The Retail Property Trust, which owns the approximately 40-acre Brea Mall, sought tax disaster relief under Revenue and Taxation Code section 170, subdivision (a)(1). The trust argued that the property was damaged because the pandemic forced the mall to close for more than 100 days starting in March 2020. The trust cited full and partial closures, restrictions on occupancy, operating hours, and the number of people allowed on the premises.
The Orange County tax assessor summarily denied the applications in March 2021, finding no physical damage to the property. The Orange County Assessment Appeals Board No. 1 upheld that denial in December 2022, concluding that physical damage is required before relief under section 170 can be granted. The trust then filed suit in Orange County Superior Court, where Judge Nathan R. Scott ruled against the property owner following a court trial in September 2024.
Justice Gooding, writing for the panel, explained that while section 170(a)(1) was intended to provide "limited relief for indirect physical damage," the Legislature cannot redefine damage to eliminate all need for physical damage. The court noted that the California Constitution permits reassessment only where taxable property is physically damaged or destroyed.
The court firmly rejected the trust's interpretation that restricted access alone constituted damage. Justice Gooding stated that neither governmental orders restricting access to property due to the COVID-19 virus nor the virus itself equate to physical harm to property. The opinion emphasized that the virus harms human beings, not property, distinguishing between economic losses and the physical alteration required for tax relief.
The ruling reinforces the precedent set in Slocum v. State Bd. of Equalization, which struck down a tax regulation that would have allowed reassessment based solely on restricted access without physical damage. The Court of Appeal noted that section 170(a)(1) provides an exception for indirect physical damage that causes restricted access, such as damage to an off-property bridge or road.
Both parties filed requests for judicial notice of additional materials, including legal opinion letters and legislative history documents. The court denied all requests as irrelevant to its constitutional analysis, concluding it had no need to go beyond the plain language of section 170(a)(1) to resolve the dispute.