Filed 10/10/17 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

JETSUI TE, INC.

,
Plaintiff and Appellant,

v.

COUNTY OF LOS ANGELES

,
Defendant and Respondent. B2 7 9273

(Los Angeles County Super. Ct. No. BC5 59245 )

APPEAL from a judgment of the Superior Court of Los Angeles County. Michael L. Stern, Judge. Affirmed.

Ajalat, Polley, Ayoob & Matarese

, Rich ard J. Ayoob, Gregory R. Broege and Sevanna Hartonians for Plaintiff and Appellant.

Mary C. Wickham, County Counsel, Albert Ramseyer

, Principal Deputy County Counsel and Richard Girgado

, Senior Deputy County Counsel ; Lamb & Kawakami, Michael K. Slattery and Shane W. Tseng for Defendant and Respondent.

* * * * * *2 Due process prohibits a state from imposing a tax on the
full value of personal property if other states also have the right to tax that property, and whether those states have that right turns on whether that property has “situs” in those other states. ( Central R

. Co. v. Pennsylvania (1962) 370 U.S. 607, 611

- 614 ( Central ) ; Flying Tiger Line, Inc. v. County of Los Angeles (1958) 51 Cal.2d 314, 318 ( Fly ing Tiger ).) The taxing authority in this case sought to impose property tax on the full value of six j ets used to operate an on

- demand “air taxi” serv ice. During the pertinent time frame, one of those jets flew to 309 different airports in 42 different states and six different countries. This

case accordingly present s the question: Does the fact that an aircraft touches down in another state, without more, mean tha t the other state has acquired situs over the aircraft under the traditional due process test for situs , such that California may no longer tax the full va lue of the aircraft? We conclude that the answer is “no,” and affirm the judgment below.
FACTS AND PROCEDURAL BACKGROUND
I. Facts In 2010, plaintiff and appellant JetSui te, Inc. ( JetSui te)
owned six Embraer Phenom 100 jets. It operated an “unscheduled a ir taxi” service that offer ed on

- demand flights.
JetSui te was incorporated in Delaware, but headquartered in Long B each, California. Its planes had no pe rmanent hangar

space and received any necessary scheduled maintenance at the manufacturer’s service facilities in Van Nuys, Californ ia and Mesa, Arizona. In 2010, one of the jets flew to 309 airports
located in 42 different states and six diffe rent countries ; JetSui te calculated that this aircraft spent 60.88 percent of its time in
Ca lifornia.3 In 2011, respondent and defendant County of Los Angeles (County) assessed person al property tax on all six jets at 1 percent of the ir full value and, in so doing, looked to the jets’

act ivity in calendar year 2010. No other jurisdiction taxe d the jets that year.
II. Procedural Background
A. Administrative p roceedings In December 2011, JetSui te challenged the County’s assessment, seeking a tax refund of $89,839 on the ground that the County should not have assessed the tax on the full value of the jets because th e jets could have been taxed by other states

. The Los Angeles County Assessment Appeals Board (Board) held an evidentiary hearing in November 2013

, analyzing the issues for all six jets based on one representative aircraft, and issued a written ruling rej ecting JetSui te’s challe nge in April
2014

. JetSui te argued to the Board that its jets had acquired “tax situs” in other states for two reasons : (1) Revenue and Taxation Code section 1161, subdivision (b) 1 provides that situs is
established in C alifornia “if an aircraft

. . . makes a landing in
the state

, ” and (2) other states conferred “benefits [and] protection” upon JetSui te by providing fire and other protection services at their airports. 2 The Board rejected both arguments.
The Board ruled that s ect ion 1161 by its terms applied only to “fractionally owned aircraft ” (and not aircraft with a single

1 All further statutory references are to the Revenue and Taxation Code unless otherwise indicated.

2 JetSui te also argued that the County’s act violated the federal Tax Equity and Fiscal Respon sibility Act of 1982 (26 U.S.C. § 6221 et seq.), but the Boar d rejected that claim , and JetSui te does not renew the claim on appeal.4

owner ) and that the benefits and protection JetSui te cited were “not shown to be more than those afforded any other transient aircraft that lands at any air port in or outside of California.
JetSui te’s transitory contact with the cities it flew into,” the Board concluded, “was not sufficient to establish a tax situs since the intent was to drop off passengers and to fly elsewhere at the earliest opportunity.”
B. Lawsuit In October 2014, JetSui te filed a petition for an administrative writ of mandate seeking to overturn the Board ’s ruling

. In additio n to a full round of briefing

, JetSui te asked the
trial court to take judicial notice of a ruling of the Utah State Tax
Commission finding that Utah had acquire d situs over JetSui te’s
fleet of jets in 2013. The court submitted the matter for trial on the papers. In October 2016, the trial court filed a written statement of decision denying JetSui te’s writ petition

. The court ruled that
JetSui te’s evidence did “not establish situs of its aircraft for tax year 2011 outside of California.” The court rejected JetSui te’s “proffered statistical evidence” as “sketchy and conclusory”

— and hence, insufficient

— beca use that evidence did not show the
duration of time the jets spent in other states; “ [ s ] imply asserting that some percentage of landings or take

- offs occurred in other

state s by itself does not,” the court reasoned, “establish situs for the pur poses of app ortioning taxes.” The court also observed that no other state had imposed taxes on JetSui te’s aircraft that year,
and determined that Utah’s taxation thr ee years later was
irrelevant.5 Fo llowing the entry of judgment

, JetSui te filed this timely appeal

. DI SCUSSION
JetSui te contends that the trial court

— and the Board
before it

— erred in rejecting its claim that the County was prohibited from taxing the full value of its jets in tax year 2011
, becau se those jets had acquired tax situs in other states.
JetSui te’s lawsuit is before us on a petition for a writ of administrative mandate. (Code Civ. Proc., § 1094.5, subd. (a).) We may issue such a writ only if (1) the administrative agency acted “without, or in excess of, jurisdiction,” (2) the petitioner was not accorded a “fair trial,” or (3) “there was [a] prejudicial abuse of discretion” because the agency did “not proceed[] in the manner required by law,” its “order or decision is not suppo rted by the findings” or its “ findings are not supported by the evidence.” ( Id

. , § 1094.5, subd. (b ).) Except where a fundamental vested right i s at issue, a court will review a claim that an administrative agency committed a prejudicial abuse of discretion

— the sole
basis for JetSui te’s petition

— f or substantial evid ence. ( Id.

, § 1094.5, subd. (c); Berlinghieri v. Department of Motor Vehicles (1983) 33 Cal.3d 392, 395

- 396 .) A lthough there is a fundamental right “ ‘ to pursue a lawful business or occupation, ’ ” “‘there is no
vested right to conduct a business free of re asonable governmental r ules and regulations

. ’ ” ( Raytheon Co. v. Fair Employment & Housing Co m. (1989) 212 Cal.App.3d 1242, 1251, italics added.) Because taxation is a form of governmental regulation (see San Francisco v. Liverpool & London & Globe Ins.
Co. (1887) 74 Cal. 113, 123; Kaufman v. ACS Systems, Inc. (2003) 110 Cal.App.4th 886, 918

- 919), our review is confined to examining whether the Board’s ruling is supported by substantial6

evidence, except as to questions of law

— including the validity of
the method of valuation

— which we review de novo. ( Elk Hills Power, LLC v. Board of Equalization (2013) 57 Cal.4th 593, 606;
Auerbach v. Los Angeles County Assessment Appeals Bd. No. 2 (2008) 167 Cal.App.4th 1415, 1420 .) In undertaking this review,
we stand in the shoes of the trial court and review the decision of the administrative agency, not the trial court. ( Auerbach

, at p. 1420.)
I. Taxation
A. Taxation generally Our state Constitution makes “[a]ll property

. . . taxable” (Cal. Const., art. XIII, § 1 , subd. (a)), and requires local governments to impose and collect property taxes ( id. , art. XIII, § 14; Sea

- Land Service, Inc. v. County of Alameda (1974)
12 Cal.3d 772, 779 ( Sea

- Land Service ) [taxation is “mandatory”] )

. Personal property is to be taxed at its “full value” (Cal. Const., art. XIII, § 1, subd. (b)), and the tax is to equal 1 percent of its fair market value ( id. , art. XIII A, §§ 1, subd. (a) & 2 ; §§ 106, 110.5, 135, subd. (a) & 401)

. Aircraft are taxable as personal property. (§§ 5301 & 5362.)
B. T axation of movable personal property When personal property moves beyond a state’s borders, as is the case with river barges, railcars

, and aircraft, the question of taxation becomes trickier because the state’s power to tax also implicates th e federal d ue p rocess c lause, which limits the state’ s
extra territorial reach. ( Norfolk & W. R. Co. v. Tax Comm ’n (1968) 390 U.S. 317, 32 5 ( Norfolk ) [noting due process is
concerned with a state “‘project[ing] [its] tax ing power

. . . beyon d its borders’” ]; see generally Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316

- 317.)7 At first, the courts took an “all or nothing” approach when defining the due process limits on a state’s power to tax personal property that moved beyond its borders . The sin e qua non of this

approa ch was the “home port doctrine, ” which provided that the state where the property’s owner was domiciled could tax all of the property, and other states or nations could tax none of it. ( Hays v. Pac. Mail S.S. Co. (1855) 58 U.S. 596, 599

- 600.) These days , however, the home port doctrine is, “if not dead, functionally comatose.” ( GeoM etrics v. County of Santa Clara (1982) 127 Cal.App.3d 940, 947

- 948 ; Japan Line, Ltd. v. County of Los Angeles (1979) 441 U.S. 434, 442 ( Japan Line ) [doctrine has “fallen into desuetude”].)
Now , due process embodies “a rule of fair apportionment among the States.” ( Japan Line

, supra , 441 U.S. at p. 442.) Under this rule, a state having situs over personal property may

tax all of that property unless one or more other states also ha s situs over that property. ( Central

, supra , 370 U.S. at pp. 611

- 614; Sea

- Land Service

, supra , 12 Cal.3d at p. 787; Fly ing Tiger

, supra , 51 Cal.2d at p. 318.) What matters is not whether the
other state actually has taxed the property, but instead w hether
the other state could tax the property (because it also has situs over the property). ( Central , at p. 614; Scandinavian Airlines System, Inc. v. County of Los Angeles (1961) 56 Cal.2d 11, 30

- 32 ( Scandinavian Airlin es ).) It is the taxpayer’s burden to show
situs in other states . ( Centra l

, at p. 613.) As this discussion indicates, situs

— and, more to the point,
the definition of situs

— is critical to the fair apportionment rule. A property has situs in a state when it is “habitually employed” or “habitually situated” in that state. ( Norfolk

, supra , 39 0 U.S.

at pp. 323

- 324 [“habitually employed”]; Central

, supra , 370 U.S.8

at p. 615 [same]; Sea

- Land Service

, supra , 12 Cal.3d at p. 780 [same]; Zantop Air Transport, Inc. v. County of San Bernardino (1966) 246 Cal.App. 2 d 433, 437 [“situ ated” synonymous with situs].) Whether personal property is habitually employed or habitually situated in a state turns on two considerations: (1) the

“ [ l ] ength o f time th[e] property is in the [state] and the inten t of its presence,” and (2) the “nature of the property owner’s contact with the [state].” ( Ice Capades, Inc. v. County of Los Angeles (1976) 56 Cal.App.3d 745, 753

- 754 ( Ice Capades ); County of San Dieg o v. Lafa

yette Steel Co. (1985) 164 Cal.App.3d 690, 694 ( Lafaye tte Steel ).) A state is more likely to acquire situs under
the first consideration if the owner intends the property “to remain” in the state “for an indefinite period or for a relative ly long time,” and less likely to acquire situs when its owner acts “with the intent that [the property] remain [ in the state ] for a short period and then be moved elsewhere.” ( Ice Capades

, at p. 753.) A state is more likely to acquire situs over property
under the second consideration if it confers “ ‘ opportunit ies

, benefits, o r protection. ’ ” ( I d

. at pp. 753

- 754 ; Ott v. Mississippi Barge Line (1949) 336 U.S. 1 6 9, 174; Braniff Airways v. Nebraska
Board (1954) 347 U.S. 590, 600 ( Braniff Airways ).) The opportunit ies , benefits

, and protection must be “substantial”
before situs is established ( Flying Tiger

, supra , 51 Cal. 2 d at

p. 319); “ the furnishing of benefit and protection, standing alone, ” is not enough to “c onfer” situs ( Scandinavian Airlines

, supra , 56 Cal.2d at p. 31). C. Taxation of aircraft in California For purposes of personal property taxation, California
divides aircraft into four categories: (1) certificated aircraft (that9

is, federally regulated aircraft that offer commercial transportation) (§ 1150); (2) air taxis (that is, small aircraft operated by a carrier that does not use aircraft above a certain size) (§ 1154, subd. (a)); (3) general aircraft (that is, aircraft privately owned by an individual or entity) (§ 5303); and ( 4) fractionally own ed aircraft (that is, aircraft owned by several
individuals or entities who are entitled to use the aircraft in proportion to their ownership interest, somewhat like a time share) (§ 1160 et seq. ). California law further divides air taxis
into t wo subcate gories: (1) air taxis that operate in scheduled flight s ervice, which are assessed in the same manner as
certificated aircraft (§ 1154, subd. (b)) ; and (2) air taxis that operate on an on

- demand, unscheduled basis , which are assessed
in the same manner as general aircraft ( § 1154, subd. (c))

. For nearly all of these categories and subcategories of aircraft, California has adopted the due pr ocess

- based definition
of situs

— either expressly or by failing to define a different definition. (See § 1155 [for ce rtificated airc raft, defining situs as

states where “ the aircraft normally make physical contact with sufficient regularity to entitle such agencies to tax the aircraft under the laws and Constitution of the United States”]; see § 5362 [for general aircraft not operating as air taxis, defining situs as between counties as where “the aircr aft is habitually situated”]; § 1154, subd. (c) [for unscheduled air taxis, defining situs as between counties as where “the aircraft is habitually situated”].) 3 Th e sole exception is fractionally owned aircraft. As

3 Although these aircraft all use the same definition of situs, they do not all use the same rule for allocati ng taxes between multiple jurisdictions. (See §§ 1151 & 1152 [setting up special allocation rule for certificated aircraft and scheduled air taxis].)10

to these aircraft and these aircraft alone, our Legislature has adopted a special situs rule: Situs is established over “[a] fleet of fractionally owned aircraft

. . . if an[y] aircraft within the f l eet makes a landing in the state.” (§ 1161, subd. (b).)
II. Analysis Under this law, whether the County has acted properly in taxing the full value of JetSui te’s jets turns on whether there is substantial evidence to support the Board’s finding that JetSui t e failed to prove that any other state acquired situs over those jets
in 2010. We conclude substantial evidenc e supports the Board’s ruling. Situs, as noted above, turns on (1) the length of time the property is in another state as well as whether the property was intended to be there indefinitely or temporarily, and (2) the

“ ‘ opportunit ies , benefits

, or protection ’ ” the other state has afforded the property. ( Ice Capades

, supra , 56 Cal.App.3d

at pp. 753

- 754; Laf

a yette Steel

, supra , 164 Cal.App.3d at p . 694.)
JetSui te calculated that the representative jet analyzed at the hearing spent 60.88 percent of its time in 2010 in California. But
JetSui te never established that the time the ai r craft spent in
each state outside of California was more than the sum of
incidental touch downs in that state and never showed the benefits and protection any particular state conferred upon those jets. Further, JetSui te’s jets were “just passing through” the states where they landed; JetSui te’s intent was, as the B oard put it, “to drop off passengers and to fly elsewhere at the earliest opportunity.” In short, JetSui te did not prove situs in any other specific state. In the absence of such proof, “it is surely

These differences in allocation are not relevant to this appeal, which deals s olely with the threshold question of situs.11

appropriate to presume that the domicile [state]”

— here

, California

— “is the only [stat e ] affording the ‘opportunities, benefits, or protection’ which due process demands as a prerequisite for taxation.” ( Central

, supra , 370 U.S. at p. 612.)
JetSui te raises three arguments in response. First, JetSui te argues that its evidentiary showing was sufficient. Specifically, JetSui te asserts that we must presume that each state and country where its jets landed offered the benefits and protection of fire and other airport services to those jets, and that the provisio n of these services by itself establishes situs. Although “aircr aft land[ing] at airports

. . . benefit from local services, including, but not limited to, police and fire protection” ( NetJet s Aviation, Inc. v. Guillory (2012)
207 Cal.App.4 th 26, 50 ( NetJ ets ) ), the provision of those services does not automatically confer situs. The states hosting a traveling ice skating show in Ice Capades ostensibly offered police and fire protection during the show’s multi

- week stay in these

states , but this was “not s ufficient to establish a tax situs.” ( Ice Capades

, supra , 56 Cal.App.3d at p. 754.) Other cases finding that a state has situs over aircraft have rested upon evidence showing regular and frequent contact between the aircraft and that specific state. ( Br aniff Airways

, supra , 347 U.S. at pp. 600

- 601 [aircraft had 18 stops per day, and earned 10 percent of its revenue, in Nebraska]; NetJets

, at p. 49 [aircraft
had between 1 3 and 181 arrivals per day , and did five to 13 percent of its business, in California ].) Similar quanta of state

specific evidence are missing here. Second, JetSui te alternatively contends that any specific deficiency in its evidentiary sh owing is irrelevant because s ection 1161, subdivision (b) provides that situs is established once a12

single “aircraft

. . . makes a landing in the state,” such that their jets’ landings in other states establishes situs i n those states. We reject JetSui te’s argument because the “single landing ” situs rule created by s ection 1161, subdivision (b) applies, by its plain language, only to fractionally owned aircraft, and JetSui te concedes that its jets are n ot fractionally owned

. Our Legislature knows how to create a special definition of situs (as it did for fractionally owned aircraft); its decision not to do so for other categories of aircraft must be given effect. ( See, e .g., People v. Tingcungco (2015) 237 Cal.App. 4th 249, 257

- 258 [noting this
maxim ].)
JetSui te nevertheless offers two reasons why the section 1161, subdivision (b) situs rule for fractio nally owned aircraft
must be extended to reach all aircraft. To begin, JetSui te asserts that the form of ownership should not dictate situs. Because our Legislature has taken a different view and allowed the default due process

- based definition of situs to remain in force for all

non

- fractionally owned aircraft (§ § 1154, subd. (c)

, 1155 & 5362 ),
JetSui te is at bottom arguing that our Legislature committed an
error of constitutional dimension in adopting a sp e cialized
definition of situs just f or fractionally owned aircraft . This is an equal protection argument, and one that lacks merit given our Legislature’s “suprem[acy] in the field of taxation” ( Delaney

v. Lowery (1944) 25 Cal.2d 561, 5 68 ) and its power to “permissibly distinguish in favor of a given class” ( Haman

v. County of Humboldt (1973) 8 Cal.3d 922, 925; Sea

- Land
Service

, supra , 12 C a l.3d at p. 780 [“equal protection

. . . imposes no invariable rule of total equality in the exercise o f the state’s taxing power”]; accord, NetJets

, supra , 207 Cal.App.4th at p. 51 [not ing that Legislature can “creat e [ ] a new definition of situs for13

purposes of taxation” for d ifferent categories of aircraft

— in that case, fractionally owned aircraft].) Further, JetSui te urges that the “internal consistency”
doctrine mandates the extension of s ection 1161, subdivision (b)’s
situs rule to all aircraft in order for all aircraft to be treated consistently. However, this argument misapprehends the
doctrine. The internal consistency doctrine is used to measure whether a jurisdiction’s tax laws impermissibly discriminate against commerce from other jurisdictions in violation of the
dormant c ommerce c lause. ( Armco Inc. v. Hardesty (1984)
467 U.S. 638, 644

- 645; Container Corp. v. Franchise Tax B d. (1983) 463 U.S. 159, 169

- 170; General Motors Corp. v. City of Los Angeles (1995) 35 Cal.App.4th 1736, 1741

- 1742, 1749

- 1750 .) Situs is a function of due process, not the dormant c ommerce

c lause. Because “the Due Proce ss Clause and the Commerce Clause reflect different constitutional concerns” and rest on “analytically distinct” considerations ( Quill Corp. v. North Dakota (1992) 504 U.S. 298, 305; MeadWestvaco Corp. v. Illinois Dept. of
Revenue (2008) 553 U.S. 16, 24 [n oting that the two clauses “impose distinct but parallel limitations on a State’s power to tax

out

- of

- state activities”]) , a test from one cannot be impo rted willy nilly to the other. More broadly, were we to accept JetSui te’s argument, we
would be conver ting our Legislature’s statutorily created single landing rule for fractionally owned aircraft into a constitutionally
mandated rule for all aircraft, ther eby displacing the well

- settled due process

- based rules for assessing situs and in the process
declar ing that 4 2 other states and six other countries have situs
of JetSui te’s jets. We will not bless this absurd result.14 Lastly, JetSui te argues that Utah’s taxation of its aircraft
in 2013 dictates a finding that Utah had situs over its jets in
2010. We d isagree. The “representative period” for the taxes at issue in this case was 2010. (§ 1153; County of Alameda v. State
B d

. of Equalization (1982) 131 Cal.App.3d 374, 380 [representative period may be the prior calendar year].) Nothing
in the record indicates that JetSui te’s activities in 2013 have any
relevance

— let alone any retroactively binding effect

— on what its
activities were

, or where they might have established situs

, in 2010. Indeed, JetSui te’s fleet operations had changed drastically between 2010 and 2013; by 2013, JetSui te’s fleet h ad grown from six jets to 21. The 2013 e vidence was entitled to no weight.
DISPOSITION
The judgment is affirmed. The County is entitled to its costs on appeal.
CERTIFIED FOR PUBLICATION.

______________________, J.
HOFFSTADT
We concur:

_________________________, Acting P. J.
ASHMANN

- GERST

_________________________, J. *
GOODMAN

* Retired judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.