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Filed 10/27/22 Walmart v. County of Placer CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication 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

THIRD APPELLATE DISTRICT

(Placer)

----

WALMART INC.,

Plaintiff and Appellant,

v.

COUNTY OF PLACER,

Defendant and Respondent.

C093835

(Super. Ct. No. SCV0044625)

Walmart disagreed with the county assessor’s valuation of two of Walmart’s 

properties for taxation purposes, and filed a claim for refund with the Placer County 

Assessment Appeals Board (Board). After the Board sustained the assessor’s valuation, 

Walmart filed a complaint for refund in the trial court. Following a bench trial, the trial 

court entered judgment in favor of Placer County (County).

Walmart now contends (1) the trial court should not have denied argument 

asserting a violation of a particular valuation rule because Walmart’s pleading 

sufficiently raised the issue, and (2) the Board’s valuation of the property was 

incomplete.

1 Finding no error, we will affirm the judgment.

1 Amicus curiae California Retailers Association filed a brief in support of Walmart in 

which amicus makes essentially the same arguments as Walmart.
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BACKGROUND

A

The California Constitution provides that, unless exempt, “[a]ll property is taxable 

and shall be assessed at . . . fair market value.” (Cal. Const., art. XIII, § 1, subd. (a).) 

The county assessor bears the duty to determine the full value of real property for 

taxation purposes. (Rev. & Tax. Code, § 401.)2 “Full value” and synonymous terms

such as “fair market value” “mean the price at which the unencumbered or unrestricted 

fee simple interest in the real property (subject to any legally enforceable governmental 

restrictions) would transfer for cash or its equivalent . . . .” (Cal. Code Regs., tit. 18, § 2, 

subd. (a).)

After its properties were assessed, Walmart paid the property taxes and filed 

applications for refund with the Board. The applications alleged the assessor incorrectly 

determined the fair market values of the properties. (§ 1603, subd. (a).) The Board 

conducted a hearing on the applications, considered oral testimony and documentary 

evidence, and sustained the assessor’s recommended values with written findings.

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(§ 1611.5.)

Walmart filed a complaint for refund of property taxes. (§ 5140.) The complaint 

alleged the properties were incorrectly assessed and that the Board’s determinations of 

the property values exceeded the fair market value. After a bench trial in which it 

considered the administrative record and oral argument, the trial court issued a statement 

2 Undesignated statutory references are to the Revenue and Taxation Code.

3 We will not distinguish between the assessor’s opinion of value and the Board’s 

opinion of value because the Board sustained the assessor’s opinion. We will therefore 

refer only to the Board.
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of decision and judgment in favor of the County. Walmart filed a notice of appeal from 

the judgment.4

B

Section 3 of title 18 of the California Code of Regulations5 prescribes value 

approaches and requires the assessor to “consider one or more” of the approaches “as 

may be appropriate for the property being appraised.” (Rule 3.) Generally, the 

approaches that may be used to value real property are the comparative sales approach 

(rule 3, subd. (a)), the cost approach (rule 3, subd. (c)), and the income approach (rule 3, 

subd. (e)).

The comparative sales approach to value relies on “[t]he price or prices at which 

the property and comparable properties have recently sold.” (Rule 3, subd. (a).) This is 

the preferred approach to value when there is reliable market data. (Rule 4.) The parties

both presented evidence to the Board of the sale price of allegedly comparable properties. 

However, the Board found that “reliable comparable sales were limited for the subject 

properties and[,] consequently, the comparative sales approach to value was given limited 

weight by the Board . . . .”

4 The County appears to argue we should decline to reach the merits of this case because 

Walmart did not obtain a reporter’s transcript of the trial court proceedings. (See 

Oliveira v. Kiesler (2012) 206 Cal.App.4th 1349, 1362 [judgment must be affirmed if

appellant failed to present adequate record for review].) We disagree. The trial court 

decided this case on the administrative record and the arguments of counsel, which were 

reflected in trial briefing. And the parties provided an agreed statement, which is a 

proper substitute for a reporter’s transcript. (Cal. Rules of Court, rule 8.134.) 

Accordingly, because we have access to the administrative record, clerk’s transcript, and 

agreed statement, the record is adequate for an appellate determination on the merits. 

5 Undesignated rule references are to sections of title 18 of the California Code of 

Regulations.
4

The cost approach to value is discussed in rules 3, subdivision (c) and 6. It reflects 

the estimated land value, plus the new cost of improvements, minus depreciation of the 

improvements. (Rules 3, subd. (c), 6.) More specifically, the approach relies on “[t]he 

cost of replacing reproducible property with new property of similar utility, or of 

reproducing the property at its present site and at present price levels, less the extent to 

which the value has been reduced by depreciation, including both physical deterioration 

and obsolescence.” (Rule 3, subd. (c).) The parties both presented evidence concerning 

the cost approach, and the Board found the cost approach was the most reliable indicator 

of value in this case.

The income approach to value reflects “[t]he amount that investors would be 

willing to pay for the right to receive the income that the property would be expected to 

yield, with the risks attendant upon its receipt.” (Rule 3, subd. (e).) The assessor 

presented evidence to the Board concerning the income approach, but Walmart did not. 

The Board found the income approach was unreliable in this case because of limited 

income data.

The Board decision related to three properties, but we will discuss only the two 

properties at issue in this litigation -- a Walmart and a Sam’s Club, both on Pleasant 

Grove Boulevard in Roseville. Both properties were owner-occupied with no leases. 

The relevant value for the properties was the value on January 1, 2016.

The assessor valued the Walmart at $26,550,000, while Walmart claimed the value 

was $15,250,000. The assessor valued the Sam’s Club at $20,425,000, while Walmart 

claimed the value was $11,500,000.

The applicant -- here Walmart -- had the burden of proof before the Board. 

(Rule 321, subd. (a).) The Board was required to determine, by a preponderance of the 

evidence, whether the assessor’s determination was incorrect. (Rule 321, subd. (b).) 

“No greater relief may be granted than is justified by the evidence produced during the 

hearing.” (Rule 321, subd. (f).)
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The Board presumed the assessor properly performed her duties and imposed on 

Walmart the burden of overcoming the presumption that the assessments were correct. 

(Rule 321, subd. (a).) After considering and weighing each party’s independent evidence 

of value, the Board determined Walmart failed to establish by a preponderance of 

evidence that the assessment was incorrect.

The Board used the cost approach, adding together the value of the land and the 

value of the improvements when the improvements were new and then subtracting for 

depreciation. The Board used the Marshall and Swift depreciation tables to determine 

depreciation, giving the properties an economic life of 35 years. The Board noted the 

Marshall and Swift depreciation tables are “a proven statistically reliable depreciation 

indicator.”

In relying on the Marshall and Swift depreciation tables, the Board declined to use 

Walmart’s own study concerning depreciation and obsolescence because it relied on 

former Sam’s Club stores in Sacramento and La Quinta. According to the Board, those 

properties were not comparable because they were vacant, with significant deed 

restrictions on the use of the properties, and located in inferior locations economically. 

The two properties at issue in this case were located in “prime areas of the robust 

Roseville market.”

The Board relied on the cost approach despite the parties’ arguments concerning 

the comparative sales and income approaches. The Board wrote: “Both parties devote 

substantial argument to the legal issue of how the ‘unencumbered fee interest’ should be 

appraised and whether and to what extent comparable sales with existing leases may be 

used in the appraisal process. While we address that issue in some detail below, we do 

not find it necessary to resolve the issue to reach our conclusion in this case. Here, we 

accept the premise that reliable sales and income data are limited for the subject 

properties. Therefore, under these facts, the most appropriate appraisal method is the cost 

approach under [rules 3, subdivision (c) and 6]. The cost approach does not rely upon 
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comparable sales and leases to establish value; thus rendering the dispute between the 

parties discussed [later in the Board decision] to be largely academic. While we accept 

the comparable sales approach to value provided by the Assessor for purposes of 

reconciling values, we [have given] limited weight to this approach due to the lack of 

reliable sales data that can be properly compared to the subject properties.”

Based on these and other findings, the Board approved and accepted the assessor’s 

value recommendations.

STANDARD OF REVIEW

Walmart’s contentions on appeal do not materially differentiate between the two 

properties, the Walmart and the Sam’s Club. We will likewise conduct our analysis 

without further differentiating between the properties.

When a taxpayer challenges a valuation method used by the assessor, the trial 

court determines de novo the validity of the method used, as does the reviewing court. 

However, when a taxpayer challenges the application of the valuation method, the trial 

court reviews the application for substantial evidence, and the reviewing court does too. 

(Freeport-McMoran Resource Partners v. County of Lake (1993) 12 Cal.App.4th 634, 

640.)

Walmart asserted in oral argument before this court that our review must be de 

novo because, by missing the essential third step in the cost approach, the Board did not 

apply the cost approach at all. Even if such an argument should be construed as a 

challenge to the valuation method rather than its application, Walmart also urged the 

following in oral argument: we review the Board’s decision and not the trial court’s 

decision; we review whether the Board applied the cost approach correctly; the issue 

presented is whether the Board applied the legal standard; it is Walmart’s position the 

Board departed from the standard; the essential third step in the cost approach missed by 

the Board was whether there were property improvements that the market would pay for; 

and the Marshall and Swift depreciation tables did not account for obsolescence. Those 
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arguments challenge the application of the value method and require substantial evidence 

review. In any event, we will conclude that under either standard of review, Walmart’s 

challenge to the valuation lacks merit.

DISCUSSION

I

The trial court denied argument based on an alleged violation of rule 6 (pertaining 

to the cost approach) because Walmart failed to identify “even a conclusory allegation” 

that the Board’s decision wrongfully violated rule 6 in its complaint for refund of taxes. 

Walmart now challenges that conclusion. We find no error.

As we have explained, the cost approach is referenced in rules 3, subdivision (c) 

and 6 and considers the value of the land, plus the new cost of improvements, minus 

depreciation. That calculation was not challenged in Walmart’s complaint, and rules 3, 

subdivision (c) and 6 were not mentioned in the pleading. Walmart’s preliminary 

statement of the sole cause of action in its complaint does not challenge the cost approach 

to value. Walmart wrote: “Walmart is challenging the property taxes on two of its Placer 

County stores. The assessments are required by law to be ‘fair market value,’ which 

generally means the price that a prudent and informed buyer would pay for the properties. 

But the assessed values are more than double the prices for which Walmart actually sells 

its stores. The Assessor wrongly assumed the stores are leased and generating revenue 

for assessment purposes, and that an institutional buyer . . . would pay a premium price to 

receive that revenue and would not occupy and use the stores. Walmart and Sam’s Club, 

respectively, occupy the stores. The Assessor is taxing the value of a fictional revenue 

and not the fee simple unencumbered property. The assessments violate the regulations 

and standards issued by the California State Board of Equalization.”

The preliminary statement focused on Walmart’s contention that the Board

compared Walmart’s properties to other properties that were not comparable and that the 

assessment was based on fictional leases even though the properties were owner-
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occupied. Those are components of the comparative sales and income approaches to 

value, not the cost approach. The rest of the complaint asserts error in the same vein --

that the Board compared Walmart’s properties to properties that were not comparable. 

For example, the complaint alleges: “The Properties were assessed based on the 

hypothetical assumption that each was generating rental revenue, i.e. as a leased fee or 

leased fee equivalent, and that a willing, prudent and well-informed buyer of the 

Properties would pay a purchase price for such properties reflecting the value of the 

imputed present and existing gross revenue stream paid by credit tenant. The Properties 

were assessed as though actually leased and not as though sold as merely available for 

occupancy or lease as required by law.” (Italics omitted.)

The complaint alleged that the disparity between the parties’ opinions of value 

was the result of (1) the Board’s treatment of the properties as leased fees in violation 

of rule 2, (2) the Board’s imputing of hypothetical revenue streams in violation of rule 8, 

and (3) the Board’s attributing to the properties the value of fictional leases in violation 

of sections 110, subdivision (d)(3) and 212, subdivision (c), both concerning intangible 

assets. Walmart did not allege facts or legal theories directly pertaining to rules 3, 

subdivision (c) or 6.

In its trial brief, Walmart referenced rule 6 for the first time, arguing that the cost 

approach must be tested for economic reasonableness by reconciling it with the 

comparative sales and income approaches, and if the Board had done so, it would have 

attributed further depreciation (obsolescence) and reduced its opinion of value.

When the County articulated pleading deficiencies during the bench trial, Walmart 

said it had the ability to move to amend the pleading, but amendment was not necessary 

unless desired by the trial court because the pleading was sufficient. Walmart did not 

move to amend, and the trial court ultimately denied argument based on an alleged 
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violation of rule 6.6 In an objection to the trial court’s tentative decision, Walmart 

claimed the pleading was adequate to allege, and put the Board on notice of, a violation 

of rule 6 because Walmart alleged generally that the Board violated the controlling law 

and because Walmart attached the Board’s decision to the complaint. The trial court 

overruled the objection.

Walmart repeats on appeal its contention that its complaint was adequate to allege 

a violation of rule 6 because Walmart attached the Board’s decision to the complaint. 

We disagree. A complaint must contain “[a] statement of facts constituting the cause of 

action.” (Code Civ. Proc., § 425.10, subd. (a)(1).) In other words, the complaint must 

give the defendant notice of the alleged cause of action. “The essence of the matter is 

fairness in pleading to give the defendant such notice by the complaint that he may 

prepare his case.” (Leet v. Union P. R. Co. (1944) 25 Cal.2d 605, 619.) Merely attaching 

the Board’s decision to a complaint alleging errors concerning rules other than rule 6 was 

not sufficient to preserve an allegation that the Board violated rule 6. The complaint did 

not give the Board notice that it would need to prepare a defense to a rule 6 challenge, 

and it did not allege facts supporting a claim that the Board’s decision violated rule 6. 

When pleading deficiencies were asserted in the trial court, Walmart chose not to amend.

Walmart argues the Board waived any defect in the complaint by not challenging 

the complaint. But this is not about a defect or uncertainty in the complaint that the 

6 The trial court said any amendment to permit a challenge to rule 6 would have been 

barred by the limitations period in section 5145.5, subdivision (a), which requires that tax 

refund actions be brought within six months after rejection of the claim. Walmart argues 

on appeal that amendment of the complaint would not have been barred by section 

5145.5, subdivision (a) because any amendment would have related back to the original 

filing of the complaint. But this argument cannot be made on appeal because Walmart 

did not move to amend its complaint and thereby preserve whether the relation back 

doctrine applied.
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Board should have challenged; it is about Walmart attempting to assert a claim that was 

not included in the complaint.

The trial court did not err in denying argument based on a violation of rule 6.

II

Walmart nevertheless contends the Board’s valuation was incomplete. Walmart 

argues that an opinion of value under the cost approach cannot stand on its own without 

corroboration from an opinion of value under the comparative sales or income approach. 

But that argument is not supported in the law, even if the practice of assessors is to test 

the cost approach by comparing the result to the result under one of the other two 

approaches.

Walmart quotes guidelines for assessing the value of personal property and 

fixtures, as well as telecommunications properties. However, those guidelines are not 

applicable to the properties in question and they do not carry the weight of law, as they 

are neither statutes nor rules. Walmart’s only citation to law for this proposition is to rule 

6, but that rule recognizes there may not be reliable data to support using the comparative 

sales and income approaches as cross-checks. Rule 6, subdivision (a) states: “The . . . 

cost approach to value is used in conjunction with other value approaches and is 

preferred when neither reliable sales data (including sales of fractional interests) nor

reliable income data are available . . . .” (Italics added.)

The Board relied on the cost approach because it determined the data for 

considering the comparative sales and income approaches were not reliable. This 

approach is consistent with rule 3, which provides that the assessor must consider “one or 

more” of the value approaches. (Rule 3.) While it may be true that good property 

assessment practices encourage an assessor to cross-check an opinion of value based on 

the cost approach by considering the comparative sales and income approaches, the law, 

as reflected in the rules, does not appear to require it, especially when the data supporting 

the comparative sales and income approaches is unreliable. Walmart’s burden before the 
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Board was to overcome the presumption that the assessor properly assessed the value of 

the properties. (Rule 321, subd. (a).) Because Walmart did not show that use of the cost 

approach to value was contrary to law, it failed to carry its burden.

Under the circumstances, we need not consider Walmart’s contention that the 

assessment of the properties reflected a hypothetical leased fee interest because the 

contention does not relate to the cost approach. As the Board noted in its decision, any 

dispute concerning the comparative sales and income approaches was largely academic.

DISPOSITION

The judgment is affirmed. The County is awarded its costs on appeal.7 

(Cal. Rules of Court, rule 8.278(a).)

 /S/

MAURO, J.

We concur:

 /S/

HULL, Acting P. J.

 /S/

DUARTE, J.

7 We previously granted Walmart’s request for judicial notice except as to exhibit C 

attached to the request. We now deny the request for judicial notice of exhibit C, 

excerpts from a book titled The Appraisal of Real Estate, because it is not apparent that 

the excerpts are “[f]acts and propositions that are not reasonably subject to dispute and 

are capable of immediate and accurate determination by resort to sources of reasonably 

indisputable accuracy.” (Evid. Code, § 452, subd. (h).)