Filed 6/15/26; Certified for Publication 7/9/26 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
VENTURA HARBOR 2d Civ. No. B344145
RESTAURANT ASSOCIATES, (Cons. w/B346997)
INC., (Super. Ct. No. 56-2022-
00572144-CU-MC-VTA)
Plaintiff and Appellant, (Ventura County)
v.
VENTURA PORT DISTRICT,
Defendant and Respondent.
This appeal involves the interpretation of article XIII C and
article XX, section 22 of the California Constitution.1 Article XIII
C prohibits local governments from imposing a tax without voter
approval. Article XX, section 22 provides that the state “shall
have the exclusive right and power to license and regulate the . . .
sale [and] purchase . . . of alcoholic beverages within the
All references to articles are to the articles of the
1
California Constitution.
State . . . .”
The appeal presents two questions. First, if a local
government leases commercial real property to a tenant and the
lease contains a percentage rent clause based on a percentage of
the tenant’s gross income, does the clause impose a tax in
violation of Article XIII C? Second, if the tenant is a restaurant
that sells food and alcoholic beverages, does the clause violate
article XX, section 22? We conclude that the answer is “no” to
both questions.
In case no. B344145, plaintiff Ventura Harbor Restaurant
Associates, Inc. appeals the judgment entered after the trial court
granted the motion for summary judgment filed by defendant and
respondent Ventura Port District (District). In case no. B346997,
appellant appeals the postjudgment order awarding District its
reasonable attorney fees. The latter appeal was consolidated
with the appeal in case no. B344145. As to both appeals, we
affirm.
Background
District “is an Independent Special District within the City
of Ventura.” It “is the owner/operator of the Ventura Harbor.”
Appellant is the sublessee of commercial real property under a
master lease with District. The sublease expressly incorporates
all of the terms of the master lease. Appellant agreed “to perform
and comply with, for the benefit of Sublessor and Master Lessor,
each and every obligation of Sublessor under the Master
Lease . . . .”
The sublease provides, “The premises shall be used and
occupied only for a commercial restaurant and bar business and
related purposes.” Both the master lease and the sublease state
that, in addition to the minimum monthly rental, the lessee or
2
sublessee shall pay a percentage of gross income derived from all
sales conducted on or from the premises.
Appellant’s complaint against District consisted of three
causes of action. The first two causes of action are at issue in this
appeal. They alleged that the percentage rent clause violates
article XIII C and article XX, section 22 of the California
Constitution. Appellant claimed it had “paid three percent (3%)
Percentage Rent on food and alcohol sales since 2016.” Appellant
asserted that, “[d]uring the last year,” it had paid percentage rent
of “$33,421.09 for food sales and $14,072.20 for alcohol sales.”
Appellate Review of Order Granting
Motion for Summary Judgment
“The purpose of the law of summary judgment is to provide
courts with a mechanism to cut through the parties' pleadings in
order to determine whether, despite their allegations, trial is in
fact necessary to resolve their dispute.” (Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 843.) “Summary judgment is
granted when a moving party establishes the right to the entry of
judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).)
A ‘party moving for summary judgment bears the burden of
persuasion that there is no triable issue of material fact and that
he is entitled to judgment as a matter of law.’ [Citation.] Once
the moving party meets this initial burden, the burden then
shifts to the party opposing summary judgment to establish, by
means of competent and admissible evidence, that a triable issue
of material fact still remains. [Citation.]” (Brown v. Ransweiler
(2009) 171 Cal.App.4th 516, 525.)
“Because summary judgment motions involve purely
questions of law, we review the grant of summary judgment de
novo. [Citation.] In performing our independent review, we
3
conduct the same procedure used by the trial court.” (Y.K.A.
Industries, Inc. v. Redevelopment Agency of City of San Jose
(2009) 174 Cal.App.4th 339, 354.)
As a Matter of Law, the Percentage Rent
Clause Does Not Violate Article XIII C
In 1996 the voters passed Proposition 218, which added
article XIII C to the California Constitution. (City of San
Buenaventura v. United Water Conservation Dist. (2017) 3
Cal.5th 1191, 1200.) Article XIII C “restricts the authority of
local governments to impose taxes by, among other things,
requiring voter approval of all taxes imposed by local
governments. In 2010, voters passed Proposition 26, which
further expanded the reach of article XIII C's voter approval
requirement by broadening the definition of ‘ “tax” ’ to include
‘any levy, charge, or exaction of any kind imposed by a local
government.’ [Citation.] The definition contains [seven]
exceptions for certain types of exactions . . . .” (City of San
Buenaventura, supra, at p. 1200.)
Appellant contends the percentage rent clause in the
master lease and sublease imposes a charge or exaction that does
not fall within any of the exceptions. Therefore, the percentage
rent is an invalid tax because the voters did not approve it.
“In the case of a constitutional provision enacted by the
voters, their intent governs. [Citations.] To determine intent,
“ ‘The court turns first to the words themselves for the answer.” ’
[Citations.] ‘If the language is clear and unambiguous there is no
need for construction, nor is it necessary to resort to indicia of the
intent . . . of the voters . . . .’ ” (Delaney v. Superior Court (1990)
50 Cal.3d 785, 798 (Delaney).)
4
“The language of article [III C] . . . is clear and
unambiguous as to the question presented in this case.”
(Delaney, supra, 50 Cal.3d at p. 798.) Article XIII C, section 1,
subdivision (e)(4) (the fourth exception) provides: “ ‘[T]ax’ means
any levy, charge, or exaction of any kind imposed by a local
government, except the following: . . . (4) A charge imposed for . . .
the purchase, rental, or lease of local government property.” The
percentage rent clause clearly falls within the fourth exception.
It imposes a charge for the rental or lease of District’s property.
In the master lease the percentage rent clause is under the
heading, “Additional Percentage Rental.” In the sublease the
clause is under the heading, “Base Rent.” “A charge that
satisfies an exception is, by definition, not a tax.” (Citizens for
Fair REU Rates v. City of Redding (2018) 6 Cal.5th 1, 11.)
“A percentage lease provides a lessor with a hedge against
inflation and automatically adjusts the rents if the location
becomes more valuable. [Citations.] It is advantageous to the
lessee if the ‘location proves undesirable or his enterprise proves
unsuccessful.’ [Citation.] Thus, both parties share in the
inherent business risk.” (College Block v. Atlantic Richfield Co.
(1988) 206 Cal.App.3d 1376, 1380, italics added.)
Appellant asserts that the percentage rent charge must
meet the “reasonableness” requirement of the last paragraph of
article XIII C, section 1, subdivision (e): “The local government
bears the burden of proving by a preponderance of the evidence
that a levy, charge, or other exaction is not a tax, that the
amount is no more than necessary to cover the reasonable costs of
the governmental activity, and that the manner in which those
costs are allocated to a payor bear a fair or reasonable
5
relationship to the payor's burdens on, or benefits received from,
the governmental activity.” (Italics added.)
Appellant claims: “[I]t was reversible error for the Superior
Court to rule as a matter of law that no reasonableness
requirement applies to [] District’s charges for ‘percentage rent’
as a tax exemption under [article XIII C, s]ection 1(e)(4).” “The
absence of any cost-or benefit-justification for the percentage rent
imposed on appellant violates this reasonableness requirement.”
“[N]o rational basis has ever been determined for the amount of
percentage rent collected from appellant.”
The fourth exception does not contain a reasonableness
requirement. But article XIII C, section 1, subdivisions (e)(1), (2),
and (3) contain such a requirement: “(e) As used in this article,
‘tax’ means any levy, charge, or exaction of any kind imposed by a
local government, except the following: (1) A charge imposed for
a specific benefit conferred or privilege granted directly to the
payor that is not provided to those not charged, and which does
not exceed the reasonable costs to the local government of
conferring the benefit or granting the privilege. (2) A charge
imposed for a specific government service or product provided
directly to the payor that is not provided to those not charged,
and which does not exceed the reasonable costs to the local
government of providing the service or product. (3) A charge
imposed for the reasonable regulatory costs to a local government
for issuing licenses and permits, performing investigations,
inspections, and audits, enforcing agricultural marketing orders,
and the administrative enforcement and adjudication thereof.”
(Italics added.)
We agree with the trial court’s reasoning: “[T]he presence
of a reasonableness requirement in [article XIII C, section 1,]
6
subdivisions (e)(1), (2) and (3), and the absence of a
reasonableness requirement in subdivision (e)(4) indicates that
there is no reasonableness requirement for . . . subdivision (e)(4).”
In Howard Jarvis Taxpayers Assn. v. Bay Area Toll
Authority (2020) 51 Cal.App.5th 435 (Bay Area Toll), the court
employed similar reasoning in interpreting article XIII A, section
3, subdivision (b), which lists exceptions to a state charge that
would otherwise be a tax requiring approval by a two-thirds vote
of both houses of the legislature. The exceptions mirror the first
five exceptions of article XIII C, section 1, subdivision (e). Article
XIII A, section 3, subdivision (d) is identical to the last paragraph
of article XIII C, section 1, subdivision (e), except that subdivision
(d) puts the burden of proof upon the state, while the last
paragraph of subdivision (e) puts the burden of proof upon the
local government.2 Bay Area Toll concluded: “The first three
exceptions to the general definition of ‘tax’ contain language
limiting the charge to reasonable costs; the fourth and fifth
exceptions do not. The absence of ‘reasonable cost’ language in
the latter exceptions, when it is present in the first three,
strongly suggests the limitation does not apply where it is not
stated. And . . . reading article XIII A, subdivision (d) of section 3
as applicable to all of the subdivision (b) exceptions would render
the express reasonableness language in the first three exceptions
2 Article XIII A, section 3, subdivision (d) provides:“The
State bears the burden of proving by a preponderance of the
evidence that a levy, charge, or other exaction is not a tax, that
the amount is no more than necessary to cover the reasonable
costs of the governmental activity, and that the manner in which
those costs are allocated to a payor bear a fair or reasonable
relationship to the payor's burdens on, or benefits received from,
the governmental activity.”
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surplusage. ‘ “A construction making some words surplusage is
to be avoided.” ’ ” (Bay Area Toll, supra, at pp. 459-460.)
Furthermore, it would be absurd to construe the last
paragraph of article XIII C, section 1, subdivision (e) as limiting a
real property rental charge to an “amount [that] is no more than
necessary to cover the reasonable costs of the governmental
activity.” (Ibid.) District notes: “Appellant’s reading of
[subdivision (e)] would restrict what a local government can
charge for total rent to [its] ‘real property leasing costs.’
. . . Presumably this would only include minimal expenses such
as real estate commission, costs to review the lease and the like.
The rent would be largely uncorrelated to the size, location, or
desirability of the property being leased.”
In support of its argument that a reasonableness
requirement applies to the fourth exception of article XIII C,
section 1, subdivision (e), appellant cites Zolly v. City of Oakland
(2020) 47 Cal.App.5th 73, review granted Aug. 12, 2020, S262634
(Zolly). There, “[t]he City of Oakland . . . entered into various
waste management contracts with [two companies]. As part of
those contracts, [the companies] agreed to pay franchise fees to
the City . . . .” (Id., at p. 78.) The Court of Appeal held that “a
franchise fee, arguably subject to the fourth exemption in article
XIII C, section 1, subdivision (e), must still be reasonably related
to the value of the franchise. [Citation.] Only that portion with a
reasonable relationship may be exempt from the ‘tax’ definition.”
(Id., at p. 88.) The court explained: “The purpose [of Proposition
26] was to expand the definition of ‘tax’ to require more types of
fees and charges be approved by two-thirds of the Legislature or
by local voters. Proposition 26's findings and declarations of
purpose expressly note it was passed in response to ‘the recent
8
phenomenon whereby the Legislature and local governments
have disguised new taxes as “fees” in order to extract even more
revenue from California taxpayers without having to abide by
these constitutional voting requirements.’ ” (Ibid.)3
Zolly, supra, 47 Cal.App.5th 73, is distinguishable. A local
government’s charge of percentage rent in a lease of commercial
real property cannot be characterized as a “franchise fee.” “A
franchise . . . is a form of property [citation], and a franchise fee is
the purchase price of the franchise.” (Jacks v. City of Santa
Barbara (2017) 3 Cal.5th 248, 262.) Nor can percentage rent be
characterized as an attempt to disguise a new tax as a “fee.” “A
lease provision providing for a percentage rent is a valid and
enforceable obligation of the tenant.” (10 Miller & Starr, Cal.
Real Estate (4th ed. 2025) § 34:72.) “A provision for rent based
on a percentage of the lessee’s gross receipts is standard in mall
and other retail leases.” (Bostrom v. County of San Bernardino
(1995) 35 Cal.App.4th 1654, 1670.) The trial court aptly
3 In Zolly v. City of Oakland (2022) 13 Cal.5th 780, 797, the
Supreme Court affirmed the Court of Appeal’s judgment. The
Supreme Court did not decide whether article XIII C, section 1,
subdivision (e)(4) includes a reasonableness requirement. (Id., at
p. 796 [“As we conclude Oakland has not demonstrated that
Exemption 4 applies to its challenged fees, we do not address the
Court of Appeal's holding that Exemption 4 should be interpreted
to include a requirement that an exempt fee be ‘reasonably
related to the value of the franchise’ ”].) Bay Area Toll noted:
“The Zolly court [the Court of Appeal] did not engage in the
textual analysis that leads us to conclude subdivision (d) of
article XIII A, section 3, does not impose a substantive
requirement of reasonableness beyond that stated in subdivision
(b) of this section.” (Bay Area Toll, supra, 51 Cal.App.5th at p.
461, fn. 18.)
9
observed, “According to the lease, percentage rent must be paid
as rent, and the fact that a landlord is willing to risk payment of
lower rent when sales are down does not convert percentage rent
into a tax. [Appellant’s] percentage rent is squarely with in [sic]
the Article XIII C, section 1, subdivision (e)(4) exception to the
definition of ‘tax.’ ”
As a Matter of Law, the Percentage Rent
Clause Does Not Violate Article XX, section 22
Article XX, section 22 provides that the State “shall have
the exclusive right and power to license and regulate the . . . sale
[and] purchase . . . of alcoholic beverages within the State.”
Appellant contends that, because the percentage rent clause
applies to revenue from the sale of alcoholic beverages, it is
unconstitutional.
“Article XX, section 22 of the California Constitution gives
the state Department of Alcohol Beverage Control exclusive
jurisdiction to regulate alcohol. [Citation.] If the purpose and
effect of the city ordinance is to regulate the manufacture, sale,
purchase, possession or transportation of alcoholic beverages, the
legislation is expressly preempted by the state Constitution.
[Citations.] For example, an express prohibition of the sale of
alcoholic beverages at automobile service stations conflicts with
article XX, section 22.” (City of Oakland v. Superior Court (1996)
45 Cal.App.4th 740, 764.)
The trial court ruled that the percentage rent clause does
not violate article XX, section 22 because “the imposition of
percentage rent was not created to regulate the manufacture,
sale, purchase, possession or transportation of alcoholic
beverages.” We agree. “ ‘Primarily, percentage rent is intended
to provide additional revenue to the landlord in the event the
10
tenant's business thrives during the term of the lease. . . .’ ”
(Western Medical Enterprises, Inc. v. Albers (1985) 166
Cal.App.3d 383, 389-390.)
Furthermore, pursuant to Ainsworth v. Bryant (1949) 34
Cal.2d 465, the percentage rent clause was not unconstitutional
because it applied to all sales conducted on or from the premises,
not just sales of alcoholic beverages. In Ainsworth a retail seller
of intoxicating liquor brought an action to enjoin the enforcement
against him of an ordinance “ ‘imposing (an) excise tax on the
retail purchase . . . of tangible personal property . . . .’ ” (Id., at
p. 468.) The seller claimed “the tax . . . may not be so applied in
view of article XX, section 22, of the state Constitution . . . .”
(Ibid.) In upholding the constitutionality of the tax, the court
reasoned: “[I]t covers all lines of retail business within the city,
and retailers of intoxicating liquors become subject to it, not
because they sell that particular commodity but because they sell
tangible personal property.” (Id., at p. 475.)
Appellant Has Forfeited Claim that Trial Court
Erroneously Sustained District’s Evidentiary Objections
Appellant claims the trial court erroneously sustained
numerous objections by District to the admission of appellant’s
evidence. “We review the trial court's ruling on objections to
evidence in connection with a summary judgment motion for an
abuse of discretion.” (Tindell v. Murphy (2018) 22 Cal.App.5th
1239, 1254.) “ ‘[A] reviewing court should not disturb the exercise
of a trial court's discretion unless it appears that there has been a
miscarriage of justice. . . . ‘Discretion is abused whenever, in its
exercise, the court exceeds the bounds of reason, all of the
circumstances before it being considered. The burden is on the
party complaining to establish an abuse of discretion, and unless
11
a clear case of abuse is shown and unless there has been a
miscarriage of justice a reviewing court will not substitute its
opinion and thereby divest the trial court of its discretionary
power.’ ” (Denham v. Superior Court (1970) 2 Cal.3d 557, 566.)
“A ‘miscarriage of justice’ occurs when it is ‘ “. . . reasonably
probable that a result more favorable to the appealing party
would have been reached in the absence of the error.” ’ ” (Lundy
v. Ford Motor Co. (2001) 87 Cal.App.4th 472, 479.)
Appellant’s claim of evidentiary errors is forfeited because
it is not supported by meaningful legal analysis with citation to
authority. “To demonstrate error, appellant must present
meaningful legal analysis supported by citations to authority and
citations to facts in the record that support the claim of error.
[Citations.] When a point is asserted without [meaningful]
argument and authority for the proposition, ‘it is deemed to be
without foundation and requires no discussion by the reviewing
court.’ ” (In re S.C. (2006) 138 Cal.App.4th at 396, 408.)
In any event, appellant has failed to show that the claimed
evidentiary errors resulted in a miscarriage of justice, i.e., he has
failed to show it is reasonably probable that District’s motion for
summary judgment would have been denied had its evidentiary
objections been overruled.
Alleged Error as to Trial Court’s Finding of Fact
Appellant contends the trial court “erred in making a
finding of fact that respondent District is not a party to
appellant’s sublease.” Appellant argues: “[T]he District became a
party to the sublease. It also remained a party to the . . . Master
Lease . . . .”
We need not decide whether the court’s “finding” was a
factual or legal conclusion or whether it was erroneous.
12
Appellant has not carried its burden of showing that the alleged
error resulted in a miscarriage of justice. Therefore, if the trial
court erred, the error is not reversible. (See Code Civ. Proc.,
§ 475; Scheenstra v. California Dairies, Inc. (2013) 213
Cal.App.4th 370, 403 [“A fundamental rule of appellate review is
that the appellant must affirmatively show prejudicial error”].)
Attorney’s Fees
Both the master lease and the sublease contain a
“prevailing party” attorney’s fees clause. Pursuant to Civil Code
section 1717, the trial court awarded District reasonable
attorney’s fees of $137,400 because it was the prevailing party.4
Appellant argues that, because District was “the party that
drafted” the master lease, the court “erred in not resolving
ambiguities [in that document concerning attorney’s fees] against
[District].” But appellant fails to identify the alleged ambiguities
in the master lease. In addition, the argument is forfeited
because it is not supported by meaningful legal analysis. (In re
S.C., supra, 138 Cal.App.4th at p. 408.)
Appellant contends that, because its complaint “prayed for
attorney’s fees based on Code of Civil Procedure § 1021.5 for
prevailing in an ‘action which has resulted in the enforcement of
an important right affecting the public interest,’ ” the trial court
4 Civil Code section 1717, subdivision (a) provides, “In any
action on a contract, where the contract specifically provides that
attorney’s fees and costs, which are incurred to enforce that
contract, shall be awarded . . . to the prevailing party, then the
party who is determined to be the party prevailing on the
contract, whether he or she is the party specified in the contract
or not, shall be entitled to reasonable attorney’s fees in addition
to other costs.”
13
erroneously awarded attorney fees to District as the prevailing
party under Civil Code section 1717. The contention is forfeited
because it is not supported by meaningful legal analysis with
citation to authority. (In re S.C., supra, 138 Cal.App.4th at p.
408.)
Moreover, the contention is without merit because the
complaint requested an award of appellant’s “[c]osts of suit”
pursuant to Code of Civil Procedure section 1032, subdivision (b).
These costs include attorney’s fees when authorized by contract
or statute. (Id., § 1033.5, subds. (a)(10)(A) & (B); see also Id.,
subd. (c)(5)(B) [“Attorney’s fees awarded pursuant to Section 1717
of the Civil Code are allowable costs under Section 1032 as
authorized by subparagraph (A) of paragraph (10) of subdivision
(a)”].)
Disposition
The judgment and postjudgment order awarding attorney
fees to District are affirmed. District shall recover its costs on
appeal.
YEGAN, Acting P. J.
We concur:
BALTODANO, J.
CODY, J.
14
Carla J. Ortega, Judge
Superior Court County of Ventura
______________________________
Glickman & Glickman and Steven C. Glickman, Nicole E.
Hoikka; Law Offices of Jean Getchell and Jean A. Getchell, for
Plaintiff and Appellant.
Lagerlof and Thomas S. Bunn, Yaw-Jiun (Gene) Wu, for
Defendant and Respondent.
Filed 7/9/26
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
VENTURA HARBOR 2d Civ. No. B344145
RESTAURANT ASSOCIATES, (Cons. w/B346997)
INC., (Super. Ct. No. 56-2022-
00572144-CU-MC-VTA)
Plaintiff and Appellant, (Ventura County)
v. ORDER CERTIFYING
OPINION FOR PUBLICATION
VENTURA PORT DISTRICT, [NO CHANGE IN
JUDGMENT]
Defendant and Respondent.
THE COURT:
The opinion in the above-entitled matter filed on June 15,
2026, was not certified for publication in the Official Reports. For
good cause, it now appears that the opinion should be published
in the Official Reports and it is so ordered.
YEGAN, A.P.J. BALTODANO, J. CODY, J.