47 Cal. 4th 1298, 223 P.3d 57, 104 Cal. Rptr. 3d 195

Filed 2/4/10

IN THE SUPREME COURT OF CALIFORNIA

LORRAINE STEINHART,
Plaintiff and Appellant,
S158007
v.
Ct.App. 2/3 B190957
COUNTY OF LOS ANGELES,
Los Angeles County
Defendant and Respondent.
Super. Ct. No. LC073339

Article XIII A of the California Constitution (article XIII A), which the
voters adopted in June 1978 as Proposition 13, limits the ad valorem tax on real
property to 1 percent of the property?s ?full cash value.? (Id., ? 1, subd. (a).) As
relevant here, section 2, subdivision (a), of article XIII A (sometimes hereafter
section 2, subdivision (a)), defines ?full cash value? as the 1975-1976 assessed
value of the property adjusted for inflation, or the appraised value of the property
upon a ?change in ownership? occurring after the 1975-1976 assessment. The
issue this case presents is whether a ?change in ownership? occurred within the
meaning of this section upon the death of a trust settlor who transferred her
residence to a trust that was revocable during her life, who was the sole present
beneficiary of that revocable trust, and who provided in the trust document that
upon her death the trust would become irrevocable and her sister would have the
right to occupy the residence during her lifetime. Preliminarily, we must
determine whether the settlor?s surviving sister properly filed this action to
1


challenge an administrative determination that a change in ownership occurred.
The Court of Appeal here held that the surviving sister properly filed the action
and that no change in ownership occurred. For reasons set forth below, we reverse
the Court of Appeal?s judgment.
FACTUAL BACKGROUND1

During her lifetime, Esther Helfrick established a revocable trust, made
herself trustee and sole present beneficiary of the trust, and transferred to herself
as trustee her residence in Sherman Oaks, California. The trust became
irrevocable upon Helfrick?s death on March 24, 2001. At that time, under the
terms of the trust, Helfrick?s sister, plaintiff Lorraine Steinhart, received the right
to occupy and use the residence ?for so long as she lives,? provided she pay all
taxes, insurance, and assessments on the property and the costs of utilities and any
necessary repairs. Upon Steinhart?s death, the trustees of the trust were to sell the
residence and disburse the net proceeds to those specified in the trust instrument,
i.e., Helfrick?s siblings still living at the time of Steinhart?s death and the still-
living issue of any deceased siblings.
When Helfrick died, the residence?s assessed value for tax purposes was
$96,638, with total taxes due of $1,105.79. Upon her death, defendant County of
Los Angeles (County) reassessed the residence and increased its valuation for tax
purposes to $499,000. It then issued a prorated supplemental tax bill for the 2000-
2001 tax year in the amount of $1,085.19. For the next three tax years, the County
sent property tax bills of, respectively, $5,492.67, $5,764.45, and $6,245.33.
Pursuant to the terms of the trust, Steinhart paid these bills.

1
Because this appeal challenges a judgment of dismissal entered upon the
sustaining of a demurrer without leave to amend, we draw the operative facts from
the complaint. (Stephenson v. Drever (1997) 16 Cal.4th 1167, 1170, fn. 1.)
2



On July 24, 2004, Steinhart filed a claim with the Los Angeles County
Auditor-Controller (County Auditor) seeking a tax refund of $18,587.64.2 In
stating the reasons for her refund claim, she asserted that when she received a life
estate interest in the residence, no ?change in ownership? occurred within the
meaning of section 2, subdivision (a), to trigger reassessment.
Steinhart later received five letters from the County Auditor relating to the
challenged tax bills, each dated March 2, 2005, and each stating: ?The County has
completed its review of your claim(s) for refund of taxes and/or penalties you filed
with us on DECEMBER 21, 2004. [?] Your claim(s) was reviewed by the
ASSESSOR. Based on the documentation you submitted, they [sic] determined
that your claim does not meet the provisions in the Revenue and Taxation Code
for granting a refund. For this reason, your claim(s) for refund is denied effective
March 2, 2005. [?] Section 5141 of the State of California Revenue and Taxation
Code allows you six months from the effective date of denial of your claim(s) to
commence an action in the Superior Court to seek judicial review of this denial.
Should you have any questions or need further assistance regarding this claim
please contact the Los Angeles County Property Tax System at (888) 807-2111
and press 1 for the OFFICE OF THE ASSESSOR.? Steinhart also received a
letter from the County Assessor (Assessor) dated March 3, 2005, stating that the
reappraisal would ?stand? because ?[t]he real property transfer is a ?Change in
Ownership?, as defined by law.? The letter provided the name and telephone
number of a person Steinhart could contact ?[i]f [she] ha[d] questions.? At the
bottom, it also included the following: ?NOTICE: This notice is your record of
our action on your request for investigation. It is your responsibility to pay all

2
The complaint states that Steinhart filed the refund claim on April 4, 2004.
The written claim, which is attached to the complaint, indicates that Steinhart
signed the claim on July 24, 2004. A handwritten note on the claim appears to
indicate that the claim was ?mailed 8-4-04.? The Court of Appeal opinion states
that Steinhart filed the claim on July 24, 2004. The precise date is immaterial.
3


billed tax installments. Disputes involving the assessed value of your property
should be formally addressed to the Assessment Appeals Board at (213) 974-1471.
If we have indicated that a correction is being made, you have 60 days from the
date of your corrected tax bill to file an appeal.?
Steinhart did not pursue the matter with the Los Angeles County
Assessment Appeals Board (Assessment Appeals Board). Instead, on August 29,
2005, she filed an action against the County in superior court contesting the
reassessment. She alleged that the County had erred in denying her refund claim
because, under the terms of the trust, no change in ownership occurred upon
Helfrick?s death to trigger reassessment under section 2, subdivision (a). By way
of relief, Steinhart sought recovery of the excess real property taxes she had paid
on the residence for the years in question. She also requested ?a declaration that
pursuant to the terms of the trust instrument, no change [in] ownership occurred as
of the date of [Helfrick?s] death, and hence, defendants were not legally authorized
to tax the residence based on a reevaluation of the property as of the date of
[Helfrick?s] death.?
The County responded by way of demurrer, asserting that the complaint
failed to state a cause of action for the following reasons: (1) Steinhart did not
exhaust her administrative remedies before filing suit; (2) under Revenue and
Taxation Code section 60,3 which defines a ?change in ownership? as ?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 transfer of a life
estate to a non-spouse third party constitutes a change in ownership under section
2, subdivision (a); and (3) the court lacked power to issue the requested order for

3
All further unlabeled statutory references are to the Revenue and Taxation
Code.
4


declaratory relief, because the requested order would, in violation of section 4807,
prevent or enjoin the collection of the tax. In opposition to the demurrer, Steinhart
argued the following: (1) because her claims present no issues of fact, and the
reassessment is a nullity as a matter of law, she was not required to exhaust her
administrative remedies; (2) the County is estopped from invoking the exhaustion
doctrine, because the denial letters she received from the County led her to believe
the next step in the review process was the filing of an action in superior court
within six months of the County?s denial; (3) under Pacific Southwest Realty Co.
v. County of Los Angeles (1991) 1 Cal.4th 155 (Pacific Southwest), no change in
ownership occurred upon Helfrick?s death; and (4) section 4807 is inapplicable
because the complaint seeks a refund of paid taxes, not a prohibition against
collection of future taxes. After hearing, the trial court sustained the demurrer
without leave to amend, dismissed the complaint with prejudice, and ordered entry
of judgment for the County.4
On Steinhart?s appeal, the Court of Appeal reversed. For two reasons, it
first rejected the County?s reliance on the exhaustion doctrine: (1) Steinhart?s
claims present pure questions of law, not factual issues regarding the property?s
valuation; and (2) the futility exception to the exhaustion requirement applies
given the County?s ?unyielding position,? both in the trial court and on appeal,
that a change in ownership occurred.5 The court next rejected the County?s
reliance on section 4807, finding the statute inapplicable because Steinhart is
seeking not to enjoin collection of future taxes, but to obtain a refund of taxes she
has already paid. In other words, she is seeking a judicial declaration ?only in aid
of obtaining a refund, i.e., a ruling from the court to the effect that no change in

4
The trial court?s order did not specify the basis of its ruling. The transcript
of the demurrer hearing suggests the court agreed with both the County?s
procedural (exhaustion) and substantive (change in ownership) arguments.
5
The court did not address Steinhart?s estoppel argument.
5


ownership occurred and therefore the County was not authorized to reassess the
subject real property.? On the merits, the court, relying on our decision in Pacific
Southwest, found that no change in ownership occurred upon Helfrick?s death. In
reaching this conclusion, the court expressly disagreed with the decision in Leckie
v. County of Orange (1998) 65 Cal.App.4th 334, which reached a different
conclusion on analogous facts after finding the relevant discussion in Pacific
Southwest to be dicta.
We then granted the County?s petition for review.
DISCUSSION

As noted above, the County raises both procedural and substantive issues in
opposition to plaintiff?s refund claim. We begin with the procedural issues:
whether plaintiff failed to exhaust her administrative remedies and, if so, whether
that failure bars her action.
I. Exhaustion of Administrative Remedies

Article XIII of the California Constitution (article XIII), which addresses
taxation, specifies that ?[t]he county board of supervisors, or one or more
assessment appeals boards created by the county board of supervisors, shall
constitute the county board of equalization for a county.? (Art. XIII, ? 16.) It
further provides, with exceptions not applicable here, that ?the county board of
equalization . . . shall equalize the values of all property on the local assessment
roll by adjusting individual assessments.? (Ibid.) As our courts have observed, in
view of these provisions, a county board of equalization ?is a constitutional
agency exercising quasi-judicial powers. [Citation.]? (International Medication
Systems, Inc. v. Assessment Appeals Bd. (1997) 57 Cal.App.4th 761, 766; see also
Maples v. Kern County Assessment Appeals Bd. (2002) 96 Cal.App.4th 1007, 1013
[?as a board of equalization,? county assessment appeals board ?is a constitutional
agency exercising quasi-judicial powers delegated to it by the California
6


Constitution?]; Shell Western E & P, Inc. v. County of Lake (1990) 224
Cal.App.3d 974, 979 [while sitting as a board of equalization, county board of
supervisors is a constitutional agency exercising quasi-judicial powers delegated
to the agency by the Constitution].)
Article XIII also specifies that ?[t]he Legislature shall pass all laws
necessary to carry out [article XIII?s] provisions.? (Art. XIII, ? 33.) Pursuant to
this constitutional command, the Legislature has statutorily established a three-
step process for handling challenges to property tax assessments and refund
requests. The first step is the filing of an application for assessment reduction
under section 1603, subdivision (a), which provides: ?A reduction in an
assessment on the local roll shall not be made unless the party affected or his or
her agent makes and files with the county board [of equalization] a verified,
written application showing the facts claimed to require the reduction and the
applicant?s opinion of the full value of the property.? The second step, which
occurs after payment of the tax, is the filing of an administrative refund claim
under section 5097, subdivision (a), which provides in relevant part that ?[n]o
order for a refund . . . shall be made except on? the timely filing of a verified claim
for refund. By statute, an application for assessment reduction filed under section
1603 ?also constitute[s] a sufficient claim for refund under [section 5097] if? it
states that it ?is intended to constitute a claim for refund. If [it] does not so state,
[the applicant] may thereafter and within the [specified time] period . . . file a
separate claim for refund of taxes extended on the assessment which the applicant
applied to have reduced pursuant to [s]ection 1603 . . . .? (? 5097, subd. (b).) The
third and final step in the process is the filing of an action in superior court
pursuant to section 5140, which provides that a person who paid the property tax
may bring an action in superior court ?against a county or a city to recover a tax
which the board of supervisors of the county or the city council of the city has
refused to refund on a claim filed pursuant to Article 1 (commencing with Section
5096) of this chapter.? A court action may not ?be commenced or maintained . . .
7


unless a claim for refund has first been filed pursuant to Article 1 (commencing
with Section 5096).? (? 5142, subd. (a).)
As our prior decisions establish, ?the general rule? in California is that ?a
taxpayer seeking judicial relief from an erroneous assessment must . . . exhaust[]
his remedies before the administrative body empowered initially to correct the
error. [Citations.]? (Security-First Nat. Bk. v. County of L.A. (1950) 35 Cal.2d
319, 320 [holding that failure to apply to board of equalization for correction of
allegedly erroneous assessment precludes action for recovery of taxes].) In the
property tax context, application of the exhaustion principle means that a taxpayer
ordinarily may not file or pursue a court action for a tax refund without first
applying to the local board of equalization for assessment reduction under section
1603 and filing an administrative tax refund claim under section 5097. (Stenocord
Corp. v. City etc. of San Francisco (1970) 2 Cal.3d 984, 986-990 (Stenocord);
Georgiev v. County of Santa Clara (2007) 151 Cal.App.4th 1428, 1434-1435.)
Our prior decisions also establish that, for purposes of the exhaustion
requirement, the filing of a refund claim under section 5097 generally does not
excuse a taxpayer?s failure first to file with the local board of equalization an
application for assessment reduction under section 1603.6 For example, in
Stenocord, after receiving a notice of tax deficiency and demands for payment, the

6
Thus, Steinhart errs in asserting that ?[p]roceeding under the refund
procedure appears to be an alternative method to proceeding under the
equalization method [where] taxes have been illegally assessed or levied.? Section
5097, subdivision (b), constitutes further proof of Steinhart?s error, by providing,
as already noted, that an application for assessment reduction filed under section
1603 ?also constitute[s] a sufficient claim for refund? if it states that it ?is intended
to constitute a claim for refund,? and that if it does not so state, the applicant may
?thereafter,? i.e., after applying for assessment reduction, ?file a separate claim for
refund of taxes extended on the assessment which the applicant applied to have
reduced . . . .? (See also ? 5097, subd. (a)(1)(3) [time for filing a refund claim
depends on whether the taxpayer?s application for assessment reduction ?state[s]?
that it ?is intended to constitute a claim for a refund?].)
8


plaintiff, without applying to the local board of equalization for review, paid the
taxes, filed a refund claim with the board of supervisors and, upon the claim?s
rejection, filed a court action for recovery of the taxes paid. (Stenocord, supra, 2
Cal.3d at pp. 986-987.) Applying the general rule that ?a taxpayer seeking relief
from an erroneous assessment must exhaust available administrative remedies
before resorting to the courts? (id. at p. 987), we held that the plaintiff?s failure to
seek review before the board of equalization barred the plaintiff?s refund action
(id. at pp. 987-990). In reaching this conclusion, we rejected the plaintiff?s
contention that its filing of a refund claim with the board of supervisors satisfied
the exhaustion requirement. (Id. at p. 990; see also Plaza Hollister Ltd.
Partnership v. County of San Benito (1999) 72 Cal.App.4th 1, 34 [?refund
process? ?is distinct from the process of seeking a reduced assessment by filing an
application for equalization?]; Sunrise Retirement Villa v. Dear (1997) 58
Cal.App.4th 948, 958 [failure to file ? 1603 application ?will usually result in the
dismissal of the [refund] suit for failure to exhaust an available administrative
remedy?]; Osco Drug, Inc. v. County of Orange (1990) 221 Cal.App.3d 189, 193
[discussing ?distinction between the reduction in a base-year value [pursuant to
? 1603] and a right to a refund of taxes?].)
In this case, it is undisputed that Steinhart skipped step one of the statutory
process, i.e., she did not file an application for assessment reduction under section
1603, subdivision (a), with the Assessment Appeals Board, which acts as the
County?s board of equalization. Instead, she went straight to step two, filing a
refund claim with the County Auditor-Controller. She argues, however, that for
three reasons she may proceed with her lawsuit notwithstanding her failure to
apply for assessment reduction. Relying on Stenocord and Star-Kist Foods, Inc. v.
Quinn (1960) 54 Cal.2d 507 (Star-Kist), she first asserts that because her claim
involves no disputed facts regarding valuation and presents a ?pure question of
law? ? whether there was a change in ownership within the meaning of section 2,
subdivision (a) ? exhaustion of administrative remedies was unnecessary. She
9


next invokes the so-called ?futility exception? to the exhaustion principle, arguing
that applying for assessment reduction in this case would have been futile given
the County?s ?steadfast[]? and ? ?unyielding? ? position ?[a]t the trial court level,
before the Court of Appeal, and before this Court,? that a change in ownership
occurred here. Third, and finally, she argues that the County?s failure to indicate
in any of its correspondence that she had to apply for assessment reduction before
seeking judicial relief estops the County from relying on her failure to exhaust
administrative remedies. As explained below, none of these arguments has merit.
A. Under the governing statutes, Steinhart had to apply for assessment
reduction even though her claim presents a pure question of law.
As noted above, in arguing that exhaustion was unnecessary because her
claim presents a pure question of law, Steinhart relies on Stenocord and Star-Kist.
In the latter, the County?s assessor, in assessing the taxpayer?s leasehold interests,
refused to apply a statute requiring certain deductions, believing that the statute
was unconstitutional. (Star-Kist, supra, 54 Cal.2d at p. 509.) Without applying
for assessment reduction, the taxpayer petitioned the superior court for a writ of
mandate ordering the assessor to cancel the assessments and reassess the leasehold
interests in accordance with the statute. (Ibid.) In disagreeing that the taxpayer?s
failure to apply for assessment reduction precluded its court action, we first noted
that assessment reduction applications had ?not been required . . . in certain cases
where the facts were undisputed and the property assessed was tax-exempt
[citations], outside the jurisdiction [citation], or nonexistent [citations].? (Id. at p.
510.) We next explained: ?The necessity of [an application for assessment
reduction] is properly determined by the nature of the issues in dispute, and not by
whether an assessment is attacked in part or in toto. [Citations.] [?] The only
substantive issue in the present case is whether section 107.1 is unconstitutional on
its face. As in cases involving only the question whether property is taxable, there
is no question of valuation that the local board of equalization had special
10


competence to decide. There is no dispute as to the facts and no possibility that
action by the board might avoid the necessity of deciding the constitutional issue
or modify its nature. [Citation.] Under the circumstances, therefore, recourse to
the local board of equalization was not required before seeking a judicial
determination of the constitutionality of section 107.1.? (Id. at pp. 510-511.)
Although rejecting the exhaustion claim, we nevertheless held that mandate relief
was unavailable because the taxpayer had a plain, speedy, and adequate remedy at
law: ?paying its taxes under protest and suing for recovery thereof . . . .? (Id. at
p. 511.)

Ten years later, in Stenocord, we held that a taxpayer?s failure to apply for
assessment reduction barred the taxpayer?s court action for a tax refund, in which
the taxpayer alleged that the assessor had improperly found an understatement in
the taxpayer?s cost of goods. (Stenocord, supra, 2 Cal.3d at pp. 986-987.) In
reaching our conclusion, we noted that ?[a]n exception? to the exhaustion
requirement ?is made when the assessment is a nullity as a matter of law because,
for example, the property is tax exempt, nonexistent or outside the jurisdiction
[citations], and no factual questions exist regarding the valuation of the property
which, upon review by the board of equalization, might be resolved in the
taxpayer?s favor, thereby making further litigation unnecessary [citations].? (Id. at
p. 987.) We found, however, that the exception was inapplicable, notwithstanding
the taxpayer?s assertion that the assessor lacked statutory authority to reassess the
property and that the reassessment was arbitrary and unconstitutional. (Ibid.) We
explained: ?The fact that the assessor erroneously overvalues property which is
otherwise subject to tax does not render the assessment a nullity under the
foregoing rule, for disputes regarding valuation are within the special competence
of the board of equalization. [Citations.] If any question of valuation exists, it
would be irrelevant that plaintiff also challenges the assessment as ?arbitrary? or
void on constitutional grounds. [Citations.] If prior recourse to the board on the
question of valuation might have avoided the necessity of deciding the
11


constitutional issue, or modified its nature, plaintiff?s action was properly
dismissed. [Citation.] [?] It is evident from the face of the complaint that the
dispute herein involved a question of valuation which, if submitted to the board of
equalization, might have obviated [the taxpayer?s] action.? (Id. at p. 988.)
Steinhart argues that under Star-Kist and Stenocord, exhaustion was
unnecessary here because the assessment is a nullity as a matter of law and there is
no question of valuation the Assessment Appeals Board has special competence to
decide, no dispute as to the relevant facts, and no possibility that the Assessment
Appeals Board?s action might avoid the necessity of a court?s having to decide the
constitutional/statutory interpretation issue, i.e., whether a change in ownership
occurred. The County responds that under Stenocord, because the property here is
not tax exempt, nonexistent, or outside the jurisdiction, the assessment is not a
nullity as a matter of law and the exception to the exhaustion rule does not apply.
We need not choose between these divergent interpretations of our
precedents because, as the County alternatively argues, since we issued the cited
decisions, the Legislature has expressly and definitively settled the exhaustion
question insofar as it involves a challenge to a change in ownership determination.
In 1986, the Legislature enacted what is now section 1605.5, subdivision (a),
which provides in relevant part: ?The county board [of equalization] shall hear
applications for a reduction in an assessment in cases in which the issue is
whether or not property has been subject to a change in ownership, as defined in
Chapter 2 (commencing with Section 60) of Part 0.5 . . . .? (Added by Stats. 1986,
ch. 1457, ? 21, p. 5232, italics added.) In detailing the purpose of this section, the
relevant legislative history explained: ?The law is [currently] unclear if taxpayers
can appeal the issue of whether or not there has been a change [in] ownership to
either [a county board of equalization or an assessment appeals board]. [?] This
provision requires county boards of equalization and assessment appeals boards to
hear change [in] ownership issues.? (Assem. Com. on Rev. & Tax., Analysis of
Assem. Bill No. 2890 (1985-1986 Reg. Sess.) as amended Mar. 19, 1986, p. 7.)
12


Thus, section 1605.5, subdivision (a), expressly vests county boards with
?jurisdiction . . . to adjudicate change [in] ownership disputes? between assessors
and taxpayers and ?contemplates? that such disputes will ?be resolved by the local
appeals board before resort is made to the courts.?7 (Sunrise Retirement Villa v.
Dear, supra, 58 Cal.App.4th at p. 958.)
Subsequent legislative developments make crystal clear the Legislature?s
intent to bar taxpayers from challenging change in ownership determinations in
court if they fail first to apply to their local board of equalization for assessment
reduction, even if their challenge presents a pure question of law involving
undisputed facts. In 1992, a bill was introduced in the Legislature that would have
conditioned the requirement that a local board of equalization hear a change in
ownership dispute ?upon [a] request by an applicant? for assessment reduction
(Sen. Bill No. 1557 (1991-1992 Reg. Sess.) as introduced Feb. 18, 1992, ?5), and
would have specified that, to exhaust administrative remedies with respect to such
disputes, taxpayers must merely file a refund claim and need not apply for
assessment reduction. (Id., ? 8.) According to the legislative history, the bill?s
proponents argued that ?change-[in]-ownership issues, often being issues of law,
are not appropriately handled by assessment appeals boards.? (Sen. Rev. & Tax.
Com., Analysis of Sen. Bill No. 1557 (1991-1992 Reg. Sess.) Apr. 8, 1992, p. 4.)
Counties objected to the bill, complaining that taxpayers should not ?be able to
?jump over? the assessment appeals board and go directly to court if they thought it
would maximize their chances of prevailing.? (Id. at p. 5.) The bill did not pass.

7
Although requiring county boards of equalization to hear change in
ownership issues in the first instance, the Legislature simultaneously provided that
this requirement ?shall not be construed to alter, modify, or eliminate the right of
an applicant under existing law to have a trial de novo in superior court with
regard to the legal issue of whether or not that property has undergone a change in
ownership . . . .? (? 1605.5, subd. (a)(3), as added by Stats. 1986, ch. 1457, ? 21,
pp. 5232-5233.)
13



Instead, the next year, the Legislature passed a new provision expressly
confirming ?the requirement? that a taxpayer apply for assessment reduction ?in
order to exhaust administrative remedies,? but specifying that the filing with the
county board of equalization of a stipulation by the taxpayer and the county
assessor ?stating that issues in dispute do not involve valuation questions,? and the
board?s ?acceptance? of the stipulation (?with or without conducting a hearing?),
?shall be deemed compliance with [this] requirement.? (? 5142, subd. (b), as
added by Stats. 1993, ch. 387, ? 8, p. 2218.) At the same time, the Legislature
specified that ?[n]othing? in the new provision ?shall be construed to deprive the
county board of equalization of jurisdiction over nonvaluation issues in the
absence of a contrary stipulation.? (? 5142, subd. (c), as added by Stats. 1993, ch.
387, ? 8, p. 2218.)8 These statutes and their legislative history show that the
Legislature has made an express and considered decision not to eliminate the
requirement that taxpayers wanting to contest change in ownership determinations
first apply for assessment reduction to exhaust their administrative remedies.
Accordingly, we need not consider whether a judicially declared exception to the
exhaustion requirement is warranted under Star-Kist or Stenocord, which predated
the relevant statutes. A contrary conclusion would improperly negate the carefully
crafted statutory scheme the Legislature has, within its constitutional authority, put
in place. Thus, by failing to apply for assessment reduction, Steinhart failed to
exhaust her administrative remedies.9

8
Subdivision (c) of section 5142 actually states that ?[n]othing in this
subdivision shall be construed to deprive the county board of equalization of
jurisdiction over nonvaluation issues in the absence of a contrary stipulation.?
(Italics added.) However, the subdivision was added at the same time as section
5142, subdivision (b), and it has meaning only if construed to refer to subdivision
(b).
9
In addition to relying on Star-Kist and Stenocord, Steinhart complains that
because a county board of equalization has two years to act on an application for
assessment reduction (see ? 1604, subd. (c)), and a taxpayer must institute a civil

(footnote continued on next page)
14


B. The futility exception to the exhaustion requirement is inapplicable.
Steinhart alternatively argues that the futility exception to the exhaustion
requirement applies given the legal position the County has ?steadfastly? asserted
?[a]t the trial court level, before the Court of Appeal, and before this Court.? In
this regard, she echoes the analysis of the Court of Appeal, which explained:
?[A]t the trial court level and on appeal, the County continues to assert that as a
matter of law, the transfer . . . of a life estate from her late sister constitutes a

(footnote continued from previous page)

tax refund action in superior court within six months of a county?s denial of a
refund claim (see ? 5141), an assessment appeals board ?could defeat the
taxpayer?s refund lawsuit merely by waiting until after the six-month period
expires to render its final equalization decision.? Steinhart is wrong. A taxpayer
can easily avoid this problem simply by stating that the application for assessment
reduction is intended to constitute a section 5097 refund claim. (? 5141, subd.
(c).) Under these circumstances, the refund claim is not ?deemed denied? until
?the date the final installment of the taxes extended on such assessment becomes
delinquent or on the date the equalization board makes its final determination on
the application, whichever is later.? (Ibid.) More generally, a taxpayer may
simply wait to file a tax refund claim until after the county?s board of equalization
finally acts on an assessment reduction application. Under the statutes that
governed during the time frame at issue here, Steinhart would have had four years
from the date of each tax payment to file a refund claim with the County. (? 5097,
former subds. (a)(2) & (b), as amended by Stats. 1987, ch. 1184, ? 23, p. 4216.)
Thus, had she timely filed an application for assessment reduction, even had the
Assessment Appeals Board taken two full years to act on that application,
Steinhart would still have had ample time to file a refund claim with the County.
Under current law, if a taxpayer does not state that the application for assessment
reduction is intended to constitute a section 5097 refund claim, after a county
assessment appeals board finally acts on the application, the taxpayer has one year
to file a refund claim if the county?s written notice of its decision ?does not advise
the [taxpayer] to file a claim for refund? (id., subd. (a)(3)(A)), and six months if
the notice does advise the taxpayer to file such a claim ?within six months of
the . . . final determination? (id., subd. (a)(3)(B)).
15


change in ownership. In view of the County?s unyielding position on this legal
issue, an administrative challenge by Steinhart certainly would have been futile.?
On the record here, the futility exception is inapplicable. As we have
explained, ? ?[f]utility is a narrow exception to the general rule? ? requiring
exhaustion of remedies. (Sea & Sage Audubon Society, Inc. v. Planning Com.
(1983) 34 Cal.3d 412, 418.) The exception applies only if the party invoking it
can positively state that the administrative agency has declared what its ruling will
be in a particular case. (Ibid.) Applying these principles, in George Arakelian
Farms, Inc. v. Agricultural Labor Relations Bd. (1985) 40 Cal.3d 654, 662-663,
we refused to apply the futility exception where nothing in the record indicated
that, ?at the time that a request for [administrative] review would have been
timely, the [administrative agency] had predetermined its position as to? the issue
in question. Similarly, nothing in the record here indicates that, at the time an
application for assessment reduction would have been timely, the County?s
Assessment Appeals Board had predetermined its position as to whether a change
in ownership had occurred.10 Contrary to Steinhart?s argument and the Court of
Appeal?s analysis, the position the County took in the subsequent court action
Steinhart filed is insufficient alone to invoke the futility exception.11 Thus, the

10
Notably, Steinhart does not assert that she declined to apply for assessment
reduction because she knew or suspected the Assessment Appeals Board would
deny her request. Rather, in her brief, she concedes she simply overlooked the
requirement, explaining that when she filed her lawsuit, she was ?ignorant? of the
requirement that she apply to the Assessment Appeals Board for assessment
reduction, and that she ?first became aware? of section 1605.5 only ?[u]pon
review of [the] County?s demurrer papers filed in the Superior Court.?
11
Regarding futility, Steinhart does not, and the Court of Appeal did not, rely
on the administrative denial of Steinhart?s refund claim. Nor could they, given
that, as already explained, the statutory scheme requires a taxpayer to file both an
application for assessment reduction and a separate refund claim, unless the
application for assessment reduction expressly states that it is intended to
constitute a claim for refund (? 5097) or a stipulation ?stating that issues in dispute

(footnote continued on next page)
16


futility exception does not apply to excuse Steinhart?s failure to file an application
for assessment reduction.
C. The County is not estopped from relying on Steinhart?s failure to
exhaust remedies.
Reviving an argument the Court of Appeal did not address, Steinhart argues
that the notices she received from the County regarding her refund claim estop the
County from relying on her failure to exhaust her administrative remedies by
applying to the Assessment Appeals Board for assessment reduction. She relies
principally on the five notices from the County Auditor, all dated March 2, 2005
(March 2 notices), which stated in relevant part: ?The County has completed its
review of your claim(s) for refund of taxes and/or penalties you filed with us on
DECEMBER 21, 2004. [?] Your claim(s) was reviewed by the ASSESSOR.
Based on the documentation you submitted, they [sic] determined that your claim
does not meet the provisions in the Revenue and Taxation Code for granting a
refund. For this reason, your claim(s) for refund is denied effective March 2,
2005. [?] Section 5141 of the State of California Revenue and Taxation Code
allows you six months from the effective date of denial of your claim(s) to
commence an action in the Superior Court to seek judicial review of this denial.?
From this language, Steinhart argues, ?[i]t appeared that the ?County? had spoken,
and its word was that [her] claim had been denied, and pursuant to the applicable
claim for refund statutory scheme, she had six months in which to commence an
action in the Superior Court.? Moreover, Steinhart asserts, nothing in these
notices or in the notice from the County Assessor dated March 3, 2005 (March 3
notice) ?advised? her ?that she should have proceeded by a request for

(footnote continued from previous page)

do not involve valuation questions? is filed with and accepted by the county board
of equalization. (? 5142, subd. (b).)
17


equalization under Section 1601 . . . rather than a claim for refund under Section
5096,? or that ?prior to filing her action in the Superior Court within six months of
the denial of her [refund] claim, she must first seek equalization by the
Assessment Appeals Board.? Estoppel applies, Steinhart contends, because ?in
filing her civil action . . . without first? applying for assessment reduction, she
?relied on the advice given by [the] County? in these notices.
As we have explained, ?[t]he doctrine of equitable estoppel is founded on
concepts of equity and fair dealing.? (Strong v. County of Santa Cruz (1975) 15
Cal.3d 720, 725.) ?The essence of an estoppel is that the party to be estopped has
by false language or conduct ?led another to do that which he [or she] would not
otherwise have done and as a result thereof that he [or she] has suffered injury.?
[Citation.]? (State Compensation Ins. Fund v. Workers? Comp. Appeals Bd.
(1985) 40 Cal.3d 5, 16.) The doctrine ?ordinarily will not apply against a
governmental body except in unusual instances when necessary to avoid grave
injustice and when the result will not defeat a strong public policy. [Citations.]?
(Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763, 793.)
On the undisputed facts here, Steinhart?s estoppel argument fails as a matter
of law. (See Cal. Cigarette Concessions v. City of L.A. (1960) 53 Cal.2d 865, 868
(Cal. Cigarette) [?When . . . the facts are undisputed, the existence of an estoppel
is a question of law?].) As we long ago explained in McKeen v. Naughton (1891)
88 Cal. 462, 467, ? ?in order to work an estoppel,? ? a representation ? ?must
generally be a statement of fact. It can rarely happen that the statement of a
proposition of law will conclude the party making it from denying its correctness,
except when it is understood to mean nothing but a simple statement of fact.?
[Citation.]? In McKeen, we applied this principle to reject the claim that a party?s
opposition to a motion to dismiss an appeal for lack of jurisdiction estopped the
party from later arguing that the judgment rendered upon that appeal was void for
lack of jurisdiction. We explained: ?Every fact in connection with the attempted
taking of the appeal was within the knowledge of the [party who moved for the
18


appeal?s dismissal], and being chargeable with a knowledge of the law, neither he
nor the appellant here, who stands in his place, can be heard to say that he was
deceived by any contention of the [party who opposed the appeal?s dismissal] in
[the earlier] action, as to the law governing appeals from justices? courts, and
involved in the decision of that motion.? (Ibid.) Similarly, in this case, every fact
in connection with Steinhart?s challenge to the County?s reassessment was within
Steinhart?s knowledge. Indeed, Steinhart does not identify any fact that was
unknown to her; instead, she asserts she was ignorant of the law that required her
to apply to the Assessment Appeals Board for assessment reduction before filing a
refund action in court, and she claims the County?s letters misled her regarding
this legal requirement.
It is also significant that Steinhart, in filing and pursuing her tax refund
claim, was represented by counsel.12 In general, the law ?particularly? disfavors
estoppels ?where the party attempting to raise the estoppel is represented by an
attorney at law.? (Kunstman v. Mirizzi (1965) 234 Cal.App.2d 753, 757.) For
purposes of analyzing estoppel claims, attorneys are ?charged with knowledge of
the law in California.? (Tubbs v. Southern Cal. Rapid Transit Dist. (1967) 67
Cal.2d 671, 679 [rejecting claim of estoppel to assert statute of limitations].)
Moreover, Steinhart?s counsel concedes that before filing this action in court on
Steinhart?s behalf, he actually ?read . . . the applicable claim for refund statutory
scheme.? Then, as now, that statutory scheme included section 5142, subdivision
(b), which, as already explained, expressly references ?the requirement that? the
taxpayer ?appl[y] for reduction under Chapter 1 (commencing with Section 1601)

12
In initially applying for a refund, Steinhart submitted a memorandum
entitled ?Reason For Refund Claim? and signed by Terran T. Steinhart as
?Attorney for Claimant.? The March 3 notice was addressed to Terran T.
Steinhart.
19


of Part 3 in order to exhaust administrative remedies.?13 Steinhart?s counsel also
concedes that before filing this action, he read our decision in Pacific Southwest.
There, in recounting that litigation?s procedural history, we explained: ?Plaintiff
paid tax bills pursuant to the increased valuation but applied for a reduction of the
assessment, which it later amended into a claim for refund under Revenue and
Taxation Code section 5097, subdivision (b).? (Pacific Southwest, supra, 1
Cal.4th at p. 160, italics added.) As already explained, section 5097, subdivision
(b), provides a taxpayer with two ways to file a proper refund claim: (1) stating in
an ?application for a reduction in an assessment filed pursuant to Section 1603?
that ?the application is intended to constitute a claim for refund?; or (2) after
applying for assessment reduction, ?fil[ing] a separate claim for refund of taxes
extended on the assessment which applicant applied to have reduced pursuant to
Section 1603 or Section 1604.? Under the circumstances, Steinhart is clearly
chargeable with the knowledge that the law required her to apply to the
Assessment Appeals Board for assessment reduction before filing a refund action
in court. And, as we long ago explained, one who acts with full knowledge of
plain provisions of law and their probable effect on facts within his or her
knowledge, especially where represented by counsel, may claim neither ignorance
of the true facts nor detrimental reliance on the conduct of the person claimed to

13
At oral argument, Steinhart?s counsel, although confirming he read the
statutory scheme governing tax refunds before filing this action, asserted he did
not notice section 5142, subdivision (b)?s express reference to the requirement that
taxpayers apply for assessment reduction under section 1601 et seq. ?in order to
exhaust administrative remedies.? This assertion does not aid Steinhart, because,
absent a confidential relationship, one asserting estoppel must show that in relying
on the alleged misrepresentation, he or she ?acted as a reasonably prudent person
would act, and was not guilty of negligence or carelessness.? (Robbins v. Law
(1920) 48 Cal.App. 555, 562.) Thus, Steinhart is wrong in arguing that, ?[h]aving
read . . . the applicable claim for refund statutory scheme,? she was
?understandably ignorant? of the requirement that she go to the Assessment
Appeals Board before going to court.
20


be estopped, two of the essential elements of equitable estoppel. (Cal. Cigarette,
supra, 53 Cal.2d at p. 871.)
Finally, it is significant that the notices on which Steinhart bases her
estoppel claim were, at most, ambiguous and confusing regarding Steinhart?s need
to apply to the Assessment Appeals Board for assessment reduction. It is true, as
Steinhart observes, that the March 2 notices, after advising that the County
Auditor had rejected her refund claims, stated: ?Section 5141 of the State of
California Revenue and Taxation Code allows you six months from the effective
date of denial of your claim(s) to commence an action in the Superior Court to
seek judicial review of this denial.? However, neither this statement, which
simply advised Steinhart of the applicable statute of limitations, nor anything else
in the March 2 notices affirmatively represented that there were no other
prerequisites to filing a court action or that Steinhart had met all other
prerequisites. At best, this is but one possible interpretation that arguably could
be read into the accurate advisement regarding the applicable statute of limitations.
(See Honig v. San Francisco Planning Dept. (2005) 127 Cal.App.4th 520, 530-
531 [no estoppel where notice that referred only to statutory filing requirement,
and was silent regarding statutory service requirements, did not indicate that
timely filing of a petition would be sufficient to obtain judicial review, did not
purport to address the requirements for serving the petition, and did not state that
failure to comply with any service requirements would be excused]; Beresford
Neighborhood Assn. v. City of San Mateo (1989) 207 Cal.App.3d 1180, 1186-1187
[same].) It is also true, as Steinhart observes, that the County Assessor?s March 3
notice, after advising that ?[d]isputes involving the assessed value of your property
should be formally addressed to the Assessment Appeals Board,? stated: ?If we
have indicated that a correction is being made, you have 60 days from the date of
your corrected tax bill to file an appeal.? However, like her reading of the March
2 notices, Steinhart?s reading of these statements ? that the latter ?specified the
[only] factual circumstances under which review by the [Assessment Appeals]
21


Board was required,? and the former ?was not relevant? because no correction was
being made ? is but one possible interpretation that arguably could be adopted.
It is at least equally, if not more, plausible to read the former statement as a
general advisement that all disputes involving the assessed value of property must
be brought before the Assessment Appeals Board, and the latter statement as
addressing only one kind of dispute subject to this requirement. Of course,
Steinhart?s disagreement with the County Assessor?s determination clearly
qualified as a ?[d]ispute[] involving the assessed value of? the property. That the
notices did not clearly indicate Steinhart could file a court action without first
taking her dispute to the Assessment Appeals Board weighs against a finding of
estoppel. As we have explained, where a party asserts estoppel, ?the facts proved
must be such that an estoppel is clearly deducible from them. . . . [Citation.] [?]
The representation, whether by word or act, to justify a prudent man in acting
upon it, must be plain, not doubtful or matter of questionable inference. Certainty
is essential to all estoppels. [Citation.]? (Wheaton v. Insurance Co. (1888) 76 Cal.
415, 429-430.)
Taking all of the circumstances into consideration, we conclude that
Steinhart?s estoppel claim fails as a matter of law.
II. There Was A Change in Ownership Within the Meaning of Article
XIII A, Section 2, Subdivision (a).
In the past, we have elected to address the merits of issues that raised
?important questions of public policy,? despite a party?s failure to exhaust
administrative remedies. (Lindeleaf v. Agricultural Labor Relations Bd. (1986) 41
Cal.3d 861, 870-871.) Here, the County asks us to reach the change in ownership
issue notwithstanding Steinhart?s failure to exhaust administrative remedies, and
both the parties and numerous amici curiae have fully briefed the issue. Given
these circumstances and the importance of the question presented to taxing
agencies, state and local governments, and those whose property interests may be
22


subject to taxation, we now address the merits of the substantive issue the parties
raise, despite Steinhart?s failure to exhaust her administrative remedies. (Cf.
Connolly v. County of Orange (1992) 1 Cal.4th 1105, 1115 [addressing merits of
issue, notwithstanding procedural obstacles, ?[b]ecause of the importance of the
questions presented in this matter to taxing agencies, local government, and school
districts, and the individual and institutions whose property interests may be
subject to taxation?].)
Regarding that issue, ?our task is to effectuate the voters? intent in adopting
article XIII A. [Citations.]? (City and County of San Francisco v. County of San
Mateo (1995) 10 Cal.4th 554, 562.) In performing this task, we look first to the
words of the provision in question, giving them their natural and ordinary
meaning, unless it appears they were used in some technical sense. (Ibid; see also
Thompson v. Department of Corrections (2001) 25 Cal.4th 117, 122; ITT World
Communications, Inc. v. City and County of San Francisco (1985) 37 Cal.3d 859,
865; Board of Supervisors v. Lonergan (1980) 27 Cal.3d 855, 863.) ?The words
used in a [constitutional provision] ?must be taken in the ordinary and common
acceptation, because they are presumed to have been so understood by the framers
and by the people who adopted? ? the provision. (Kaiser v. Hopkins (1936) 6
Cal.2d 537, 539.)
As noted above, the constitutional provision here in question ? article
XIII A, section 2, subdivision (a) ? provides in relevant part that, in applying the
1 percent limit on ad valorem taxes, a property?s ? ?full cash value? means the
county assessor?s valuation of real property as shown on the 1975-76 tax bill
under ?full cash value? or, thereafter, the appraised value of real property when . . .
a change in ownership has occurred after the 1975 assessment.? Thus, the
substantive question before us is whether a ?change in ownership? within the
meaning of this provision occurred upon Helfrick?s death. For reasons that follow,
we hold it did.
23


The starting point for our conclusion lies in the fact that, during her
lifetime, Helfrick transferred the residence to a trust of which she was the sole
present beneficiary and as to which she held the power to revoke. Under general
principles of trust law, trust beneficiaries hold ?the equitable estate or beneficial
interest in? property held in trust and are ?regarded as the real owner[s] of [that]
property.? (Title Ins. & Trust Co. v. Duffill (1923) 191 Cal. 629, 647 (Duffill).)
The trustee is ?merely the depositary of the legal title? to the property (ibid.);
? ?the legal estate? ? the trustee holds ? ?is . . . no more than the shadow . . .
following the equitable estate . . . .? ? (Id., at p. 648.) Moreover, ?[p]roperty
transferred to, or held in, a revocable inter vivos trust is deemed the property of
the settlor . . . .? (Zanelli v. McGrath (2008) 166 Cal.App.4th 615, 633, italics
added; see also Arluk Medical Center Industrial Group, Inc. v. Dobler (2004) 116
Cal.App.4th 1324, 1331-1332 [?a settlor with the power to revoke a living trust
effectively retains full ownership and control over any property transferred to the
trust?].) Any interest that beneficiaries of a revocable trust have in trust property
is ?merely potential? and can ?evaporate in a moment at the whim of the
[settlor].?14 (Johnson v. Kotyck (1999) 76 Cal.App.4th 83, 88; see also Security-

14
A number of California statutes reflect the Legislature?s recognition of
these principles. (See Prob. Code, ?? 15800 [holder of revocation power, not
beneficiary, has rights otherwise afforded beneficiary under California?s Trust
Law (id., ?? 15000 et seq.) and is owed duties of trustee], 15801, subd. (a) [holder
of revocation power, not beneficiary, has power to consent or withhold consent
where beneficiary?s consent may, or must, be given before action may be taken],
15802 [holder of revocation power, not beneficiary, shall be given any notice that
is to be given to a beneficiary], 15410, subd. (a) [when settlor revokes trust,
property shall be disposed of as settlor directs], 16001, subd. (a) [trustee of
revocable trust shall follow written directions of holder of revocation power],
16064, subd. (b) [trustee of revocable trust need not report information or account
to beneficiary], 18200 [during lifetime of settlor who retains revocation power,
trust property is subject to claims of settlor?s creditors to extent of revocation
power], 19001, subd. (a) [property subject to revocation power at the time of
settlor?s death is subject to claims of creditors of deceased settlor?s estate]; see

(footnote continued on next page)
24


First Nat. Bank of Los Angeles v. Wellslager (1948) 88 Cal.App.2d 210, 214
[settlor with revocation power ?retain[s] the power and control of the trust estate
and [can] with a stroke of the pen . . . divest[] the beneficiaries of their interest?].)
Thus, although transferring legal title to the residence to herself as trustee,
Helfrick, as sole trust beneficiary and holder of the revocation power, continued to
hold the entire equitable estate personally and effectively retained full ownership
of the residence; any interest Steinhart (or her siblings or their issue) had in the
residence under the terms of the trust was merely potential, and could have
evaporated in a moment at Helfrick?s whim. Under these circumstances, it cannot
be said that the transfer of bare legal title to Helfrick as trustee constituted a
?change in ownership? within the meaning of article XIII A, and no one contends
otherwise.
Upon Helfrick?s death, the trust became irrevocable and the entire equitable
estate in the residence, which Helfrick had personally held during her lifetime,
transferred from Helfrick to Steinhart and her siblings (or their issue) as
beneficiaries of the irrevocable trust. (See Empire Properties v. County of Los
Angeles (1996) 44 Cal.App.4th 781, 787 [upon settlor?s death, revocable trust
became irrevocable and ?the full beneficial interests in the property transferred to?
the ?residual beneficiaries of the trust?].) It is true that, under the terms of the
trust, the beneficial estate in the residence was divided among Steinhart, who, as
life tenant, held the right to immediate possession, and Steinhart?s siblings (or
their issue), who held only a remainder interest in any net proceeds that might
someday be realized from sale of the residence after Steinhart?s death. But that

(footnote continued from previous page)

also Zanelli v. McGrath, supra, 166 Cal.App.4th at p. 633 [statutes ?recognize that
when property is held in [a revocable] trust, the settlor and lifetime beneficiary
? ?has the equivalent of full ownership of the property? ? ?].)
25


circumstance does not alter the fact that, upon Helfrick?s death, the entire
equitable estate in the residence was transferred from Helfrick to, collectively,
Steinhart and her siblings (or their issue) as beneficiaries of the irrevocable trust.
In other words, upon Helfrick?s death, real ownership of the residence ? which,
as explained above, follows the equitable estate ? transferred from Helfrick to
Steinhart and her siblings (or their issue) as beneficiaries of the irrevocable trust.
For purposes of section 2, subdivision (a), this transfer constituted a ?change in
ownership? within the common and ordinary understanding of that phrase.15
To the extent the constitutional language, as applied to the facts of this
case, is ambiguous, the conclusion that a change in ownership occurred here under
section 2, subdivision (a), is consistent with the ?interpretive aids? we use to
resolve ambiguities in article XIII A?s language: the Proposition 13 ballot
materials the voters received and contemporaneous constructions by the
Legislature and administrative agencies charged with article XIII A?s
implementation. (Amador Valley Joint Union High School Dist. v. State Bd. Of
Equalization (1978) 22 Cal.3d 208, 246 (Amador); see also City and County of
San Francisco v. County of San Mateo, supra, 10 Cal.4th at p. 563.) Regarding
the former, in the ballot pamphlet for Proposition 13, the Legislative Analyst
explained that under the measure, a property?s assessed value ?could . . . be
increased by no more than 2 percent per year as long as the same taxpayer
continued to own the property.? (Ballot Pamp., Primary Elec. (June 6, 1978),
analysis of Prop. 13 by Legis. Analyst, p. 57, italics added.) Here, upon Helfrick?s
death, when all of the beneficial estate in her residence was transferred, Helfrick

15
Because, as earlier explained, the legal title to trust property a trustee holds
is ? ?no more than the shadow . . . following the equitable estate? ? (Duffill supra,
191 Cal. at p. 648), that the legal title Helfrick held as trustee also passed upon her
death to successor trustees is of little significance. (See Cal. Code Regs. tit. 18,
? 462.240, subd. (b) [?transfer caused by the substitution of a trustee? does not
?constitute a change in ownership?].)
26


unquestionably did not ?continue[] to own the property.? (Ibid.) Thus, the
explanation the voters received regarding article XIII A?s effect fully supports the
conclusion that a ?change in ownership? occurred here under section 2,
subdivision (a), such that the assessed value of the residence could be increased by
more than 2 percent.
Likewise supporting this conclusion is the contemporaneous construction of
article XIII A by the Legislature and administrative agencies charged with the
article?s implementation. As our prior decisions explain, the year after article XIII
A?s passage, the Legislature adopted a statutory framework for implementing it.
(See Pacific Southwest, supra, 1 Cal.4th at pp. 160-162.) That framework
includes section 60, which provides the following ?overarching definition?
(Pacific Southwest, supra, at p. 162) of ?change in ownership? under section 2,
subdivision (a): ?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.? (? 60.) Section 61 then elaborates on this definition by setting forth
a non-exhaustive list of specific transfers that constitute a ?change in ownership,
as defined in Section 60,? ?[e]xcept as otherwise provided in section 62.? As here
relevant, section 61, subdivision (h), provides that ?change in ownership, as
defined in section 60, includes . . . : [?] . . . [?] . . . [a]ny interests in real property
that vest in persons other than the trustor (or, pursuant to section 63, his or her
spouse) when a revocable trust becomes irrevocable.? Complementing this
provision, section 62, subdivision (d), provides that a ?[c]hange in ownership shall
not include: [?] . . . [?] . . . [a]ny transfer by the trustor . . . into a trust for so long
as (1) the transferor is the present beneficiary of the trust, or (2) the trust is
revocable . . . .? The Legislature adopted these provisions upon the
recommendation of a task force it specially created to study and implement article
XIII A?s ?change in ownership? provision, section 2, subdivision (a). (Pacific
Southwest, supra, at p. 161.) In proposing these provisions, the task force
explained: ?Revocable living trusts are merely a substitute for a will. The gifts
27


over to persons other than the trustor are contingent; the trust can be revoked or
those beneficiaries may predecease the trustor. Transfers into trust are not
changes in ownership if either: [?] (a) The trust is revocable, or; [?] (b) The
creator of the trust is its sole beneficiary during his lifetime. [?] If the trust is
revocable it is excluded because the rights conferred are contingent. If the trustor
is the sole beneficiary during his lifetime, his retained interest is considered to be
?substantially equivalent in value? to the fee interest in any real property covered
by the trust. He is therefore the true owner and the change in ownership does not
occur until the property passes to the remaindermen on the trustor?s death.?
(Assem. Rev. & Tax. Com., Task Force on Prop. Tax Administration Rep. (Jan.
22, 1979) p. 43 (Task Force Report).)
The State Board of Equalization, through an implementing regulation, has
also expressly addressed section 2, subdivision (a)?s application to transactions
involving trusts. That regulation begins by stating a ?[g]eneral [r]ule? that, for
purposes of section 2, subdivision (a), ?[t]he transfer by the trustor . . . of real
property into a trust is a change in ownership . . . at the time of the transfer.? (Cal.
Code Regs., tit. 18, ? 462.160, subd. (a).) The regulation then specifies a list of
?[e]xceptions? to the general rule ? i.e. ?transfers? involving trusts that ?do not
constitute changes in ownership? ? including, as here relevant: (1) ?[t]he transfer
of real property by the trustor to a trust in which the trustor-transferor is the sole
present beneficiary of the trust? (id., ? 462.160, subd. (b)(1)(A)); and (2) ?[t]he
transfer of real property . . . by the trustor to a trust which is revocable by the
trustor? (id., ? 462.160, subd. (b)(2)).16 Regarding revocable trusts, the regulation
further provides that ?a change in ownership does occur at the time the revocable
trust becomes irrevocable unless the trustor-transferor remains or becomes the sole

16
Consistent with these provisions, a separate regulation specifies that ?[t]he
transfer of bare legal title? does not ?constitute a change in ownership.? (Cal.
Code Regs., tit. 18, ? 462.240, subd. (a).)
28


present beneficiary or unless otherwise excluded from change in ownership.? (Id.,
? 462.160, subd. (b)(2).)
We generally accord ?great weight? to the statutes the Legislature has
passed and the regulations the State Board of Equalization has promulgated to
implement article XIII A. (Amador, supra, 22 Cal.3d at p. 246.) Under both the
express language of, and the underlying justification for, section 61, subdivision
(h), section 62, subdivision (d), and the administrative regulation discussed above,
it is clear that upon Helfrick?s death, a ?change in ownership? under section 2,
subdivision (a), occurred in this case. Notably, Steinhart does not even argue
otherwise, conceding in her brief that under ?a literal application of? section 61,
subdivision (h)?s language, ?a change in ownership occurred? when Helfrick died,
?the revocable trust became irrevocable,? and her (Steinhart?s) ?life estate vested.?
Instead, Steinhart argues, and the Court of Appeal held, that insofar as these
provisions define a ?change in ownership? to include the transfer that occurred
upon Helfrick?s death, they are in conflict with, and therefore trumped by, section
60?s superseding general definition of ?change in ownership.? In making this
argument, Steinhart relies on our conclusion in Pacific Southwest, supra, 1 Cal.4th
at page 169, that the ?examples? sections 61 and 62 set forth were intended ?to be
derivative or explanatory, and not to conflict with section 60?s general rule,? and
that courts ?are constrained to avoid? constructions of those sections that ?would
render meaningless? section 60?s ?preeminent command.? She also relies on our
discussion in Pacific Southwest, supra, at page 165, of whether a change in
ownership occurs under section 2, subdivision (a), upon ?the conveyance of fee
simple from parent to child subject to the reservation of a life estate.? After noting
that the Legislature had expressly included such transfers in section 62?s list of
29


examples of exempt transfers (via section 62, subdivision (e)),17 we stated: ?But
even if the Legislature had not done so, reassessment would be barred under the
carefully drafted basic test of section 60, not only because the beneficial use would
not have transferred, but also because the value of each divided interest in the
estate would not approach that of a fee. A purchaser of the reserved estate would
be buying a life estate per autre vie ? a freehold estate, to be sure, but an estate of
questionable value because subject to complete defeasance at an unknown time.
Rare is the mortgagee willing to lend on the security of an estate so ephemeral.
The value of the reversionary or remainder interest would also be reduced because
the time of vesting would be uncertain and, depending on the care with which the
original conveyance was drafted, the value of the ultimate estate might be less at
the time of vesting because of intervening conveyances, creditors? demands, and
the like. [?] By contrast, when the life estate ends and the remainder or reversion
indefeasibly vests in the grantees the value of the estate is known and is identical
to the value of the fee. It is at that point that a change in ownership has occurred,
as the Legislature specifically provided in accord with the task force?s
recommendation. (? 61, subd. [(g)].)?18 (Pacific Southwest, supra, at pp. 165-166,
fn. omitted.) Based on this discussion, Steinhart argues that ?because the value of
a life estate is never substantially equal to the value of the fee interest, or
alternatively, the value of [her] specific life estate is not[, in light of her age when
Helfrick died,] substantially equal to the value of the fee interest in the residence,?

17
Section 62, subdivision (e), provides in relevant part that a change in
ownership shall not include ?[a]ny transfer by an instrument whose terms reserve
to the transferor . . . an estate for life. However, the termination of such . . . estate
for life shall constitute a change in ownership, except as provided in subdivision
(d) and in section 63.?
18
Section 61, subdivision (g), provides that a change in ownership, as defined
in section 60, includes ?[a]ny vesting of the right to possession or enjoyment of a
remainder or reversionary interest that occurs upon the termination of a life
estate . . . except as provided in subdivision (d) of section 62 and in section 63.?
30


the transfer here did not satisfy what we have called the ?third prong? of section
60 ? ?the value of which is substantially equal to the value of the fee interest.?
(Pacific Southwest, supra, 1 Cal.4th at p. 165.) And, she continues, because
section 60 states ?the super[s]eding, general test? for a change in ownership, the
result it dictates overrides the result dictated by literal application of section 61,
section 62, or the relevant administrative regulations.
Steinhart?s argument fails for the simple reason that it erroneously focuses
only on the interest Steinhart received, rather than the total extent of the interest
Helfrick transferred when the trust became irrevocable. (See Pacific Southwest,
supra, 1 Cal.4th at p. 164 [? 60?s ?third prong? focuses on ?the value of the
interest transferred?].) As discussed above, at the time of her death, Helfrick
personally held the entire equitable estate in the residence and was regarded as the
residence?s real owner. Under the terms of the trust, upon her death, Helfrick
transferred not just a life estate, but the entire fee interest ? i.e., the full bundle of
rights ? to, collectively, Steinhart and her siblings (or their issue). By focusing
only on the life estate Steinhart received, Steinhart improperly ignores the fact that
Helfrick, who was the sole beneficial owner of the residence before her death,
retained no interest in the residence after her death. Moreover, because ?the
value? of the interest Helfrick transferred in toto was ?substantially equal to the
value of the fee interest,? Steinhart?s argument that there was no change in
ownership under section 60 fails.19 (Cf. Auerbach v. Assessment Appeals Bd. No.
1 (2006) 39 Cal.4th 153, 162 [? 60?s general purpose is to ensure that tax
reassessment ?follows the fee interest or its equivalent value through various
changes in ownership?].)

19
Steinhart does not dispute that the other criteria of section 60?s test have
been met, i.e., that Helfrick transferred a ?present interest in real property,
including the beneficial use thereof.?
31


Although it is linguistically possible to construe the language of section 60
as Steinhart does ? i.e., as focusing only on whether the value of the ?present
interest? transferred ?is substantially equivalent to the value of the fee interest,?
and ignoring the fact that the owner simultaneously transferred all other
interests ? for several reasons, we decline to do so. First, this construction is not
supported by the Task Force Report, which, in discussing section 60?s third prong,
referred broadly to the value of ?[t]he property rights transferred,? not to the value
of only the present interest transferred.20 (Task Force Rep., supra, at p. 38.)
Second, under Steinhart?s construction, in certain cases, even though an owner
transfers his or her entire fee interest in a property, and retains no interest of any
kind in that property, reassessment would be precluded. In this regard, Steinhart?s
construction of section 2, subdivision (a), clearly ?would defy Proposition 13?s
mandate that a change in ownership triggers reassessment of California
property?21 (Pacific Southwest, supra, 1 Cal.4th at p. 168), and adopting it would
contravene the basic rule that requires us to construe statutes, if reasonably
possible given their language, to be consistent, not in conflict, with constitutional
provisions. (See Izazaga v. Superior Court (1991) 54 Cal.3d 356, 371 [?when
constitutional provisions can reasonably be construed so as to avoid conflict, such
a construction should be adopted?].) Third, by largely negating section 61,
subdivision (h), Steinhart?s interpretation would contravene another basic rule of
statutory construction: insofar as possible, we must harmonize code sections

20
Regarding section 60, the Task Force Report stated: ?[A] change in
ownership is a transfer which has all of the following characteristics: [?] 1. It
transfers a present interest in real property; [?] 2. It transfers the beneficial use of
the property; and [?] 3. The property rights transferred are substantially equivalent
in value to the fee interest.? (Task Force Rep., supra, at p. 38.)
21
As earlier explained, the ballot pamphlet analysis of Proposition 13
explained that under the measure, property could not be reassessed only ?as long
as the same taxpayer continued to own the property.? (Ballot Pamp., Primary
Elec. (June 6, 1978) analysis of Prop. 13 by Legis. Analyst, p. 57.)
32


relating to the same subject matter and avoid interpretations that render related
provisions nugatory. (See Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735; cf.
Pacific Southwest, supra, 1 Cal.4th at p. 169-171 [applying the rule in interpreting
?? 60 and 62, subd. (e)].) Here, nothing requires us to adopt Steinhart?s
construction of section 60. Because the entire equitable estate in the property was
transferred upon Helfrick?s death, a ?change in ownership? occurred within the
meaning of section 2, subdivision (a).22
CONCLUSION
For the reasons discussed above, we reverse the Court of Appeal?s
judgment and remand the matter for further proceedings consistent with the
analysis in this opinion.
CHIN, J.
WE CONCUR:

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

22
Under our analysis, we need not address Steinhart?s argument that because
the value of only the life estate she received was not substantially equal to the
value of the fee interest, a change in ownership did not occur. Nor need we
consider a question the parties and amici curiae discuss: for purposes of section 2,
subdivision (a), who, other than Helfrick, is the current owner of the residence.
Under the terms of both the trust and Civil Code section 840, it is Steinhart?s
obligation, as life tenant, to pay the property tax on the residence. Whether a
change in ownership would occur should either Steinhart or any of her siblings
transfer their interest in the residence is beyond the scope of this case. Finally, in
light of our conclusion, we need not consider the County?s argument that section
4807 bars Steinhart?s request for a declaration that because no change in
ownership occurred upon Helfrick?s death, the County may not tax the residence
based on a reassessment as of the date of Helfrick?s death.
33


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

Name of Opinion Steinhart v. County of Los Angeles
__________________________________________________________________________________

Unpublished Opinion


Original Appeal
Original Proceeding
Review Granted
XXX 155 Cal.App.4th 1082
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S158007
Date Filed: February 4, 2010
__________________________________________________________________________________

Court:

Superior
County: Los Angeles
Judge: Michael B. Harwin

__________________________________________________________________________________

Attorneys for Appellant:

Terran T. Steinhart of Plaintiff and Appellant.

Susan D. Blake and Thomas N. Hudson for State Board of Equalization Members Bill Leonard and
Michelle Steel as Amici Curiae on behalf of Plaintiff and Appellant.

Trevor A. Grimm, Jonathan M. Coupal and Timothy A. Bittle for Howard Jarvis Taxpayers Association as
Amicus Curiae on behalf of Plaintiff and Appellant.

Stephen H. Bennett, in pro. per., as Amicus Curiae on behalf of Plaintiff and Appellant.
__________________________________________________________________________________

Attorneys for Respondent:

Raymond G. Fortner, Jr., County Counsel, and Richard E. Girgado, Deputy County Counsel, for Defendant
and Respondent.

Edmund G. Brown, Jr., Attorney General, David S. Chaney, Chief Assistant Attorney General, Paul D.
Gifford, Assistant Attorney General, Gordon Burns, Deputy State Solicitor General, and William L. Carter,
Deputy Attorney General, for California State Board of Equalization as Amicus Curiae on behalf of
Defendant and Respondent.

Richard E. Winnie, County Counsel (Alameda), Claude R. Kolm, Deputy County Counsel; Robert A.
Ryan, Jr., County Counsel (Sacramento) and Thomas R. Parker, Deputy County Counsel, for California
State Association of Counties and California Assessor?s Association as Amici Curiae on behalf of
Defendant and Respondent.

Raymond G. Fortner, Jr., County Counsel, and Albert Ramseyer, Deputy County Counsel, for Rick
Auerbach, Los Angeles County Assessor, as Amicus Curiae on behalf of Defendant and Respondent.

Michael V. Strong, in pro. per., as Amicus Curiae.


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

Terran T. Steinhart
4311 Wilshire Boulevard, Suite 415
Los Angeles, CA 90010-3713
(323) 933-8623

Richard E. Girgado
Deputy County Counsel
648 Kenneth Hahn Hall of Administration
500 West Temple Street
Los Angeles, CA 90012-2713
(213) 974-0807

William L. Carter
Deputy Attorney General
1300 I Street, Suite 125
Sacramento, CA 94244-2550
(916) 324-5159