Foster Dairy Farms v. Stanislaus Consol. Fire Prot. Dist.

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FOSTER DAIRY FARMS, et al., Plaintiffs and Respondents, v. STANISLAUS CONSOLIDATED FIRE PROTECTION DISTRICT, Defendant and Appellant.

F084192

California Court of Appeals, Fifth District

August 24, 2023

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Stanislaus County No. CV-20-002107 John R. Mayne, Judge.

Best Best & Krieger, Megan K. Garabaldi and Patrick D. Skahan for Defendant and Appellant.

Greenberg Traurig, Cris K. O'Neall, Tyler R. Andrews and Rowena Santos, for Plaintiffs and Respondents.

OPINION

SNAUFFER, J.

Four taxpayers jointly filed a tax-refund complaint against Stanislaus County and Stanislaus Consolidated Fire Protection District. The complaint alleged certain fire suppression assessments "were ... illegal and erroneous" because they were based on misclassifying properties "as 'industrial,' when in fact they were 'agricultural.'" These property types-industrial and agricultural-were contained in a District resolution which in turn was based on an engineer's report and a regional vote originally enacting the assessments pursuant to Article XIII D of California's Constitution. Importantly, the taxpayers did not, and have not, challenged the assessments on constitutional grounds- the taxpayers concede the assessments are valid and constitutional.

In the trial court, the government - Stanislaus County and Stanislaus Consolidated Fire Protection District ("District") - argued the taxpayers' refund requests were barred by various statutes of limitations because, in most instances, the taxes were paid several years prior to taxpayers filing the complaint. Alternatively, the government asserted the properties were correctly classified.

The complaint proceeded to trial and the taxpayers prevailed. The trial judge held the complaint was filed timely and the government misclassified each property as industrial rather than agricultural.

On appeal, the parties essentially repeat the arguments presented in the trial court. We conclude the complaint was filed timely; however, taxpayers' properties were not unreasonably classified as industrial. As explained below, the trial court failed to properly consider the District's resolution within the entire assessment scheme and failed to show appropriate deference to the District's role in classifying property to fund fire suppression. Accordingly, we will reverse the judgment.

BACKGROUND^[1]

In late 2004, District voters were "asked to vote on a proposed increase in Fire Suppression Assessments" "to bring the District back to financial solvency and to preserve fire suppression services to all property owners within the District." The District explained to voters its "proposed new Assessments were determined by a recent Assessment Engineering Study _."

Ballot

The ballot itself called for a simple up or down vote. A document accompanying the ballot informed each voter "[t]he proposed maximum annual assessment against your property is shown on the attached ballot."^[2] The document set forth various, undefined property classifications and assessment rates. It concluded by stating "[a] more detailed description of the assessment methodology and benefit calculation is contained in the Engineer's Report for the assessment, which is available for public inspection" at the District Clerk's Office.

Engineer's Report

The Engineer's Report "present[ed] the benefit analysis for the imposition of the assessment known as[] the Stanislaus Consolidated Fire Protection District Fire Suppression Assessment." In describing factors relevant to the analysis, the report provided:

"Government Code Section 50078 et. seq. requires that a fire suppression assessment be based upon the type of use of property and the risk classification of the structures or other improvements on, or the use of, the property. The risk classification may include, but need not be limited to, the amount of water required for fire suppression on that property, the structure size, type of construction, structure use, and other factors relating to potential fire and panic hazards and the costs of providing the fire suppression by the District to that property."

The report explained the analysis used "the property classifications used in [a National Fire Protection Association] document" entitled" 'Fire Loss in the United States During 2002.'" Each classification was then referenced "to the land use descriptions of the District parcels as provided by the County of Stanislaus," and each parcel was assigned an "NFPA property class."^[3]

The property classification assignments were subsequently tabulated into the following relevant groups: "Industry," "Agricultural," and "Vacant Land[.]" Notably, neither agricultural nor vacant land are specified in the NFPA document but were "included as [they comprised] a significant part of the District['s] acres[.]"

After identifying factors relevant to resource demand, the report "applied a weight to each factor." "Building [s]quare [f]ootage" was weighted at "80 percent" because "it was considered to be the most significant factor in determining demand on District fire response resources. [¶] In addition, ... District call data [was used] to determine how many fire suppression calls were related to structure fires and how many were related to unimproved parcel fires." The report "also considered District staff's analysis of the amount of resources used to respond to calls to structure fires compared to grass fires."

Property types were then segregated into "Structured Property," including "Industry," and "Unimproved Property," including "Agricultural / Vacant Land[.]" Structured property was estimated to require "98%" of the District's resources.

Finally, the report published three tables based on varying staffing levels and projected an "Annual Assessment Rate" per property type. These tables include "Industry" and "Agricultural / Vacant Land" property types but do not mention structures or improvements. The report did not define any property type.^[4] Resolutions

After the vote passed, the District's Board of Directors passed several resolutions. In the first, the Board acknowledged it "carefully examined and reviewed" the Engineer's Report "and [was] satisfied with each and all of the items and documents ... set forth therein . . .." The Board "approved" the report and "ordered [it] to be filed in the Office of the Clerk as a permanent record and to remain open to public inspection."

In the second resolution, the District Board stated its proposed fire suppression assessments "comply with all applicable provisions of the California State Constitution Article XIIID." The Board concluded, "[b]ased upon its review .. . of the [Engineer's] Report," "that:

"a) The land within the District service area will receive special benefit by the operation, maintenance and servicing of fire suppression services and appurtenant equipment within the boundaries of the District service area.

"b) The net amount to be assessed upon the lands within the District service area is in accordance and apportioned by a formula and method which fairly distributes the net amount among all eligible parcels in proportion to the special benefit to be received by each parcel . . .."

The second resolution ended by noting "this Resolution constitutes the Fire Suppression Assessment levy" for the coming fiscal year, and directed the clerk "to file the levy with the County Auditor . . .." It further directed the "County Auditor" to enter the assessment "on the County Assessment Roll" and collect the "levies . . . at the same time and in the same manner as the County taxes are collected . . .."

In the last resolution,^[5] the District Board restated compliance with California's Constitution, acknowledged voters approved the assessments, and stated the "District has set forth a new process of assessment for the levying charges [sic] or assessments for the purpose of fire protection. ... Levies henceforth will be solely by way of the methodology as described in 'Exhibit A'. Each and every rate set forth in 'Exhibit A' corresponds to rates authorized by the [approved] ballot vote . . .."

Exhibit A appears as follows:

Property Type

Assessment Rate

Public Assembly / Educational / Institutional

$413.00 per parcel

Residential (1 and 2 family dwellings)

$213.00 per parcel

Residential (3 or more living units)

$173.00 per unit

Stores and Offices

$0.078 per SF

Industry

$0.062 per SF

Agricultural / Vacant Land

$50.00 per parcel

Neither the exhibit nor the resolution itself defined property types.^[6]

Properties and Taxes^[7]

Foster Farms, LLC, Foster Dairy Number Two, Foster Dairy Farms, and Frantz Properties Family Limited Partnership each own parcels within the Stanislaus Consolidated Fire Protection District. Each entity operated its business on its land.

Foster Farms, LLC operated six parcels in Stanislaus County. For fiscal years 2012 through 2018, its parcels were classified as industrial and it paid $1,126,133.78 in District fire suppression assessments.

The parties stipulated Foster Farms, LLC's parcels were "devoted primarily to agricultural or livestock uses and being used for the commercial production of agricultural or livestock products." In total, these parcels were improved with buildings covering more than 2,300,000 square feet.

Foster Dairy Number Two operated one parcel in Stanislaus County. For fiscal years 2015 through 2018, its parcel was classified as industrial and it paid $33,379.42 in District fire suppression assessments.

The parties stipulated Foster Dairy Number Two's parcel was "devoted primarily to agricultural or livestock uses and being used for the commercial production of agricultural or livestock...