Order: CITY AND COUNTY OF SAN FRANCISCO VS. CIM URBAN PARTNERS, L.P. ET AL

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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO

Document Scanning Lead Sheet
Jul-17-2017 1:54 pm

Case Number: CGC-17-558011
Filing Date: Jul-17-2017 1:54
Filed by: JOSE RIOS-MERIDA
Image: 05947981
ORDER

CITY AND COUNTY OF SAN FRANCISCO VS. CIM URBAN PARTNERS, L.P. ET
AL

001005947981

Instructions:
Please place this sheet on top of the document to be scanned.Com ND HW FB WN Hw

yoy oN wv Be oe oe Boe eo
BNR REBBEREBSERERDAERAESBHEES

DENNIS J. HERRERA, State Bar #139669
City Attorney

JEAN ALEXANDER, State Bar #53676
Chief Tax Attorney

NATALIE M. ORR, State Bar #290590
Deputy City Attorney

Fox Plaza

1390 Market Street, 6th Fl.

San Francisco, California 94102-5408

Telephone: (415) 554-3849
Facsimile: (415) 554-4644
E-Mail: Natalie.Orr@sfgov.org_

Attorneys for Plaintiff
CITY AND COUNTY OF SAN FRANCISCO

F fior Li EoD

inty of San Francisco

JUL 1 7 2017

OLERK QF JHE COURT
BY Deputy Clerk

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO
UNLIMITED JURISDICTION
CITY AND COUNTY OF SAN
FRANCISCO, Case No. CGC-17-558011
Plaintiff, proetenn ORDER OVERRULING

vs.

CIM URBAN PARTNERS, L.P., a Delaware
Limited Partnership; CIM URBAN REIT,
LLC, a Delaware Limited Liability Company;
CIM MERGER SUB, LLC, a Delaware
Limited Liability Company; CIM
COMMERCIAL TRUST CORPORATION, a
Maryland corporation; SOUTHFORK
MERGER SUB, LLC, a Delaware Limited
Liability Company; CIM URBAN REIT 211
MAIN STREET SF LP, a California Limited
Partnership, CIM URBAN REIT
PROPERTIES II LP, a California Limited
Partnership, and DOES 1-50,

Defendants.

DEMURRER

Reservation No.: 06080717-13

Hearing Date: July 17, 2017
Hearing Judge: Hon. Harold Kahn
Time: 9:30 AM

Place: Dept 302

Date Action Filed: April 6, 2017
Trial Date: Not set.

{PROPOSED] ORDER OVERRULING DEMURRER CASE NO. CCG-17-558011

n:\taxlit\li2017\171263\01206804.docxC0 Om NY DA RF WwW BY He

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RF BBPRBSSERARaAE SEES

The demurrer by Defendants CIM Urban Partners, L.P; CIM Urban REIT LLC; CIM Merger
Sub, LLC; CIM Commercial Trust Corporation; Southfork Merger Sub, LLC; CIM Urban REIT 211
Main Street SF LP; and CIM Urban REIT Properties II LP (collectively, “Defendants”) came for
hearing on July 17, 2017 at 9:30 a.m. in Department 302 of the above-entitled court. Having reviewed
the demurrer and the supporting and opposing papers, considered the relevant authorities, and heard
argument, and good cause appearing therefore, the Court HEREBY ORDERS as follows:

DEFENDANTS CIM URBAN PARTNERS, L.P., CIM URBAN REIT LLC., CIM MERGER
SUB, LLC, CIM COMMERCIAL TRUST CORPORATION, SOUTHFORK MERGER SUB, LLC,
CIM URBAN REIT 211 MAIN STREET SF LP and CIM URBAN REIT PROPERTIES II LP'S
DEMURRER TO COMPLAINT, as to both causes of action in the complaint OVERRULED as to
both causes of action. Defendants fail to identify an “assessment” scheme under the San Francisco
ordinance. Article 12-C sections 1102 and 1115(a) provide that the transfer tax is a self-reported tax
that is due and payable at the time of the property transfer. Asticle 12-C-section-1145¢8)sets-forth the’ ~

ice requiremen e ien_against real-prope here-ataxis-delinguent. Plaintiff City and

County of San Francisco’s ability to obtain a lien against the property does not displace its right to
bring a judicial action to collect a tax. Defendants’ position is antithetical to the “pay first, litigate
later” rule of the California Constitution. Article 12-C section 1113 sets forth the post-payment
administrative process to obtain a tax refund. It is doubtful whether the doctrine of exhaustion of
administrative remedies even applies to CCSF. The policies underlying the exhaustion doctrine
include limiting judicial intervention in the executive decision-making process; affording agencies an
opportunity to review and correct their own errors; deference to administrative expertise; and
promoting judicial efficiency. (Farmers Ins. Exchange v. Sup. Crt (1992) 2 Cal.4th 377, 391;
Williams & Fickett v. County of Fresno (2017) 2 Cal.5th 1258, 1268.) Where the party seeking
judicial intervention is a governmental body, the doctrine’s applicability does not further, or only
minimally serves, these policies. City of Oakland v. Hotels.com LP (2009) 572 F.3d 958, 962 is not
binding authority and is distinguishable because it examined a different taxing administrative process.
At any rate, the court need not resolve the exhaustion issue because defendants mischaracterize the

San Francisco ordinance. Defendants’ other arguments also lack merit. Defendants fail to show that

[PROPGSEB} ORDER OVERRULING DEMURRER CASE NO. CCG-17-558011 _ nAtaxlit\li2017\171263\01206804.docxCo ON DH BF Ww YN

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BYR RREBEKRHSSCRDTRRERSERE S

CCSF’s purported failure to send notice to each individual defendant defeats this action. Paragraphs
30 and 39 of the complaint indicate that defendants share a common manager and the court can infer
actual notice. Defendants’ arguments about notice and the meaning of Proposition W are substantive
arguments that should be raised in an Art 12-C section 1113 hearing. (Article 12-C section 1113.3(b)
[“[NJo claim or defense that, for any reason, a tax is not due or cannot be applied under this code may
be raised in any judicial proceeding except in an action for refund of the disputed tax.”]. Defendants’
reference to San Francisco Administrative Code section 10.23 is irrelevant. CCSF correctly note that
this provision has nothing to do with defendants. It is a provision regarding interdepartmental

communication. A\\ \eadtiwes WWUMae HSE GOR chayedy Foto days.

IT IS SO ORDERED.

Dated: aval : aD 7

JUDGE OF THE SUPERIOR COURT

Ho HAROLD KAHN

-{PROPOSED} ORDER OVERRULING DEMURRER CASE NO. CCG-17-S58011 — nAtaxlit\li2017\171263\01206804.docx