided certain rent credits depending on which option Hilfiger chose. It also
required Hilfiger to turn the building over to the trusts in good condition at the end
of the lease period or at the termination of the lease. Hilfiger’s remodeling or
rebuilding was subject to approval of the trusts, and Hilfiger could not transfer any
of its interest in the premises without the trusts’ approval. Additionally, the lease
provided that any proceeds from the taking of any part of the premises by eminent
domain belonged to the lessor.
The “beneficial use” of the building also transferred. “The second prong of
section 60 requires that to constitute a change in ownership there must be a
transfer not only of bare legal title but also of the transferor’s beneficial or
equitable interest in the land.” (Pacific Southwest, supra, 1 Cal.4th at p. 163.)
Northern Trust argues that the trusts do not have beneficial use of the building
because they neither have the right to occupy it nor receive monthly rent for it.
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We disagree. “The owner of the legal title to property is presumed to be the owner
of the full beneficial title. This presumption may be rebutted only by clear and
convincing proof.” (Evid. Code, § 662, quoted in Pacific Southwest, supra, at p.
164.) The receipt of rent for leased property may constitute beneficial use because
it represents enjoyment of the value of the property. (Pacific Southwest, supra, at
p. 164.) But receiving rent is not the only way a lessor may have the beneficial
use of property. The lease required Hilfiger to pay millions of dollars to construct
a building that was subject to the lessor’s right of sale or eviction during the lease,
and that would belong to the lessor at the end of the lease. It also required Hilfiger
to surrender the building in good condition. Moreover, the lease itself provided
that all of Hilfiger’s monetary obligations under the lease, including the
requirement that Hilfiger either renovate or replace the existing building,
constituted rent. All this, we believe, gave the trusts beneficial use of the property
for these purposes.
For purposes of section 60, ownership also refers to an interest
“substantially equal to the value of the fee interest.” “In enacting the third prong
of section 60 the Legislature meant to insulate from Proposition 13’s effect
transfers in which only an estate of lesser value [than fee simple] was conveyed.”
(Pacific Southwest, supra, 1 Cal.4th at p. 165.) A leasehold interest, particularly a
lengthy one, has a substantial value, one that can approach the value of the fee
interest. But rather than evaluate every leasehold interest on a case-by-case basis
to determine whether it has a value substantially equal to that of the fee interest,
the statutory scheme provides specific rules. Sections 61 and 62 include examples
of ownership that should be treated as substantially equal to the value of a fee
interest. As relevant here, section 61, subdivision (c), provides that a change in
ownership includes “(1) The creation of a leasehold interest in taxable real
property for a term of 35 years or more (including renewal options) . . . ; or (2) any
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transfer of a lessor’s interest in taxable real property subject to a lease with a
remaining term (including renewal options) of less than 35 years. [¶] Only that
portion of a property subject to that lease or transfer shall be considered to have
undergone a change in ownership.” Conversely, section 62, subdivision (g),
provides that a change in ownership does not include “[a]ny transfer of a lessor’s
interest in taxable real property subject to a lease with a remaining term (including
renewal options) of 35 years or more.”2
Sections 61 and 62 thus provide that leasing property for 35 years or more
changes ownership, even though technically the fee interest does not change, but
leasing property for a shorter time period does not change ownership.3
Conversely, a lessor’s transferring property subject to a lease for 35 years or more
does not change ownership (ownership had already changed when the leasehold
interest was created), but transferring property subject to a shorter lease does

2
The rule the State Board of Equalization adopted to implement these
provisions is substantially similar. California Code of Regulations, title 18,
section 462.100, provides as relevant: “(a) The following transfers of either the
lessee’s interest or the lessor’s interest in taxable real property constitute a change
in ownership of such real property: [¶] (1) Lessee’s Interest: [¶] (A) the
creation of a leasehold interest in real property for a term of 35 years or more. [¶]
. . . [¶] (2) Lessor’s Interest: [¶] (A) The transfer of a lessor’s interest in taxable
real property subject to a lease with a remaining term of less than 35 years. [¶]
. . . [¶] (b) The following transfers of either the lessee’s interest or the lessor’s
interest in taxable real property do not constitute a change in ownership of such
real property. [¶] (1) Lessee’s interest: [¶] (A) The creation of a leasehold
interest in real property for a term of less than 35 years. [¶] . . . [¶] (2) Lessor’s
interest: [¶] (A) The transfer of a lessor’s interest in real property subject to a
lease with a remaining term of 35 years or more, whether to the lessee or another
party. [¶] (c) Once a change in ownership of taxable real property subject to a
lease has been deemed to have occurred, the entire property subject to the lease is
reappraised (i.e., the value of both the lessee’s interest and the reversion).”
3
A State Board of Equalization regulation applies the same rule to an estate
for years. (Cal. Code Regs. tit. 18, § 462.060, subd. (b) [“The creation of an estate
for years for a term of 35 years or more in real property is a change in ownership
at the time of the transfer unless [listing circumstances not relevant here].”].)
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change ownership. We explained this rule in Pacific Southwest. “[T]he
Legislature decided, following the task force’s recommendation, that the creation
of a 35-year lease would achieve a change in ownership (§ 61, subd. (c)(1))
because the length of the lease would give the lessee’s interest some of the
practical attributes of a conveyance in fee simple. A lease of such duration will
constitute the main economic value of the land, even though the leaseholder does
not own a freehold estate—lenders are, in the report drafters’ view, willing to lend
on the security of such an instrument. (See task force rep., supra, at pp. 39-41.)”
(Pacific Southwest, supra, 1 Cal.4th at p. 165.)
Thus, the Legislature has determined that a leasehold interest of 35 years or
more has a value substantially equal to the value of a fee interest, but a leasehold
interest for a shorter time does not have that value. Here, the lease, even including
renewal options, was for less than 35 years. Accordingly, it does not fall within
section 61’s 35-year-lease provision. Because section 61 provides a specific rule,
there is no need to determine the value of the leasehold estate on a case-by-case
basis. Applying this specific rule rather than trying to determine whether a given
leasehold interest has a value substantially equal to the value of the fee estate is
consistent with the task force’s perceived “need for uniformity and consistency in
the application of section 60’s general rule.” (Pacific Southwest, supra, 1 Cal.4th
at p. 161.) Under the specific rule, this lease did not transfer the fee interest in the
building or its equivalent from the trusts to Hilfiger.4

4
In support of its conclusion, the Court of Appeal stated that because “this
case falls squarely within section 61, subdivision (c),” “a factual analysis of the
factors in section 60 is unnecessary.” We agree with Northern Trust and amicus
curiae State Board of Equalization that this formulation is, at the least, confusing.
A factual analysis of section 60’s factors is always necessary. Section 60 provides
the “overarching definition” of a change in ownership. (Pacific Southwest, supra,
1 Cal.4th at p. 162.) The examples found in sections 61 and 62 must be
interpreted in light of this definition. But, as explained, our analysis of section 60
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For these reasons, we conclude that the trusts, and not Hilfiger, own the
building for purposes of determining whether a change of ownership has occurred
under section 60. The change in ownership of the trusts’ interest in the property
included the building as well as the land.
III. CONCLUSION
We affirm the judgment of the Court of Appeal.
CHIN,
J.
WE CONCUR:

GEORGE, C.J.
KENNARD, J.
BAXTER, J.
WERDEGAR, J.
CORRIGAN, J.

convinces us that the building did change ownership along with the land.
Accordingly, we agree with the Court of Appeal’s conclusion, although not all of
its reasoning.
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CONCURRING AND DISSENTING OPINION BY MORENO, J.

I agree with the result and most of the reasoning of the majority opinion. I
write separately because I disagree with the majority’s conclusion that Tommy
Hilfiger Retail, Inc. (Hilfiger) has only “a leasehold interest” in the building that it
built at its own expense, operates, and owns under the terms of the lease. (Maj.
opn., ante, at p. 9.) In my view, the trusts own the land, but under the terms of the
lease, Hilfiger owns the building until the expiration of the lease, at which time
ownership of the building transfers to the trusts.
The lease granted Hilfiger the right, which Hilfiger exercised, of
constructing a new building, at Hilfiger’s expense, on the land owned by the trusts
and leased by Hilfiger. The lease states: “During the term of this Lease, the
Improvements shall be the property of and owned by Lessee but considered a part
of the Premises.” The lease further provides that, when the lease terminated,
ownership of the building would be transferred to the trusts. This type of
arrangement is known as a ground lease. A ground lease “differs fundamentally
from the usual lease of space for an office or store in a number of respects,
including the following. [¶] First, the improvements on the land . . . generally are
owned or become owned by the lessee. . . . If the land is improved, the most
common arrangements call for the lessee either to demolish the improvements and
construct his own or to purchase the improvements as personal property severed
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from the land (though in all practical respects they are to be regarded as real
property).” (Grenert, Ground Lease Practice (Cont.Ed.Bar 1971) § 1.1, p. 7)
We addressed a related arrangement in Dean v. Kuchel (1950) 35 Cal.2d
444, in which “the state leased real property for a 35-year term to a private
contractor, who agreed to construct an office building thereon and lease back the
property and the building to the state for a 25-year term. If at the end of 25 years
all covenants of the lease had been performed by the state, title to the property and
building would vest in the state, and in any event full title would vest in the state at
the end of 35 years. . . .” (Los Angeles County v. Nesvig (1965) 231 Cal.App.2d
603, 610.) Even though title to the building would vest in the state at the end of
the 35-year ground lease, we recognized that the contractor owned the building
during the 25-year building lease, and would continue to own the building until the
end of the ground lease if the state breached the terms of the building lease. (Id. at
p. 448; see also, Richards v. Pacific S.W. Discount Corp. (1941) 44 Cal.App.2d
551, 559 [“the ground lease specifically recites that the building and
improvements situated upon the property remained personal property and were
owned by the lessee and are not a part of the lessor’s estate”].)
In similar fashion, Hilfiger owns the building in the present case until the
end of the ground lease. But, as noted above, the lease provides that the building
is nevertheless considered a part of the premises. For purposes of property tax
assessment under Revenue and Taxation Code section 60, therefore, the building
is considered part of the property owned by the trusts. Accordingly, I agree with
the result reached by the majority.
MORENO, J.
2

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See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Auerbach v. Assessment Appeals Board No. 1
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 129 Cal.App.4th 241
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S134920
Date Filed: July 17, 2006
__________________________________________________________________________________

Court:

Superior
County: Los Angeles
Judge: Joanne B. O’Donnell

__________________________________________________________________________________

Attorneys for Appellant:

Raymond G. Fortner, Jr., County Counsel, and Albert Ramseyer, Deputy County Counsel, for Plaintiff and
Appellant.

__________________________________________________________________________________

Attorneys for Respondent:

No appearance for Defendant and Respondent.

Bill Lockyer, Attorney General, and William L. Carter, Deputy Attorney General, for California State
Board of Equalization as Amicus Curiae on behalf of Defendant and Respondent.

Rodi, Pollock, Pettker, Galbraith & Cahill, Cris K. O’Neall, C. Stephen Davis, Wade E. Norwood; Gibson,
Dunn & Crutcher. Theodore J. Boutrous, Jr., William E. Thomson and Casey N. Carrington for Real Party
in Interest and Respondent.

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Counsel who argued in Supreme Court (not intended for publication with opinion):

Albert Ramseyer
Deputy County Counsel
648 Kenneth Hahn Hall of Administration
500 West Temple Street
Los Angeles, CA 90012
(213) 974-0809

William E. Thomson
Gibson, Dunn & Crutcher
333 S. Grand Avenue, Suite 4700
Los Angeles, CA 90071
(213) 229-7000

William L. Carter
Deputy Attorney General
1300 I Street
Sacramento, CA 94244-2550
(916) 324-5159

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Opinion Information

Date:	Docket Number:
Mon, 07/17/2006	S134920

Disposition
Jul 17 2006	Opinion: Affirmed

Dockets
Jun 20 2005	Petition for review filed   counsel for real party in interest & respondent NORTHERN TRUST BANK OF CALIFORNIA, as Trustee, etc.,
Jun 22 2005	Received Court of Appeal record   one doghouse
Jun 22 2005	Record requested
Jul 7 2005	Answer to petition for review filed   appellant Rick Auerbach, as County Assessor
Jul 8 2005	Request for depublication (petition for review pending)   filed by counsel for The State Board of Equalization (non-party)
Jul 15 2005	Reply to answer to petition filed   respondent Northern Trust Bank of California
Jul 18 2005	Opposition filed   appellant Rick Auerbach, as County Assessor
Aug 10 2005	Petition for review granted (civil case)   Werdegar, J., was absent and did not participate. Votes: George, C.J., Kennard, Baxter, Chin, and Moreno, JJ.
Aug 10 2005	Note:   Records sent to Cal-Co-ord. Office: CT=2, RT= 1, 2, 3, 4, 5=2, 7, 8, 9, Depub. Request, Req. for Jud. Ntc., Mtn. to Augment Rec., misc. docs. and records.
Aug 25 2005	Request for extension of time filed   Counsel for Real Party in Interest and Respondent requests extension of time to October 10, 2005, to file the opening brief on merits.
Aug 25 2005	Certification of interested entities or persons filed   respondent Northern Trust Bank of California
Aug 29 2005	Certification of interested entities or persons filed   counsel for plf. and aplt. (Auerbach)
Aug 30 2005	Extension of time granted   Real Party in Interest time to serve and file the opening brief on the merits is extended to and including October 10, 2005.
Oct 11 2005	Opening brief on the merits filed   By counsel for RPI {Northern Trust Bank of California}.
Oct 24 2005	Request for extension of time filed   counsel for aplt. requests extension of time to December 12, 2005, to file the answer brief on the merits.
Oct 26 2005	Extension of time granted   Appellant's time to serve and file the answer brief on the merits is extended to and including December 12. 2005.
Dec 6 2005	Request for extension of time filed   answer brief/merits to 1-11-06>>appellant County Assessor
Dec 8 2005	Extension of time granted   Appellant's time to serve and file the answer brief on the merits is extended to and including January 11, 2006.
Dec 8 2005	Filed:   Non-Opposition to Appellants second extension of time>> Real Parties and Respondents Northern Trust Bank of California
Jan 11 2006	Answer brief on the merits filed   appellant, Rick Auerbach, Los Angeles County Assessor
Jan 12 2006	Received:   Notice of Lodging of Administrative Record - submitted concurrent with Answer Brief/Merits appellant, L.A. County Assessor - Attorney Rick Auerbach
Jan 31 2006	Reply brief filed (case fully briefed)   Respondent Northern Trust Bank of California, N.A. Attorneys William E. Thomson, etal, Retained
Jan 31 2006	Request for judicial notice filed (granted case)   Respondent Northern Trust Bank of California, N.A. Attorneys William E. Thomson, etal, Retained
Feb 15 2006	Opposition filed   to Respondent's Reqt for Judicial Notice Appellant Rich Auerback, LA County Assessor Deputy County Counsel Albert Ramseyer
Mar 2 2006	Received application to file Amicus Curiae Brief   Calif. State Board of Equalization (non-party) (brief under same cover)
Mar 2 2006	Received application to file Amicus Curiae Brief   Stephen H. Bennett, CPA, et al., (non-party) (brief under same cover)
Mar 6 2006	Permission to file amicus curiae brief granted   Stephen Bennett, CPA, et al., in support of respondent.
Mar 6 2006	Amicus curiae brief filed   Stephen Bennett, CPA, et al., for permission to file an amicus curiae brief in support of respondent is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Mar 7 2006	Permission to file amicus curiae brief granted   California State Board of Equalization in support of respondents.
Mar 7 2006	Amicus curiae brief filed   The application of California State Board of Equalization for permission to file an amicus curiae brief in support of repondents is hereby granted. An answer thereto may be served and file by any party within twenty days of the filing of the brief.
Mar 21 2006	Motion filed (non-AA)   Motion to Strike Amicus Brief of Stephen Bennett, CPA, by counsel for aplt. (Auerbach)
Mar 21 2006	Request for extension of time filed   Counsel for appellant requests extension of time to April 26, 2006 to file the response to amicus curiae brief of Stephen Bennett, CPA.
Mar 23 2006	Extension of time granted   Appellant's time to serve and file the response to the amicus brief of Stephen Bennett is extended to and including April 26, 2006 only.
Mar 24 2006	Request for extension of time filed   counsel for appellant Rick Auerbach [L. A. County Assessor] requests extension of time to 4-26-2006 to file a response to amicus brief of California State Board of Equalization.
Mar 28 2006	Opposition filed   by Stephen Bennett to Motion to Strike Amicus Brief.
Mar 29 2006	Extension of time granted   Appellant's time to serve and file the response to amicus curiae brief of California State Board of Equalization is extended to and including April 26, 2006.
Apr 12 2006	Motion denied   The motion to strike the amicus curiae brief of Stephen H. Bennet, by Richard Auerbach, as Assessor, is denied. Werdegar, J., was absent and did not participate.
Apr 25 2006	Response to amicus curiae brief filed   by: Rick Auerbach, Los Angeles County Assessor opposing a.c. brief of Stephen H. Bennett, CPA
Apr 25 2006	Response to amicus curiae brief filed   by: Rick Auerbach, Los Angeles County Assessor opposing a.c. brief of California State Board of Equalization
May 2 2006	Case ordered on calendar   June 8, 2006, at 9:00 a.m., in Los Angeles
May 10 2006	Received:   from Stephen H. Bennett, amicus curiae, Reply to Assessor's Response/Opposition to a/c brief.
May 10 2006	Received:   from counsel for aplt. (Auerbach) Motion to Strike Reply Brief of a/c Stephen Bennett, CPA
May 12 2006	Received:   appearance sheet of attorney William E. Thompson for RPI/Resp. Northern Trust Bank of California re: oral argument
May 12 2006	Application filed to:   Divide Time for Oral Argument between RPI/Respondent Northern Trust and Amicus Curiae California State Board of Equalization Note: received concurrent with this application.re: agreement between rpi/rep Northern Trust and amicus Curiae California State Board of Equalization to divide Northern Trust's Allotted O.A. time
May 16 2006	Request for judicial notice granted   The request for judicial notice filed on January 31, 2006, is hereby granted.
May 17 2006	Order filed   The request of counsel for respondent Northern Trust Bank of California in the above-referenced cause to allow two counsel to argue on behalf of respondent at oral argument is hereby granted. The request of respondent to allocate to amicus curiae California State Board of Equalization 10 minutes of respondent's 30-minute allotted time for oral argument is granted.
May 17 2006	Order filed   The court directs that the Clerk return unfiled the "Amicus curiae brief in reply to Assessor's opposition brief." The rules of court do not permit amicus curiae to file a reply brief. (Cal. Rules of Court, rule 29.1(f).) The "Motion to strike reply brief of amicus curiae Stephen Bennett, CPA" is denied as moot.
Jun 8 2006	Cause argued and submitted
Jul 17 2006	Opinion filed: Judgment affirmed in full   OPINION BY: Chin, J. --- joined by: George, C.J., Kennard, Baxter, Werdegar, Corrigan, JJ. CONCURRING AND DISSENTING OPINION BY: Moreno, J.
Jul 28 2006	Received:   Application and amicus brief from Stephen Bennett.
Aug 2 2006	Amicus curiae brief filed   by Stephen H. Bennett, Letwak & Bennett, asking court to consider State Board of Equalilzation Rule 462.160 (d)(6)
Aug 16 2006	Motion denied   The request "to consider State Board of Equalization rule 462.160(d)(6)," filed on August 2, 2006, is denied.
Aug 17 2006	Remittitur issued (civil case)
Aug 23 2006	Received:   from CA 2/1 receipt for remittitur.

Briefs
Oct 11 2005	Opening brief on the merits filed
Jan 11 2006	Answer brief on the merits filed
Jan 31 2006	Reply brief filed (case fully briefed)
Mar 6 2006	Amicus curiae brief filed
Mar 7 2006	Amicus curiae brief filed
Apr 25 2006	Response to amicus curiae brief filed
Apr 25 2006	Response to amicus curiae brief filed
Aug 2 2006	Amicus curiae brief filed

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