Berjikian v. Franchise Tax Bd.

93 F.Supp.3d 1151

Vicken O. BERJIKIAN and Enna Berjikian, Plaintiffs

v.FRANCHISE TAX BOARD; Department of Motor Vehicles; Board of Pharmacy, Defendants.

Case No. CV 13–06301 DDP JCGx.

United States District Court, C.D. California.

Signed March 12, 2015.

Freeman M. Butland, Law Office of Vicken O. Berjikian APC, Glendale, CA, for Plaintiffs.

Marta Lynn Smith, Celine M. Cooper, Michael Yi, William Dylan Gardner, CAAG–Office of the Attorney General, California Department of Justice, Los Angeles, CA, for Defendant.

ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

DEAN D. PREGERSON, District Judge.

Presently before the Court are the parties' cross-motions for summary judgment. Having considered the submissions of the parties, the court grants Plaintiffs' Motion, denies Defendants' Motion, and adopts the following Order.

I. Background

California Revenue and Taxation Code Section 19195 directs the state's Franchise Tax Board (“FTB”) to “make available as a matter of public record at least twice each calendar year a list of the 500 largest tax delinquencies in excess of one hundred thousand dollars.” Cal. Rev. & Tax.Code § 19195. The FTB's “top 500 list” includes the taxpayer's name and address, the amount of tax delinquency, the taxpayer's occupation, and the type, status, and license number of any occupational or professional license held by the person or persons liable for payment of the tax. Id.

Plaintiffs, husband and wife, are on the top 500 list. (Plaintiffs' Statement of Undisputed Facts (“PSUF”) ¶¶ 4–5.) As of July 30, 2013, Plaintiffs owed the FTB $454,991.48. (Id. ¶ 6.) $388,653.04 of this amount involves tax years 1990–1994. (Id. ¶¶ 21, 25.) The taxes Plaintiffs owed the FTB for years other than 1990–1994 would not make Plaintiffs eligible for the “top 500 list” because the delinquencies were not in excess of $100,000. (Id. ¶ 27.)

A notice of proposed tax assessments for tax years 1990–1992 was sent to Plaintiffs on December 31, 1997. (Id. ¶ 18.) A notice of proposed assessments for tax years 1993–1994 was sent to Plaintiffs on July 6, 1998. (Id. ¶ 19.) Plaintiffs had sixty days from the date the notices were mailed to request a hearing regarding the tax assessments. (Id. ¶ 20.; Exhibit D.) After the sixty days had passed, Plaintiffs' right to a hearing expired. (Id. ¶ 20, 22.) Thus, Plaintiffs' right to request any hearing with regard to tax assessments for tax years 1990–1994 expired sixty-one days after July 6, 1998. (Id. ¶ 22.)

Plaintiff Enna Berjikian has been licensed as a pharmacist in California since 1981 and as an attorney since 2006. (Id. ¶¶ 1,3.) Plaintiff Vicken Berjikian has been licensed as an attorney in California since 1983. (Id. ¶ 2.) On July 1, 2012, California Business and Professions Code Section 494.5 went into effect. (Id. ¶ 39.) Section 494.5 provides that California state governmental licensing entities shall refuse to issue, reactivate, reinstate, or renew a license and shall suspend a license if a licensee's name is included on a certified list. Cal. Bus. & Prof.Code § 494.5. The term “certified list” includes the FTB's top 500 list. Cal. Bus. & Prof.Code § 494.5(b)(1). “License” includes a certificate, registration, or any other authorization to engage in a profession or occupation issued by a state governmental licensing entity, as well as driver's licenses. Cal. Bus. & Prof.Code § 494.5(b)(2). “State governmental licensing entity” includes the DMV, the State Bar of California, and “any other state agency, board, or commission that issues a license, certificate, or registration authorizing an individual to engage in a profession or occupation, including any certificate, business or occupational license, or permit or license issued by the Department of Motor Vehicles....” Cal. Bus. & Prof.Code § 494.5(b)(4).

On April 18, 2013, the DMV received notice from the FTB that Plaintiffs were on the certified list of top 500 tax delinquencies. (PSUF ¶ 28.) On May 23, 2013, the DMV issued notices of intent to suspend both Plaintiffs' driver's licenses on September 30, 2013, pursuant to Section 494.5. (Id. ¶ 29.) On May 29, 2013, the Board of Pharmacy sent a notice of intent to suspend Enna Berjikian's pharmacy license with an effective suspension date of August 30, 2013. (Id. ¶ 30.) Plaintiffs' driver's licenses and Enna Berjikian's pharmacy license have been suspended pursuant to Section 494.5. (Id. ¶¶ 31–32.)

At the time Plaintiffs were notified they were going to lose their driver's licenses, their right to a hearing with regard to tax years 1990–1994 had expired almost fifteen years earlier. (Id. ¶ 33.) Their right to request a hearing with regard to tax year 2004 had expired almost two years earlier. (Id. ¶ 34.)

Under Section 494.5, if a licensee wishes to challenge the submission of his or her name on a certified list, the licensee “shall make a timely written request for release to the FTB.” Cal. Bus. & Prof. § 494.5(h). The FTB “shall immediately send a release to the appropriate state governmental licensing entity and the applicant or licensee,” if (1) the licensee has complied with the tax obligation; (2) the licensee has submitted a request for release not later than 45 days after the licensee's receipt of a preliminary notice “but the [FTB] ... will be unable to complete the release review and send notice of its findings to the licensee and state governmental licensing entity within 45 days ...;” or (3) the licensee is unable to pay the outstanding tax obligation due to a “current financial hardship” as determined by the FTB. Id.

Plaintiffs requested a waiver due to financial hardship under the third option, but the FTB denied their request. (PSUF ¶¶ 37–38.) The FTB did not provide any hearing opportunity as to this issue. (Id. ) Plaintiffs' right to a hearing with regard to tax year 2004 had expired roughly one year earlier, and Plaintiffs' right to a hearing with regard to tax years 1990–1994 had expired about fourteen years earlier. (Id. ¶ 39.) However, financial hardship was not an issue Plaintiffs could have brought up at a tax assessment hearing. (Id. ¶ 41.) Additionally, neither the DMV nor the Board of Pharmacy provided Plaintiffs with any hearing with regard to the loss of their licenses. (Id. ¶¶ 35–36.)

Plaintiffs then brought this action against the FTB, DMV, and Board of Pharmacy (collectively, “Defendants”). Plaintiffs allege Defendants violated their due process rights under the Fourteenth Amendment by not providing a hearing before depriving Plaintiffs of their driver's licenses and pharmacy license pursuant to California Business and Professions Code Section 494.5 (“Section 494.5 ”). (Plaintiffs' Motion at 5:3–6.) The parties agree that there are no disputed issues of material fact. Plaintiffs request that a judgment be entered in their favor, that a permanent injunction be issued ordering the DMV to reinstate Enna Berjikian's driver's license and the Board of Pharmacy to reinstate Enna Berjikian's pharmacy license, and for recovery of Plaintiffs' costs and attorney's fees. (Plaintiffs' Motion at 18:6–12.) The only question that remains is whether Plaintiffs' due process rights have been violated.

II. Legal Standard

Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). All reasonable inferences from the evidence must be drawn in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the moving party does not bear the burden of proof at trial, it is entitled to summary judgment if it can demonstrate that “there is an absence of evidence to support the nonmoving party's case.” Celotex, 477 U.S. at 323, 106 S.Ct. 2548.

Once the moving party meets its burden, the burden shifts to the nonmoving party opposing the motion, who must “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Summary judgment is warranted if a party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322, 106 S.Ct. 2548. A genuine issue exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party,” and material facts are those “that might affect the outcome of the suit under the governing law.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505. There is no genuine issue of fact “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). It is not the court's task “to scour the record in search of a genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1278 (9th Cir.1996). Counsel has an obligation to lay out their support clearly. Carmen v. San Francisco Sch. Dist., 237 F.3d 1026, 1031 (9th Cir.2001). The court “need not examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposition papers with adequate references so that it could conveniently be found.” Id.

III. Discussion

Plaintiffs allege that Section 494.5 violated their right to procedural due process by failing to provide for any hearing rights before depriving Plaintiffs of their...