Degann v. Hunanyan

















Filed 5/9/13 Degann v. Hunanyan CA2/2











>NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

>



California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.



IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND
APPELLATE DISTRICT



DIVISION
TWO




>

JONATHAN DEGANN et al., Plaintiffs and Respondents, v. ANNA HUNANYAN et al., Defendants and Appellants.

B238685 (Los Angeles County Super. Ct. No. LC082607)

APPEAL from
a judgment of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County. Louis M.
Meisinger, Judge. Reversed and remanded
with directions.



Law Offices of Wayne M. Abb and
Wayne M. Abb for Defendants and Appellants.



Luna &
Glushon and Robert L. Glushon for Plaintiffs and Respondents.









* * * * * *

Defendants
and appellants Anna Hunanyan also known as Anna Hunanyan-Meguerian also known
as Azniv Meguerian, and Lucy Meguerian appeal from a judgment quieting title to
certain property in favor of plaintiffs and respondents Jonathan Degann and
Tina Degann (the Deganns). Appellants
and the Deganns are adjacent landowners, and the Deganns believed that the
property they purchased included certain outdoor improvements. A survey revealed that part of the improved
area included appellants’ property.
Following a bench trial, the
trial court ruled that the Deganns had established all elements of adverse
possession. It specifically ruled the
Deganns’ evidence that their property had been assessed on the basis of their
purchase price, coupled with evidence that they considered their purchase price
to include the visible improvements, was sufficient to demonstrate they had
paid property taxes on that portion of appellants’ property.

We
reverse. To overcome the presumption
that adjoining landowners pay property taxes only on the property described in
their deeds, an adverse claimant may offer evidence to support an inference that
the assessor instead assessed the property according to the land and
improvements visibly possessed by each party.
We hold that where there is no evidence that anyone from the assessor’s
office inspected the property or considered the visible improvements when
making a tax assessment, a buyer’s subjective opinion about the inclusion of
those improvements as part of the property’s purchase price is insufficient to
support the inference a fair market value assessment accounted for those
improvements. Alternatively, the Deganns
failed to prove their adverse possession claim because they did not offer
evidence of their tax payment via “certified records of the county tax
collector” as required by Code of Civil Procedure section 325, subdivision (b).

FACTUAL AND PROCEDURAL BACKGROUND

>The
Dispute Between Adjacent Landowners.

Appellants
own the property at 4536 Vanalden Avenue
in Tarzana, and in 2001 the Deganns purchased the adjacent property at 4524
Vanalden Avenue.
They paid $550,000 for the property, which they felt reflected its fair
market value. At the time of purchase,
the property included a fenced patio area outside the master bedroom,
containing improvements including a concrete patio, in-ground spa, landscaping
and irrigation. The Deganns did not
install any additional improvements to that area. They visually inspected the property at the
time of purchase and would not have paid $550,000 for their property without
the patio and spa area. Since the time
of purchase, the Deganns paid each property tax bill for the property.

At some
point, appellants sought to construct a significant addition to their home and
undertook to have a survey prepared for the project. The survey revealed that an existing wall
between the properties encroached approximately 10 feet onto appellants’ property. During the summer of 2007, after the survey
had been performed, the Deganns found a business card in their mailbox from
appellants that contained a handwritten note stating: “We have a big problem. You are on our property.” The Deganns then learned of the survey
results. According to appellants, the
parties unsuccessfully negotiated for the Deganns’ purchase of the disputed
property. Appellants also asked the
Deganns if they would contribute to the demolition and reconstruction costs of
a new wall on the property line. The
Deganns retained counsel.

The parties
exchanged correspondence about the disputed property during the next several
months. Then, the Friday before Labor
Day weekend in 2008, the Deganns came home to find that appellants had removed
part of the block wall and fence between their properties. Despite the Deganns’ protests, appellants
continued to perform additional demolition the following week, but ceased after
the Deganns obtained a temporary restraining order.

Thereafter,
the Deganns obtained their own survey of the property and learned appellants
had correctly claimed their property’s boundary line was approximately
10 feet inside where the wall and fence had been. Relative to the Deganns’ entire lot of 20,040
square feet, or .46 acres, approximately 678 square feet on the Deganns’ side
of the block wall was included in the legal description of appellants’
property. Part of the legal lot line
went through a patio area, some pilasters, portions of a wrought iron fence and
brick edging, but not the house or the spa; another part went through an
undeveloped hillside area.

>Pleadings,
Trial and Judgment.

In September 2008, the Deganns
filed a complaint against appellants,href="#_ftn1" name="_ftnref1" title="">^[1] alleging causes of action for negligent and
willful trespass and quiet title, and seeking a permanent injunction. After they obtained a temporary restraining
order, the trial court issued a preliminary injunction on October 3, 2008,
preventing further construction on the disputed property during the pendency of
the lawsuit. The operative first amended
complaint, filed in February 2009, alleged the same causes of action but
included allegations concerning the Deganns’ claim by adverse possession. Appellants answered and filed a
cross-complaint for ejectment, trespass, quiet title and declaratory relief.

A bench
trial commenced on September 13, 2011. A
key issue at trial was whether the Deganns had satisfied the adverse possession
element of payment of property taxes on the disputed property. Bruce Bagano, a supervising appraiser with
the Los Angeles County Assessor’s Office, testified about how the office
assesses property for the purpose of computing property taxes. The goal is to establish a property’s fair
market value at the time of transfer, and the office applies a rebuttable
presumption that a property’s purchase price is the fair market value. In ascertaining fair market value, appraisers
do not perform surveys and visually inspect a property only in an unusual
case. On the basis of his review of the
Assessor’s office file for the Deganns’ property, he opined that the $550,000
assessed value was based on the property’s purchase price. He further opined that no survey was done and
that it was highly unlikely that anyone from the Assessor’s office had
performed a visual inspection of the property.
He explained that the Assessor’s office has and takes into account a
physical description of the property when ascertaining fair market value, but
that description is not cross-checked against a survey.

Real estate
expert Alan Wallace testified that it is not customary in the industry for a
buyer and realtor to obtain a survey before the purchase of a single-family
home. Instead, buyers typically rely on
a visual inspection of the property and presume that existing walls and fences
demarcate the property line. In a
minority of transactions—such as when a property in a high-end neighborhood has
a relatively low sales price—the Assessor’s office would visually inspect the
property. Wallace did not know when the
Assessor’s office stopped conducting visual inspections for all
transactions. The current practice can
occasionally result in boundary line problems—particularly with hillside
properties. Moreover, realtors typically
do not check to see whether improvements have been permitted, as the
presumption is that the seller has accurately represented any improvements
comply with the law. Wallace added that
a property’s purchase price, or fair market value, includes hardscape and
landscape improvements.

In addition
to experts, the Deganns and Meguerian testified. In connection with her testimony concerning
her refusing the Deganns’ offer to purchase the disputed property for $10,000,
Meguerian—a realtor—opined that the area was worth more than $100,000. The trial court heard closing argument,
during which time it asked multiple questions.
Thereafter, notwithstanding that a statement of decision was neither
required nor requested, the trial court offered its reasons for its
ruling. Characterizing the payment of
property taxes as the only issue in dispute, it found that the existing case
law compelled the conclusion that the Deganns had paid property taxes on the
disputed property for the requisite five-year period.

The trial court reasoned that the
evidence showed there were significant improvements on the disputed
property. Expressly according great
weight to Meguerian’s testimony that the disputed property was worth over
$100,000, the trial court found that her testimony, taken together with the
Deganns’ testimony that they would not have purchased the home without the
disputed property, showed that a meaningful portion of the property’s purchase
price was for the disputed property. On
the basis of expert testimony that a property’s assessed or fair market value
is typically the same as a property’s purchase price, the trial court
concluded: “[W]here the fair market
value is the test and the appraiser does not do a visual inspection or a
survey, the purchase price of land and improvements actually occupied by the
parties is a proxy for fair market value, and therefore, assessed value, and
therefore, taxes that are actually paid on the assessed value, i.e., the fair
market value, means that the plaintiffs in this case paid taxes on the land and
improvements that they actually occupied, regardless of the fact that the tax
bills may actually refer to the correct legal description
. . . which corresponds to the correct description in the
deed.” Summarizing, the trial court
stated: “Since the assessor uses the
purchase price of the property that was actually occupied by the parties who
fully bargained for the price on that basis, this is equivalent functionally to
a visual inspection or assessment by the assessor.”

With respect to the Deganns’ cause
of action for trespass, the trial court found they had failed to satisfy their
burden to establish damages. It further
concluded that its ruling on the quiet title cause of action was dispositive of
the cross-compliant.

The trial
court entered judgment at the conclusion of trial and an amended judgment in
November 2011, finding in favor of the Deganns on their third cause of action
for quiet title, ruling that the Deganns “were, on September 8, 2008, the date
of the commencement of the above-entitled action, and now are the owners in fee
simple absolute, and in actual and peaceable possession of the real property”
described in an attached legal description.
The trial court found in favor of appellants on the Deganns’ causes of
action for trespass, and in favor of the Deganns on appellants’
cross-complaint.

This appeal
followed.

DISCUSSION

Appellants
contend the trial court misapplied the law in concluding that the Deganns
satisfied the requisite elements of adverse possession—specifically, the
element of the payment of property taxes on the disputed property. We agree in principle with appellants’
position, though conclude that the deficiency is one of proof rather than
application of law.

I. Standard of Review.

Consistent with their claim of
error, appellants urge us to independently review the matter. (See, e.g., Souza v. Wetlands Water Dist. (2006) 135 Cal.App.4th 879, 891 [if “the issue is presented to the
court on the basis of undisputed facts and uncontroverted evidence and only a question
of the application of the law to those facts need
be answered, our review is de novo”].)
But in rendering its decision, the trial court expressly relied on one
party’s testimony concerning the value of the disputed property and disregarded
other evidence on the point. It also
drew specific inferences from the evidence concerning the significance of the
disputed property relative to the Deganns’ purchase of the entire parcel.

Under these
circumstances, we must review the trial court’s determination for substantial
evidence. (Axis Surplus Ins. Co. v. Glencoe Ins. Ltd. (2012) 204 Cal.App.4th
1214, 1222.) In resolving challenges to a verdict based on sufficiency of
the evidence, we review the record as a whole, resolving all conflicts and
indulging all legitimate and reasonable inferences in favor of the prevailing
party, to determine whether substantial evidence supports the verdict. (Western
State Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 571name="SR;1767">.) Substantial evidence, however, is not synonymous with “any” evidence. (Kruse
v. Bank of America (1988) 202 Cal.App.3d 38, 51.) To be substantial, the evidence supporting
the judgment must be “of ponderable legal significance,
. . . reasonable, credible and of solid value.” (Roddenberry
v. Roddenberry (1996) 44 Cal.App.4th 634, 651.) “[I]t is ‘“‘substantial’ proof of the
essentials which the law requires.”’
[Citations.]” (>Ibid.)
“Inferences may constitute substantial evidence, but they must be the
product of logic and reason. Speculation
or conjecture alone is not substantial evidence. [Citation.]
The ultimate test is whether it is reasonable for a trier of fact to
make the ruling in question in light of the whole record. [Citation.]”
(Buckley v. California Coastal
Com. (1998) 68 Cal.App.4th 178, 192.)

Moreover, while the determination of the trier of fact is
entitled to great weight (Fortman v.
Hemco, Inc. (1989) 211 Cal.App.3d 241, 259), substantial evidence “is
. . . not merely an appellate incantation designed to conjure up
an affirmance. To the contrary, it is
essential to the integrity of the judicial process that a judgment be supported
by evidence that is at least substantial.”
(Roddenberry v. Roddenberry,
supra, 44 Cal.App.4th at p. 652.)
Quoting former Chief Justice Traynor, the Roddenberry court elaborated that on occasion “‘“an appellate
court affirms the trier of fact on isolated evidence torn from the context of
the whole record. Such a court leaps
from an acceptable premise, that a trier of fact could reasonably [have
believed] the isolated evidence, to the dubious conclusion that the trier of
fact reasonably rejected everything that controverted the href="http://www.fearnotlaw.com/">isolated evidence. Had the appellate court examined the whole
record, it might have found that a reasonable trier of fact could not have made
the finding in issue. One of the very
purposes of review is to uncover just such irrational findings and thus
preclude the risk of affirming a finding that should be disaffirmed as a matter
of law.” [Citation.]’ [Citation.]”
(Ibid.)

II. The Deganns’ Evidence Was Insufficient
to Satisfy the Requisite Elements of Adverse Possession.

A. Applicable Legal Principles.

name="sp_7047_711">Under California law, to establish adverse possession, a
claimant must allege and prove: “(1)
possession under claim of right or color of title; (2) actual, open, and
notorious occupation of the premises constituting reasonable notice to the true
owner; (3) possession which is adverse and hostile to the true owner; (4)
continuous possession for at least five years; and (5) payment of all taxes
assessed against the property during the five-year period. [Citation.]”
(Mehdizadeh v. Mincer (1996)
46 Cal.App.4th 1296, 1305; see also Gilardi
v. Hallam (1981) 30 Cal.3d 317, 321 (Gilardi);
Code Civ. Proc., § 325.)name=FN5>
The doctrine of adverse possession is strictly construed, and the burden
of proving all of the essential elements is on the party seeking to assert the
right to title. (E.g., >Landini v. Day (1968) 264 Cal.App.2d
278, 282 [claimant bears the burden of proving every element by “‘clear and
satisfactory evidence’”]; Nelson v.
Robinson (1941) 47 Cal.App.2d 520, 528 [adverse possession cannot be
established by inference “‘but only by clear and positive proof’”].)

Since 1878, payment of taxes has been a
“requisite condition to the acquisition of title by adverse possession.” (O’Hara
v. O’Brien (1895) 107 Cal. 309, 316.)
Consequently, the
failure to pay taxes on the land is fatal to a claim of adverse
possession. (Gilardi, supra, 30 Cal.3d at pp. 326–327; Raab v. Casper (1975) 51 Cal.App.3d 866, 878.) The Gilardi
court explained that “[o]rdinarily, when
adjoining lots are assessed by lot number, the claimant to the disputed portion
cannot establish adverse possession, because he cannot establish payment of taxes. [Citations.]”
(Gilardi, supra, at p. 326;
see also Raab v. Casper, supra, at p.
878 [“As a general rule, where adjoining lots are assessed merely by numbers
and without reference to a survey, the claimant cannot establish adverse
possession because he cannot establish payment of taxes”].) Applying the general rule, multiple cases
have rejected claims of adverse possession.
(E.g., Friedman v. Southern
California T. Co. (1918) 179 Cal. 266, 271 [no adverse possession because “the
defendant paid no taxes except those assessed upon the land described by its
deed”]; Pedersen v. Reynolds (1939)
31 Cal.App.2d 18, 29 [no adverse possession of portion of adjoining parcel
where “the holders of the deeds which actually contain within their
descriptions the disputed strip of land, paid the taxes thereon”]; >Johnson v. Buck (1935) 7 Cal.App.2d 197,
202 [“The evidence shows clearly that the taxes were
paid upon the land described in respondents’ deed, which did not include the
strip in dispute, and in the absence of an agreement extending the boundary to
include this strip, this does not constitute a payment of taxes on such
strip”].)

Two
exceptions exist to the ordinary rule that those whose taxes are assessed by
lot number cannot establish the payment of taxes on a portion of another’s
lot. First, the claimant may show “that
there is an error in the description on the assessment roll” to establish the
error and his payment of taxes. (>Gilardi, supra, 30 Cal.3d at p.
326.) For example, in >Sorensen v. Costa (1948) 32 Cal.2d 453,
for over 40 years adjacent landowners occupied and improved one-half of their
own lot and one-half of the adjoining lot as described in the city’s official
map. Affirming a judgment quieting title
to one-half of one of the lots, the appellate court found that the plaintiff
met his burden to show the payment of taxes where the land was actually
assessed as improved property even though the description on the tax assessment
roll was unimproved property. (>Id. at pp. 465–466.) Under such circumstances, the plaintiff “proved by substantial evidence that the description
on the tax assessment rolls was mistaken and that he and his predecessors not
only thought that they were paying taxes on the land occupied but in fact paid
taxes actually assessed against such lands.”
(Id. at p. 466.)

The
Gilardi court described a second
exception: “[W]here
the claimant by construction of buildings or other valuable improvements or by
the building of fences has visibly shown occupation of a disputed strip of land
adjoining the boundary, several cases have reasoned that the ‘natural
inference’ is that the assessor did not base the assessment on the record
boundary but valued the land and improvements visibly possessed by the
parties.” (Gilardi, supra, 30 Cal.3d at p. 327; accord, Price v. De Reyes (1911) 161 Cal. 484, 490 [where claimant had
enclosed area including 18 inches of adjoining parcel, “the natural inference would be that the assessor put the value on
the land and improvements of each party as disclosed by the visible possession,
rather than that he ascertained the true line by a careful survey and assessed
to one a part of the possessions of the other”]; Drew v. Mumford (1958) 160 Cal.App.2d 271, 277 [where fence had
been constructed and reconstructed in an area enclosing 21 inches of adjoining
parcel, court concluded “it would be possible to infer in support of the
judgment in the instant case that taxes were assessed and paid on the basis of
the property in the possession of the parties”].)

In
Gilardi, supra, 30 Cal.3d 317, the
court found the evidence insufficient to satisfy the second—or “natural
inference”—exception. There, a survey
stake purporting to mark the property line between lot 1407, owned by the
plaintiffs, and adjoining lot 1408, owned by the defendants, had been
erroneously placed on a portion of lot 1407.
(Id. at p. 320.) Relying on the position of the stake, the
defendants’ predecessors had improved a portion of lot 1407 with a sidewalk,
sprinkler system, trees, and a lawn. (Ibid.)
Lot 1408 was also improved with a house,
while lot 1407 remained unimproved except for what the defendants’ predecessors
installed. (Id. at p. 321.) Finding that this evidence did not support
the natural inference that taxes had been assessed on the improvements, the
Supreme Court held the defendants failed to prove the requisite adverse
possession element of the payment of taxes on lot 1407: “The parties and their predecessors were
assessed taxes by lot number. There is
no direct evidence that the sidewalk or ornamental plantings were considered in
the assessment of the lots. There are no
physical barriers, structures, or enclosures indicating that plaintiffs and
their predecessors were excluded from using the sidewalk and planted areas on
their land, or that the improvements were not a joint undertaking of the
landowners. In the circumstances, the
trial court was not required to infer that the assessor concluded the sidewalk
and plantings reflected ownership of the disputed land by defendants and their
predecessors.” (Id. at p. 327.)

B. The Deganns’ Evidence Did Not Establish
the Payment of Taxes on the Disputed Property.

>1. The
evidence did not reasonably and logically support the inference that the
Assessor visibly inspected and assessed the disputed property to the Deganns.

Here, as is the typical case with
adjoining landowners, the evidence showed that appellant and the Deganns paid
property taxes on the land described in their deeds. (See, e.g., Walner v. City of Turlock (1964) 230 Cal.App.2d 399, 410 [“The record reflects that the
land here involved was assessed according to the deeds on file in the office of
the county recorder”].) “The name="SR;4997">burden is on the adverse
claimant of the fee to establish that no taxes were assessed against the land
or that if assessed he paid them.” (>Gilardi, supra, 30 Cal.3d at p.
326.) Thus, to meet their burden the
Deganns necessarily had to rely on one of the two exceptions to the ordinary
rule by establishing an error in the assessment rolls or offering evidence to
support the natural inference that their tax assessment was based on the
improvements made to the disputed property.
(Id. at pp. 326–327.) As there was no evidence of any assessment
roll error, the Deganns’ theory was that they were entitled to a natural
inference their tax assessment included the disputed property because they paid
taxes on the basis of their purchase price, and their purchase price accounted
for the improvements on the disputed property.

The trial court accepted their
theory. Essentially, it found that the
Deganns met their burden to establish the natural inference exception on the
basis of evidence showing the disputed property contained significant
improvements, Meguerian’s testimony that the disputed property had a value of
over $100,000, the Deganns’ testimony that the improvements on the disputed
property were an important part of their decision to purchase the property for
$550,000, and Bagano’s testimony that a property’s purchase price forms the
basis for its assessed value for property tax purposes. The trial court found that the Assessor’s use
of the bargained-for price the Deganns paid, which took into account their
visual assessment of the improvements, was the “equivalent functionally to a
visual inspection or assessment by the Assessor. In other words, the buyer’s eyes reflected in
the purchase price, essentially becomes the Assessor’s eyes.” The trial court concluded: “I think that there is, because of the way
that these taxes were assessed, a natural inference, and in my view, a
reasonable inference that the taxes paid by the plaintiffs in this case
reflected the property based upon the boundary that had been constructed
between these two properties.”

The court in Price v. De Reyes, supra, 161 Cal. 484 first articulated the
natural inference concept. There, the adverse claimant and a
neighbor agreed to a boundary line between their properties that did not
reflect the true description in the deeds, and the claimant constructed
improvements along the boundary line which were actually on his neighbor’s
property. (Id. at pp. 487–489.)
Although the parties paid taxes according to the legal descriptions of
the property, the court relied on the rule that when parties are uncertain of a
boundary and agree to its location, that boundary attaches to the deeds so that
one in possession of the overlap holds title thereto. (Id.
at pp. 489–490; see also Ernie v. Trinity
Lutheran Church (1959) 51 Cal.2d 702, 707 [the agreed boundary doctrine
“requires that there be an uncertainty as to the true boundary line, an
agreement between the coterminous owners fixing the line, and acceptance and
acquiescence in the line so fixed for a period equal to the statute of
limitations”].) In light of the boundary
agreement, the Price court held that
the payment of taxes
assessed on the basis of the deeds amounted to payment of the taxes on the property actually possessed by the parties
based on the agreed name="SR;2264">boundary line. (Price v. De Reyes, supra, at p.
490.) The court then added: “Furthermore, the natural inference would be
that the assessor put the value on the land and improvements of each party as
disclosed by the visible possession.” (Ibid.)

Here, there was no evidence to show that the parties
satisfied the elements of the agreed boundary doctrine, and hence no evidence
to support any natural inference of valuation by the Assessor as the principle
was originally conceived. Nonetheless,
over time, the natural inference exception has become attenuated from the
agreed boundary doctrine. For example,
the court in Raab v. Casper, supra,
51 Cal.App.3d at page 878, explained the natural inference exception as
follows: “[W]here one party is visibly
in possession of land under a claim of right and has placed valuable
improvements on the land, the natural inference is that the assessor did not
base his assessment on the true boundary but valued the land and improvements
visibly possessed by the claimants.”
(See also Gilardi, supra, 30
Cal.3d at p. 327 [analyzing application of natural inference exception where no
issue as to agreed boundary].)

Consistently, however, the exception has remained an
“inference.” (Gilardi, supra, 30 Cal.3d at p. 327.) As explained in Aguimatang v. California State Lottery (1991) 234 Cal.App.3d 769,
800: “‘An inference is a deduction of
fact that may logically and reasonably be drawn from another fact or
group of facts found or otherwise established in the action.’ (Evid. Code, § 600, subd. (b), italics
added.) An inference is more than a
surmise or a conjecture. [Citations.] An inference cannot be based on mere
possibilities; it must be based on probabilities. [Citations.]”
(See also Estate of Braycovich (1957)
153 Cal.App.2d 505, 512 [an inference “is a reasonable deduction from the facts
proved and, of course, must be logical”].)

Here, there was no evidence from which to infer logically
and reasonably that the property tax assessment for the Deganns’ property
accounted for the disputed property. To
Bagano’s knowledge, no one from the Assessor’s office conducted a visual
inspection of the Deganns’ property; such an assessment would have been
contrary to normal procedure. While
Bagano conceded that the Assessor’s office typically uses a property’s purchase
price as the assessed value, he added that “when we do the assessment we
generally have a physical description of the property such as the lot size, the
size of the improvement, the age of the improvement and that sort of
thing. So that physical description is
taken into account when we do the assessment.”
Yet, neither he nor any other witness testified that the physical
description of the Deganns’ property included the disputed property. (Cf. Mesnick v.
Caton (1986)
183 Cal.App.3d 1248, 1260 [insufficient evidence of tax payment element of
adverse possession where assessor’s representative visually inspected property
but inspection made no reference to disputed improvements].) We cannot conclude that the mere visibility
of the improvements reasonably and logically leads to the inference that the
Assessor factored them into the assessment where the evidence establishes that
no one from the Assessor’s office ever saw them.

In the face of evidence that the Assessor did not conduct a
visual inspection, the trial court relied on evidence of the Deganns’ visual
inspection, concluding it could serve as a proxy for an inspection by
the Assessor’s office. The trial court
applied the natural inference exception on the basis of evidence the Deganns
considered the disputed property as part of their $550,000 purchase price, coupled
with evidence that the $550,000 amount formed the basis for the property’s
assessed value. According to this
reasoning, one may establish the payment of taxes element of
an adverse possession claim by merely asserting his or her subjective belief that
a disputed area was acquired at the time of purchase. We cannot conclude that a property owner’s
opinion as to whether certain improvements were considered in determining the
property’s purchase price constitutes substantial evidence supporting an
inference the Assessor actually considered the visible improvements in
assessing the property.

We are guided by >Sorensen v. Costa, supra, 32 Cal.2d
453. There, the court found the adverse
claimant had in fact been paying taxes on the house he occupied, not on the
“unimproved land” described in his deed; it relied on evidence of a mistaken
description in the tax assessment rolls, which established that the claimant
and his predecessors “not only thought that they were paying taxes on the land
occupied but in fact paid taxes actually assessed against such lands.” (Id.
at p. 466.) The court elaborated: “There is no question that a person claiming
title by adverse possession must show that he and his predecessors actually paid the taxes assessed on the
particular land occupied, and he cannot show compliance with section 325 of the
Code of Civil Procedure by merely proving that he and his predecessors ‘thought
or supposed they were paying taxes’ on the land occupied by them, when
the lands were assessed under a correct description that applied to other
land.” (Ibid.; see Gilardi, supra, 30 Cal.3d at p.
327 [no basis for “‘natural inference’” that assessment included disputed
improvements where the evidence showed parties paid taxes by lot number and
there was “no direct evidence” that the improvements were considered as part of
the lots’ assessment]; see also Smith v. Byer (1960) 179 Cal.App.2d 118,
121 [“The word ‘assessment’ in [§ 325] refers to the act of the assessor”].)

This case is
no different than Dooley’s Hardware Mart
v. Trigg (1969) 270 Cal.App.2d 337.
There, the defendant acquired a lot and thought the existing block wall,
which had been erected by the plaintiff who owned the adjacent lot, marked the
boundary between her property and the plaintiff’s. She built a driveway abutting and parallel to
the block wall before the plaintiff conducted a survey and learned the true
boundary line was one foot into the driveway.
(Id. at p. 339.) Though the court concluded that the defendant
had established her entitlement to an easement over the one-foot strip, it
further concluded that she could not claim title to the strip by adverse
possession because she did not pay taxes on the area during the period of
encroachment. (Id. at pp. 339, 341.)

Here,
similarly, we decline to find a buyer’s subjective opinion about the extent of
property or improvements acquired amounts to substantial evidence sufficient to
support the payment of property taxes element of adverse possession. In the absence of any evidence that the Deganns
communicated the intended scope of their acquisition to the Assessor’s office,
a reasonable and logical inference that the Assessor’s office visibly assessed
the disputed property and included it as part of its assessment cannot be drawn
from the Deganns’ inspection and resulting purchase of the property. (See Aguimatang v.
California State Lottery, supra, 234 Cal.App.3d at p. 800.) Nor do we find that Meguerian’s valuation
testimony added anything relative to the application of the natural inference
exception. Whether the disputed property
was worth over $100,000 as stated by Meguerian or $10,000 according to the
Deganns did not tend to show how the disputed property had been visibly
assessed.

We recognize
that the trial court intended to fashion an application of the natural
inference exception that took account of both Proposition 13, which mandates
that properties are assessed on the basis of their market value at the time of
transfer (e.g., Auerbach v. Assessment
Appeals Bd. No. 1 (2006) 39 Cal.4th 153, 157) and the current practice of
the Assessor’s office to not make visual inspections. Nonetheless, where there is no evidence that
the Assessor’s office in any way considered or was even aware of the improvements
on the disputed property, we cannot conclude that the Deganns’ testimony about
their property’s market value can support a finding that they paid taxes on the
property they claim through adverse possession.
We do not intend to suggest that, in light of Proposition 13 and the
Assessor’s office non-inspection practice, adjoining property owners will never
be able to establish the requisite payment of taxes where a residence
encroaches on a neighbor’s land. For
example, an adverse claimant may offer evidence that the parties had agreed on
a boundary line different from that reflected in the assessment rolls, that at
some earlier point in time the Assessor’s office conducted a site inspection or
that the Assessor’s office had some knowledge of the improvements by other
means, such as their inclusion in the “physical description” of the property
referenced by Bagano. Here, however,
there was no such evidence.

Though the
result that appellants are entitled to property which the Deganns believed was
theirs may seem harsh, the doctrine of adverse possession is not an equitable
one, designed to reward the taker or punish the person dispossessed. (Finley
v. Yuba County Water Dist. (1979) 99 Cal.App.3d 691, 696.) Accordingly, an adverse claimant must
strictly comply with the statutory requirements for taking title by this
method: “There are no equities in favor
of a party seeking by adverse holding to acquire the property of another
. . . . ‘Section 325 of
the Code of Civil Procedure requires that one who seeks or claims to obtain
title by adverse possession shall have paid “all the taxes, state, county, or
municipal, which have been levied and assessed upon such land during the five
years of his adverse occupancy.” . . . If the owner of the land
pays the taxes as they fall due, there is no reason why his title should be
impaired . . . . The
statute makes the payment of taxes as important an element as actual occupancy
of the land for the purpose of gaining a title by adverse possession, and the
burden is upon the claimant to do the acts required to create the adverse
title. He should be as vigilant in
paying the taxes as in holding possession of the land. He is seeking to gain the title of another
through statutory authority, and it is for him to see that he does all of the
acts which the statute requires.’” (>Glowner v. De Alvarez (1909) 10 Cal.App.
194, 196; accord, Smith v. Byer, supra,
179 Cal.App.2d at p. 121.)href="#_ftn2"
name="_ftnref2" title="">^[2]

Because
there was no substantial evidence to support an inference that the Assessor
based the property tax assessment on the visible improvements on the disputed
property, the Deganns failed to establish the requisite property tax payment
element of their adverse possession claim.
Consequently, reversal of the judgment with directions to enter judgment
in favor of appellants is required. (See
Frank v. County of Los Angeles (2007)
149 Cal.App.4th 805, 833 [effect of reversal for insufficient evidence].)

>2. The
Deganns’ testimony was insufficient to establish they paid taxes on the
disputed property.

Even if we
were to accept the trial court’s conclusion that the natural inference
exception may be satisfied by the evidence offered here, we would still find
that the Deganns failed to establish the payment of taxes element of their
adverse possession claim.

Code of Civil Procedure section
325, subdivision (b) sets forth the requirements for one claiming title by
adverse possession: “name=I869C8923845011DFB88F97D1CE701A9A>name=I8698DFA6845011DFB88F97D1CE701A9A>In
no case shall adverse possession be considered established under the provision
of any section of this code, unless it shall be shown that the land has been
occupied and claimed for the period of five years continuously, and the party
or persons, their predecessors and grantors, have timely paid all state,
county, or municipal taxes that have been levied and assessed upon the land for
the period of five years during which the land has been occupied and
claimed. Payment of those taxes by the
party or persons, their predecessors and grantors shall be established by
certified records of the county tax collector.”
While the payment of taxes has long been an element of an adverse
possession claim, the statutory requirement regarding proof is more recent; it
was enacted
at a regular session of the Legislature in 2010 (Stats. 2010, ch. 55, § 1)
and became effective on January 1, 2011.
(See Cal. Const., art. IV, § 8, subd. (c)(1) [absent urgency
clause, a statute enacted at a regular session of the Legislature becomes
effective on January 1 of the following year].)

Here,
the evidence concerning the payment of taxes was undisputed. Each of the Deganns testified separately that
they paid the taxes on their property annually.
They further testified that they had requested proof of tax payment from
the appropriate office and submitted those documents to their counsel, but their
counsel specifically represented that he did not have copies of the Deganns’
tax bills in court. Moreover, although
the Assessor’s office file for the Deganns’ property was admitted into
evidence, there was no testimony or other indication that the file contained
certified copies of their tax payment records.
When appellants’ counsel raised the issue of this deficiency in proof
during his motion for judgment at the conclusion of the Deganns’ case, the
trial court found it sufficient that the Deganns testified they paid their tax
bill on the full assessed value of their home.
The trial court stated: “I don’t
need to have the bill to say I have paid my taxes. I can testify that I paid all of my income
taxes since 1942 even though I don’t have the bills, can’t I?”

The proper interpretation of a statutename="SR;1708"> and its applicationname="SR;1711"> to undisputed facts present
questions of law subject to de novo review. (People
ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432; >California Veterinary Medical Assn. v. City
of West Hollywood (2007) 152 Cal.App.4th 536, 546.) The rules governing statutory interpretation
are well-settled. Our goal is to
ascertain legislative intent, and to do so “we turn first to the words of the
statute, giving them their usual and ordinary meaning. [Citations.]”
(Nolan v. City of Anaheim (2004)
33 Cal.4th 335, 340.) “If the statutory
language is unambiguous, ‘we presume the Legislature meant what it said, and
the plain meaning of the statute governs.’
[Citations.]” (>People v. Toney (2004) 32 Cal.4th 228,
232; see also Lennane v. Franchise Tax
Bd. (1994) 9 Cal.4th 263, 268 [“‘Where the statute is clear, courts will
not “interpret away clear language in favor of an ambiguity that does not
exist”’”].)

There is no ambiguity in Code of Civil Procedure section
325, subdivision (b). It provides that
the payment of taxes for the requisite five-year period
“shall be established by certified records of the county tax collector.” (Code Civ. Proc., § 325, subd. (b).) It is a well-established rule of statutory
construction that the word “shall” connotes mandatory action. (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 443; Puerta
v. Torres (2011) 195 Cal.App.4th 1267, 1272; In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 348.) The Deganns did not satisfy this mandatory
requirement, as they failed to offer into evidence the tax collector’s
certified records showing their payment of taxes for the requisite five-year
period. The statute itself sets forth
the consequence for this failure, which is that adverse possession has not been
established. (Code. Civ. Proc., § 325,
subd. (b) [providing that “[i]n no case shall
adverse possession be considered established” unless the statutory requirements
are met].)

Accordingly,
the failure to establish the payment of taxes as required by Code of Civil
Procedure section 325, subdivision (b) constitutes an alternative basis for
reversal of the judgment.

>

DISPOSITION

The
judgment is reversed and the matter is remanded with directions to enter
judgment in favor of appellants.
Appellants are entitled to their costs
on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.



_____________________, J. href="#_ftn3" name="_ftnref3" title="">^*

FERNS

We concur:





____________________________,
Acting P. J.

ASHMANN-GERST



____________________________,
J.

CHAVEZ