Court Opinion

ID: 9398709
Source: CourtListenerOpinion
Date Created: 2023-05-31 21:04:15.947666+00
Date Added: 2024-06-11T17:19:35.893613
License: Public Domain

Filed 5/31/23
                      CERTIFIED FOR PUBLICATION

       IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         FIRST APPELLATE DISTRICT

                                 DIVISION ONE

 CSHV 1999 HARRISON, LLC, et al.,
         Plaintiffs and Appellants,
                                              A163369
 v.
 COUNTY OF ALAMEDA et al.,                   (Alameda County
                                             Super. Ct. No.
         Defendants and Respondents.
                                           RG20060588)

       CalSTRS, the California State Teachers’ Retirement System, created
two limited liability companies (LLCs), appellants CSHV 1999 Harrison, LLC
and CSHV 1956 Webster, LLC, for the purpose of purchasing and holding
title to two investment properties in Oakland. Respondents City of Oakland
(City) and County of Alameda (County) imposed documentary transfer taxes
totaling over $3.5 million, which the LLCs paid. The LLCs subsequently filed
a petition for writ of mandate seeking refunds, asserting they, like their sole
member CalSTRS, are “political subdivisions” of the State of California and
therefore exempt from paying the tax. The trial court disagreed and denied
their petition. We affirm.
                                BACKGROUND

       CalSTRS is a “unit of the Government Operations Agency” authorized
to “invest the assets of the [Teachers’ Retirement Fund] through the
purchase, holding, or sale thereof of any investment, financial instrument, or

                                       1
financial transaction.” (Ed. Code, §§ 22001, 22203.) The Legislature has
expressly declared the importance of CalSTRS’s effective administration of
retirement funds, stating it “finds and declares that changing economic
conditions and increasing complexity in the investment market make it
necessary and desirable that the system obtain the best possible investment
expertise.” (Id. § 22350; see id. § 22362, subd. (d) [requiring CalSTRS to
make certain kinds of investments unless that “will result in lower overall
earnings for the retirement fund than obtainable from alternative investment
opportunities”].)
      In 2016, CalSTRS formed two LLCs incorporated in Delaware for the
purpose of acquiring two properties in Oakland. Both LLC agreements state
“The purpose of the Company is to implement the essential governmental
function of the Member ([CalSTRS]) by entering into that certain Contract of
Sale (the ‘Purchase Agreement’) between the Company and [the LLC], . . .
among others, in connection with the acquisition by the Company of the
property located at [the specified location]. . . .” Both agreements provide
that CalSTRS is the “only member of the Company and owns one hundred
percent (100%) of the interests in the Company. No other person or entity
may become a member of the Company. . . . [¶] . . . [¶] [CalSTRS] shall
contribute the ‘Purchase Price’ of the Property pursuant to the Purchase
Agreement.” “[CalSTRS] is a unit of the California Government Operations
Agency and is an integral part of the State of California performing an
essential governmental function. The [LLCs], which [are] wholly owned by
[CalSTRS], [are] also an integral part of the State of California performing an
essential governmental function. The income of the [LLCs] will be derived
from the exercise of an essential governmental function and will accrue only
to [CalSTRS].”

                                       2
      As to liability, the agreements provide “The debts, obligations[,] and
liabilities of the Company, whether arising in contract, tort[,] or otherwise,
shall be solely the debts, obligations[,] and liabilities of the Company, and the
Member shall not be obligated personally for any such debt, obligation[,] or
liability of the Company solely by reason of being a member of the Company.”
      As to tax matters, the agreements state “For Federal and relevant
State income and/or franchise tax purposes and for no other purposes
whatsoever, the Company shall be disregarded as an entity separate from
[CalSTRS], as provided in Section 301.7701-3(a) of the Federal Income Tax
Regulations[1] and any comparable provision of the relevant State income or
franchise tax law. . . .”
      The following month, the LLCs acquired the Harrison and Webster
properties. In connection with the purchase of the Harrison property, the
Harrison LLC paid documentary transfer taxes of $3,371,250 to the City of
Oakland, and $247,225 to Alameda County. In connection with the Webster
property, the Webster LLC paid taxes of $161,250 to the City of Oakland, and
$11,825 to Alameda County.
      About a year later, the LLCs sought refunds of the documentary
transfer taxes by pursuing their administrative remedies with the City and
County. After their refund requests were denied, the LLCs filed a petition for
writ of mandate.
      Following a bench trial, the superior court ruled “[t]he LLCs are not
governmental entities even if a governmental entity is the sole member of the
LLC.” The court further ruled the City and County ordinances do not
“provide a textual basis for an exemption for transactions in which a business

      1   26 Code of Federal Regulations section 301.7701-3(a).

                                        3
entity takes ownership of real property based on that entity’s ownership” by
an exempt state agency. The court therefore denied the petition and entered
judgment in favor of the City and County.2
                                DISCUSSION
The Documentary Transfer Tax
      “The documentary transfer tax is a tax that may be imposed upon the
transfer of ownership of real property.” (102 Ops.Cal.Atty.Gen. 78 (2019).) It
is “an excise tax on the privilege of conveying real property by means of a
written instrument.” (926 North Ardmore Ave., LLC v. County of Los Angeles
(2017) 3 Cal.5th 319, 332, fn. 13 (North Ardmore).)
      Local governments may impose “a tax upon conveyances of real
property as authorized under the Documentary Transfer Tax Act (Rev. &
Tax. Code, §§ 11901–11934 (the ‘Act’)).[3] The Act provides numerous
exemptions from the tax (§§ 11921–11930), including when a government
agency is acquiring title to real property.” (85 Ops.Cal.Atty.Gen. 235 (2002).)
      Specifically, section 11911 authorizes a city or county to levy a tax “on
each deed, instrument, or writing by which any lands, tenements, or other
realty sold within the county shall be granted, assigned, transferred, or
otherwise conveyed to, or vested in, the purchaser or purchasers” if “the
consideration or value of the interest or property conveyed (exclusive of the
value of any lien or encumbrance remaining thereon at the time of sale)
exceeds one hundred dollars ($100).” (§ 11911, subds. (a), (b).) “Any tax

      2 We granted the request of the League of California Cities and the
California State Association of Counties for leave to file an amicus brief in
support of the City and County.
      3All further undesignated statutory references are to the Revenue and
Taxation Code.

                                       4
imposed pursuant to Section 11911 shall be paid by any person who makes,
signs or issues any document or instrument subject to the tax, or for whose
use or benefit the same is made, signed or issued.” (§ 11912.) Oakland, as a
charter city, is also authorized by our state Constitution to impose a transfer
tax under the “home rule” doctrine. (See CIM Urban Reit 211 Main St. (SF),
LP v. City and County of San Francisco (2022) 75 Cal.App.5th 939, 949–950.)
      “Section 11911 is derived from a provision of the former federal
documentary stamp act . . . (26 U.S.C. former § 4301 et seq. (1964), repealed
by Pub.L. No. 89-44, tit. VIII, § 802(a)(2) (June 21, 1965) 79 Stat. 159).”
(North Ardmore, supra, 3 Cal.5th at p. 329.) Like documentary transfer
taxes under our state and local law, the federal “stamp act also imposed a tax
on written instruments conveying ‘lands, tenements, or other realty sold’ in
return for consideration. (26 U.S.C. former § 4361 (1964).)” (Ibid.)
      Section 11922 provides for an exemption for state entities and political
subdivisions, stating “Any deed, instrument or writing to which the United
States or any agency or instrumentality thereof, any state or territory, or
political subdivision thereof, is a party shall be exempt from any tax imposed
pursuant to this part when the exempt agency is acquiring title.”
      Pursuant to this statutory authority, both the City and County enacted
documentary transfer taxes that provide an exemption for government
entities. (Oakland Mun. Code, §§ 4.20.020, 4.20.040, 4.20.050(E); Alameda
Ord. Code, §§ 2.04.020, 2.04.060.)
      Oakland’s exemption states, “the United States, state of California, any
city, county, city and county, district or any other political subdivision of the
state of California shall be exempt from any liability for the tax imposed
herein.” (Oakland Mun. Code, § 4.20.040.) Alameda County’s exemption
similarly states, “Any deed, instrument or writing to which the United States

                                        5
or agency or instrumentality thereof, any state or territory, or political
subdivision thereof, is a party shall be exempt from any tax imposed
pursuant to this chapter when the exempt entity of government is acquiring
title.” (Alameda Ord. Code, § 2.04.060.)
      “ ‘While it is generally recognized that tax exemption provisions must
be strictly construed in favor of the taxing agency and against the taxpayer,
nonetheless such construction must be fair and reasonable with due regard
for the ordinary meaning of the language used and the objective sought to be
accomplished.’ [Citation.] The rule requiring strict construction of tax
exemption provisions does not apply to taxation of state property. (State
Land Settlement Bd. v. Henderson (1925) 197 Cal. 470, 481. . . .) If it did, the
constitutional exclusion of sovereign state property from taxation would be
diluted. Instead, state property is not to be taxed unless there is express
authority for the taxation. (Ibid.)” (Mayhew Tech Center, Phase II v. County
of Sacramento (1992) 4 Cal.App.4th 497, 506–507 (Mayhew), italics omitted.)
The LLC Statutes and Agreements
      The parties do not dispute that CalSTRS is a state agency and exempt
from paying any documentary transfer tax in connection with real property it
acquires.4 Rather, they dispute whether the LLCs share CalSTRS’s exempt
status because CalSTRS created and is the sole member of the LLCs and
because the LLCs have no purpose other than furthering CalSTRS’s public
mission to manage public pension funds as effectively as possible.

      4   “[T]he State Teachers’ Retirement System is . . . a unit of the
Government Operations Agency.” (Ed. Code, § 22001.) “Deeds transferring
title of real property to the State Teachers’ Retirement System are not
subject to a county documentary transfer tax.” (68 Ops. Atty. Gen. 71 (1985).)

                                        6
      A considerable number of states, including California and Delaware
under which the LLCs here were formed, have enacted a statutory scheme
governing LLCs based on the Revised Uniform Limited Liability Company
Act5 as promulgated by the National Conference of Commissioners on
Uniform State Laws in 2006.6 (Brent A. Olson, California Business Law
Deskbook (2022) §§ 1:5(a), 3:1(a), (e); Elf Atochem North American, Inc. v.
Jaffari (Del. 1999) 727 A.2d 286, 290.) Generally, LLCs “can be created with
flow-through tax treatment, limited liability for its owners, perpetual
existence, free transferability of interests, and either centralized
management or some other management structure.” (Id. at §§ 1:5(a), 3:1(a),
(c); see generally Northwest Energetic Services, supra, 159 Cal.App.4th at pp.
852–853.) “These developments make the LLC the most appealing non-
corporate entity for business organization purposes. As such, the LLC is fast
becoming the entity of choice for closely held businesses in the United
States.” (California Business Law Deskbook, at §§ 1.5(a), 3:1(a); see also
Northwest Energetic Services, at p. 852 [“In light of the growing popularity of
LLC’s, the California Legislature enacted the LLC Act with the aim of
expanding California's competitive business environment.”].7)

      5   Corporations Code section 17701.01 et seq.
      6 California first enacted legislation authorizing LLCs in 1994 as part
of the Beverly–Killea Limited Liability Company Act (former Corp. Code,
§ 17000 et seq.). “Before the enactment, a business entity could form in
California only as a corporation, partnership, or sole proprietorship.”
(Northwest Energetic Services, LLC v. California Franchise Tax Bd. (2008)
159 Cal.App.4th 841, 852 (Northwest Energetic Services).)
      7  LLCs are perceived as being particularly advantageous to small
business enterprises. (Northwest Energetic Services, supra, 159 Cal.App.4th
at p. 852; Brent A. Olson, California Business Law Deskbook, supra, at
§ 3:1(a) [given that an LLC “will have flow-through tax status even though it
exhibits the ‘corporate’ characteristics of limited liability, continuity of life,

                                        7
      Under both California and Delaware law, a “limited liability company
is an entity distinct from its members.” (Corp. Code, § 17701.04, subd. (a);
Del. Code Ann., tit. 6, § 18-701; Curci Investments, LLC v. Baldwin (2017)
14 Cal.App.5th 214, 220 [under California law, an LLC is ordinarily
considered a distinct entity from its members and manager]; In re Opus East,
LLC (Bankr. D.Del. 2012) 480 B.R. 561, 575 [“ ‘A member has no interest in
specific limited liability company property.’ ”].)
      The tax advantages of “the LLC form of business is the ability,
assuming proper organization, to avoid the double taxation of corporate
income and shareholder dividends by having an eligible LLC elect to be
treated as a partnership for federal tax purposes without being subject to as
many restrictions as ‘subchapter S corporations.’ [Citation.] [¶] Moreover, a
‘single-member’ LLC . . . has the option of electing either to be taxed as an
association (i.e., a corporation) or, like a sole proprietorship, to be disregarded
as an entity separate from its owner. 26 C.F.R. § 301.7701–3(a) (2003). If the
single-member LLC elects to be taxed as a sole proprietorship, the LLC itself
does not pay taxes and does not have to file a separate tax return. 26 C.F.R.
301.7701–2(a) (2003); Cal. Rev & Tax Code § 23038(b)(2)(B)(iii). Rather, the
single member reports all LLC profits or losses on a personal tax return as if
the business was a sole proprietorship.” (In re KRSM Properties, LLC
(Bankr. 9th Cir. 2004) 318 B.R. 712, 718–719, fns. omitted.)
      Consistent with the governing statutes, the LLC agreements here
provide, “The debts, obligations[,] and liabilities of the Company, whether
arising in contract, tort[,] or otherwise, shall be solely the debts, obligations[,]

and free transferability of ‘transferable interests,’ ” “the LLC is the typical
choice of entity for the small business organization, particularly for a
business seeking flexibility in its governance and operations”].)

                                         8
and liabilities of the Company, and the Member shall not be obligated
personally for any such debt, obligation[,] or liability of the Company solely
by reason of being a member of the Company.” (See Corp. Code, § 17703.04,
subd. (a)(1).)
      With respect to taxation, the agreements specify, “For Federal and
relevant State income and/or franchise tax purposes and for no other purpose
whatsoever, the Company shall be disregarded as an entity separate from
[CalSTRS], as provided in Section 301.7701-3(a) of the Federal Income Tax
Regulations and any comparable provision of relevant State income or
franchise tax law. . . . [E]ach of the assets and each of the liabilities of the
Company shall be treated as an asset or a liability (as appropriate) of
[CalSTRS] (and not of the Company) for Federal and relevant State income
and/or franchise tax purposes and for no other purpose whatsoever.”8 (Italics
added.)
      Thus, the statutory provisions governing the two LLCs expressly
provide they are separate entities distinct from their member, CalSTRS. The
LLC agreements, in turn, expressly state the only exception in this regard is
as permitted by federal and state income tax law.
      The LLCs nevertheless urge that we can, and should, disregard their
separate entity status for the additional purpose of the documentary transfer
tax, citing a recent opinion by our state Attorney General, cases decided
under the former Federal Stamp Act, and cases discussing “beneficial

      8  These provisions are in conformance with income tax law allowing
LLCs with “a single owner [to] elect to be classified as an association or to be
disregarded as an entity separate from its owner.” (26 C.F.R. § 301.7701-
3(a).) “If the separate existence of an eligible business entity is disregarded
for federal tax purposes, the separate existence of that business entity shall
be disregarded for purposes of this part.” (§ 23038, subd. (b)(2)(B)(iii).)

                                         9
ownership” and “change of ownership.” As the LLCs’ legal authorities
evidence, the parties have not cited to, nor are we aware of, any case
addressing the specific issue at hand—whether an LLC created by a
government entity to accomplish its public functions can be deemed a
“political subdivision” of the state exempt from a documentary transfer tax.
We therefore turn to the authorities cited by the LLCs.
Attorney General Opinions
       “Although we are not bound by the Attorney General’s interpretation
of a statute, ‘ “ ‘[a]bsent controlling authority, [the Attorney General’s
opinion] is persuasive because we presume that the Legislature was
cognizant of the Attorney General’s construction of [the statute] and would
have taken corrective action if it disagreed with that construction.’ ” ’ ”
(Towner v. County of Ventura (2021) 63 Cal.App.5th 761, 773 (Towner).)
      The LLCs direct our attention to a 2019 opinion responding to an
inquiry by the County of Santa Barbara as to whether “a nonprofit public
benefit corporation that is an instrumentality of a city housing authority” is
exempt from the documentary transfer tax. (102 Ops.Cal.Atty.Gen. 78, at
p. *1 (2019).) The Attorney General concluded, “A housing authority created
under state law ‘constitutes a corporate and politic public body, exercising
public and essential governmental functions. . . .’ Therefore[,] a housing
authority is a government agency, and thus exempt from the documentary
transfer tax under section 11922. [¶] We see no material difference arising
from the circumstance that the taxable event—filing a deed or other
instrument of property transfer—is undertaken by the nonprofit public
benefit corporation created by the public agency, rather than by the housing
agency itself. When it exercises the powers of a public housing agency, a

                                        10
nonprofit created by the housing agency is a ‘political subdivision’ entitled to
an exemption from the documentary transfer tax.” (Id. at p. *3.)
      The LLCs maintain “[t]he same rule should be applied to a single
member limited liability company that is wholly owned by a state agency and
irrevocably dedicated to essential government functions.”
      The Attorney General’s opinion, however, presumed the nonprofit
public benefit corporation in question was an instrumentality of the city
housing authority—it did not decide that issue. (102 Ops.Cal.Atty.Gen.,
supra, at p. * 1.) Rather, it observed “it is common for housing authorities in
California to create nonprofit public benefit corporations.” It further
observed that in a prior opinion, the Attorney General “noted that the
[Documentary Transfer Tax] statute uses the term ‘exempt agency’ as a
broad catch-all in its final phrase: ‘when the exempt agency is acquiring
title.’ ” (Id. at p. * 3.) “This sweeping usage indicated . . . the exemption was
intended to be applied inclusively: ‘[I]f the entity involved can be classified as
a government agency, it is exempt from the tax.’ After also examining the
legislative history, we concluded that the use of ‘political subdivision’ in
section 11922 was meant to apply broadly rather than restrictively, and that
county water districts did qualify for the exemption.” (Ibid.)
      The opinion to which the 2019 opinion referred considered whether a
county water district is a “ ‘political subdivision’ ” of the state for purposes of
the documentary transfer tax. (56 Cal.Ops.Atty.Gen. 79 (1973).) The
Attorney General therein observed “there are different California authorities
which could be mechanically cited in favor of or against the inclusion of
county water districts within the term ‘political subdivision.’ ” (Id. at p. 81.)
He therefore endeavored “to discover whatever legislative intent can be found
regarding the scope of the term ‘political subdivision’ as used in the

                                        11
particular statute at hand.” (Ibid.) And in that undertaking, the Attorney
General examined the former federal stamp tax, which the state tax replaced
and on which it was modeled. (Id. at pp. 81–83.) He concluded Congress had
“acted to broaden the coverage of the exemption as to the type of property
acquired by governmental entities” and, thus, endorsed a view of the state
exemption for “ ‘political subdivision[s]’ ” “broad enough to include special
districts such as the county water district.” (Id. at p. 83; ibid. [“the section as
presently worded indicates by its use of the term ‘exempt agency’ as an all-
inclusive term that if the entity involved can be classified as a governmental
agency, it is exempt from the tax”].) Citing to a number of cases treating
water districts as government entities in a variety of contexts, the Attorney
General stated “[a]bout the clearest conclusion that can be drawn in this
entire area of classification of governmental entities is that county water
districts and similar special districts can be classified as ‘state,’
‘governmental,’ and ‘public’ agencies.” (Ibid.)
      The Attorney General took the same approach nearly three decades
later in 2002, when considering whether a “city” is a “ ‘political subdivision’ ”
of the state for purposes of the documentary transfer tax.
(85 Ops.Cal.Atty.Gen. 235, at pp. *1–2 (2002).) That opinion recited that for
some purposes cities are recognized as political subdivisions of the state, and
for others they are not. Thus, as with county water districts, different
California authorities “ ‘could be mechanically cited’ ” for designating a city
either way. (Id. at p. *4.) Looking to both the prior Federal Stamp Act
exemption, and the legislative history of the state statute which included
broad statements that “ ‘Federal, state and local government agencies are
exempted from the tax,’ ” the Attorney General concluded cities are “ ‘political

                                         12
subdivisions’ ” of the state for purposes of the documentary transfer tax. (Id.
at pp. *8–9.)
      It is true these Attorney General opinions reflect a “broad” view as to
whether an entity is a political subdivision of the state for purposes of the
documentary transfer tax. However, a nonprofit public benefit corporation, a
county water district, and a city are fundamentally different creatures from
an LLC. Nor can we say “there are different California authorities” that can
be “mechanically cited in favor of or against the inclusion of” an LLC created
by a government entity to advance the entity’s public purposes “within the
term ‘political subdivision.’ ” (56 Cal.Ops.Atty.Gen., supra, at p. 81.)
      Thus, the Attorney General opinions do not carry the weight required
to disregard the general statutory provisions governing LLCs and the
correlative language of the LLC agreements at issue.
      We nevertheless acknowledge there is some tension between the
express statutory mandate to CalSTRS to maximize returns on the
retirement funds it manages and the general statutory provisions applicable
to LLCs that specify their separateness from members and managers.
Concluding that the LLCs must pay the City’s and County’s documentary
transfer taxes effectively removes $3.53 million from the teacher’s retirement
system solely because CalSTRS utilized this relatively new form of entity to
acquire the investment properties. Had CalSTRS, itself, purchased the
properties, no transfer tax would have been assessed. Thus, it might be
argued the city and county have effectively received a windfall solely because
CalSTRS used LLCs, of which it is the sole member and which have no
purpose other than to fulfill CalSTRS’s statutory mission to manage and
maximize public pension funds, to purchase the properties rather than

                                       13
purchasing them directly. But that is a case CalSTRS must make to the
Legislature.9
Former Federal Stamp Tax Cases
      The LLCs also rely on four cases involving the former federal stamp
act, asserting the act would have “exempt[ed] a state agency’s acquisition of
realty by a wholly-owned, single-member limited liability company.”
(Capitalization omitted.) Even apart from the fact LLCs did not exist during
the time the stamp act was operative (see North Ardmore Avenue, supra,
3 Cal.5th at p. 334 [commenting it was unsurprising that no federal authority
addressed “the stamp act’s application to a transaction exactly like this one”
involving a commercial LLP because “[w]hen the stamp act was in effect,
limited liability companies did not exist and tax laws created disincentives
for small businesses to take the corporate form”]), the cases are
distinguishable.
      Murray v. Hoey (S.D.N.Y. 1940) 32 F.Supp. 1008, involved a will that
provided the residue of a sizeable estate would be allocated among 14
corporate charitable beneficiaries. (Id. at p. 1009.) To facilitate the
management of the residual properties, the beneficiaries had an act
introduced in the New York State Legislature to incorporate a foundation to
manage and liquidate the properties. (Ibid.) The beneficiaries deeded the
properties to the new foundation, and the federal government imposed the
stamp tax on the deeds. (Ibid.) The federal district court invalidated the

      9  The City and County point out that by employing LLCs CalSTRS is
able to limit its liability and receive certain tax benefits. But these are
hardly reasons to conclude the LLPs cannot share CalSTRS’s exempt status.
To the contrary, they are the sort of benefits we would expect CalSTRS to
seek in fulfilling its mission to responsibly maximize returns on the pension
funds it invests.

                                       14
imposition of the tax, stating the state act creating the foundation
“sufficiently characterize[d] its status as trustee,” thus exempting the
transfers from the tax. (Id. at p. 1012, italics added.)
      Berry v. Kavanagh (6th Cir. 1943) 137 F.2d 574, involved “deeds
executed to a reinsurer by a statutory receiver of a reserve life insurance
company in liquidation.” (Id. at p. 574.) The federal circuit court concluded
the deeds were executed “to convey the naked legal title of the real estate in
question to the grantee for the purpose of managing, conserving and
liquidating the real estate for the benefit of the policyholders of the insolvent
company.” (Id. at p. 576.) The court construed the contract and deed “as a
whole” and concluded “there was created an agency to sell and not the
relationship of vendor and vendee.” (Ibid., italics added.)
      Berkeley Savings & L. Ass’n of Newark, N.J. v. United States (D. Ct.
N.J 1969) 301 F.Supp. 22, dealt with a loan guarantee program under which
the Veterans Administration (VA) sold properties to individual purchasers
through installment contracts and retained legal title “until an individual
purchaser’s monthly payments had reduced the balance of the purchase price
to a certain amount,” at which point the purchaser would gain legal title. (Id.
at p. 23.) Before some of the individual purchasers acquired legal title, the
VA assigned the installment contracts and conveyed legal title to the plaintiff
savings and loan. (Id. at p. 24.) The district court concluded no tax was due
on those deeds, stating “the tax does not apply to a conveyance of realty to a
building and loan association for the purpose of securing a loan thereon. . . .”
(Id. at p. 28, italics added.)
      Columbia Gas of Pennsylvania, Inc. v. United States (3rd Circ. 1971)
446 F.2d 320, involved a stamp tax imposed on a transfer of stock and real
estate between a corporation and its subsidiary as part of a “plan of corporate

                                       15
simplification.” (Id. at pp. 320–321.) The issue was whether a former
Internal Revenue Code exemption—for “ ‘[t]he issuance, transfer, or exchange
of securities, or the making, delivery, or filing of conveyance, to make
effective any plan of reorganization or adjustment . . . [¶] . . . [w]hereby a
mere change in identity, form or place of organization is effected’ ”—applied.
(Id. at p. 322, italics omitted, quoting former Int.Rev. Code, § 4382 (b)(1)(D).)
The circuit court concluded “Congress intended to exempt a generic class of
formalistic transactions involving no change in ownership and no new
dedication of capital.” (Columbia Gas of Pennsylvania, Inc., at p. 324.)
      In short, these cases all considered whether a “change in ownership”
had occurred such that the transaction constituted a transfer under the
former federal stamp act, a question not at issue in this case. Indeed, there is
no dispute a change in ownership occurred here. Moreover, none of these
cases considered a context akin to that here, namely whether an LLC created
by a government entity to facilitate the entity’s public purposes, is exempt
from paying a documentary transfer tax.10
“Beneficial Ownership” Cases
      Asserting “it is well-established that taxing authorities must elevate
substance over form,” the LLCs also maintain CalSTRS acquired a “beneficial
interest in the properties” and thus “ ‘holds “the essential indicia of

      10 The LLCs also assert “the city and county ordinances are founded on
federal income tax principles” (capitalization omitted) and because “[f]ederal
income tax recognizes disregarded entities,” such as when a member of an
LLC “elects to disregard the single-member limited liability company for
federal income tax purposes, the entity is required to be disregarded for
California income tax purposes.” As we have discussed, the state
documentary transfer tax is based on the former federal stamp act, not
federal income tax law. (See North Ardmore, supra, 3 Cal.5th at p. 329.)

                                        16
ownership,” ’ ” thereby imbuing the LLCs with CalSTRS’s tax exempt status.
The LLCs cite Mayhew, supra, 4 Cal.App.4th 497 and North Ardmore, supra,
3 Cal.5th 319, in support this assertion. Both cases are distinguishable.
      In Mayhew, the State of California accepted the bid of a developer
(Mayhew Tech Center, Phase II (Mayhew)) to build a new facility for the
Franchise Tax Board. (Mayhew, supra, 4 Cal.App.4th at p. 501.) Funds for
acquisition of the property came from the proceeds of a sale of certificates
issued by a trustee. (Ibid.) The State leased the property from Mayhew, with
the rental payments going to pay the certificate holders. (Ibid.) Mayhew, in
turn, “transferred its right to receive rental payments to the trustee for the
benefit of the certificate holders . . . [and] transferred legal title to the
property to ComPlan, Inc. (ComPlan).” (Ibid.) At the end of the lease, legal
title would “automatically vest in the State if all rental payments [were]
made.” (Ibid.) The State could “unilaterally terminate the lease, without
penalty, in the event the Legislature and Governor fail to provide funds for a
rental payment. In such an event, the State would have no further rights in
the property.” (Id. at pp. 501–502.)
      Mayhew and ComPlan, as well as the State, subsequently sought a
refund of property taxes they had paid, claiming the property was state-
owned and therefore exempt from taxation.11 (Mayhew, supra, 4 Cal.App.4th
at pp. 503–504.) The county maintained the “agreements create[d] no more

      11 Mayhew and ComPlan claimed exemption from property taxes, not
documentary transfer taxes, under article XIII, section 3 of the California
Constitution (Mayhew, supra, 4 Cal.App.4th at p. 501), which provides: “The
following are exempt from property taxation: (a) Property owned by the
State.” (Cal. Const., art. XIII § 3, subd. (a).)

                                         17
than a leasehold in the State, not ownership.” (Id. at p. 504.) The trial court
ordered refunds, and the Court of Appeal affirmed. (Id. at pp. 503–504, 510.)
      The appellate court observed that, although “ ‘[t]he owner of the legal
title to property is presumed to be the owner of the full beneficial title, . . . [a]
title clause standing alone is not conclusive of ownership for tax purposes,’ ”
quoting General Dynamics Corp. v, County of L.A. (1958) 51 Cal.2d 59, 67.
(Mayhew, supra, 4 Cal.App.4th at pp. 504–505.) “To ascertain ownership for
tax purposes, the court must examine the terms of the agreements involved
and determine who holds ‘the essential indicia of ownership.’ ” (Id. at p. 505.)
      The court then examined the financial arrangement between Mayhew
and the State, concluding it “closely resemble[d] the financing of a purchase
through a loan secured by a deed of trust on the subject property.” (Mayhew,
supra, 4 Cal.App.4th at p. 505.) Under the arrangement, “the buyers of the
certificates . . . provided funds for the purchase. . . . The rents paid under the
lease are for the benefit of the certificate holders, and in the event of default
in paying the rent, the trustee will sell or lease the property to pay off, first,
the certificate holders. The remaining funds will go to the State. Mayhew is
left without an interest in the property, and the legal title transferred to
ComPlan does not include the right to receive rents, contains no reversionary
interest, and will be automatically divested in the event of expiration of the
lease or default on the payment of rent.” (Ibid.)
      “Furthermore, the lease provides for automatic vesting of title in the
State at the expiration of the lease if all rental payments are made. Even in
the event of [a] default on rental payments, the State would receive the funds
remaining after sale of the property and payment of the certificate holders.
In other words, any equity remaining in the property belongs to the State. As
in a conditional sale setting, the State holds beneficial ownership both in the

                                         18
practical and legal sense because it has possession and use of the property to
the complete exclusion of all others, subject only to its own default and the
remedies which would result.” (Mayhew, supra, 4 Cal.App.4th at p. 505.)
Under these circumstances, the court concluded the State “holds beneficial
ownership for [property] tax purposes.” (Ibid.)
      The circumstances in Mayhew differ markedly from those here.
Mayhew involved a rather complex financial transaction in which the state
not only had “possession and use of the property to the complete exclusion of
all others,” but also would automatically be vested with title upon conclusion
of the lease term. (Mayhew, supra, 4 Cal.App.4th at p. 505.) And even if the
full transaction was not consummated, the state would recoup any equity. In
short, the transaction was effectively a financed “sale” to the state. Under
these circumstances, the state was the beneficial owner for property tax
purposes. Here, in contrast, there was a straightforward sale to the LLCs
and they are not effectively fulfilling the role of a lender that holds naked
title to the property for security.
      In North Ardmore, supra, 3 Cal.5th 319 a couple established a family
trust to which they transferred an apartment building. (Id. at pp. 324–325.)
After the husband’s death, the family trust’s assets were transferred to an
administrative trust for the wife’s benefit, with the couple’s two sons named
as successor trustees. (Id. at p. 325.) The sons formed an LLC to acquire and
hold the apartment building, with the administrative trust as the sole
member. They also formed a partnership in which the administrative trust
owned a 99 percent interest. (Ibid.)
      The administrative trust conveyed the building to the LLC and
conveyed its membership interest in the LLC to the partnership. (North
Ardmore, supra, 3 Cal.5th at p. 325.) The trust also divided its 99 percent

                                       19
interest in the partnership and distributed it to four subtrusts for the benefit
of the wife. None of these transfers triggered the documentary transfer tax,
because the transactions simply “moved the [apartment building’s] legal
ownership among the various entities . . . [b]ut [the wife’s] beneficial interest
remained unchanged.” (Ibid.)
      However, the following year, three of the subtrusts transferred their
interests in the partnership to two trusts maintained for the two sons,
resulting in the two sons acquiring “a beneficial interest in the [apartment
building] they had not held before.” (North Ardmore, supra, 3 Cal.5th at
p. 325.) After the transfers, each of the sons’ trusts held a 44.595 percent
interest in the partnership, which was the sole member of the LLC. (Id. at
p. 326.) The LLC continued to hold legal title to the apartment building.
(Ibid.) The sons’ trusts executed promissory notes to the three subtrusts in
consideration for the transferred assets. (Ibid.)
      The issue before the high court was whether there had been a “change
in ownership” for the purposes of the documentary transfer tax, thus allowing
the county to tax the “written instruments that transferred [the] interests in
[the partnership] from [the] subtrusts to the [sons’] trusts.” (North Ardmore,
supra, 3 Cal.5th at pp. 326, 328.) In other words, the issue was whether a
transfer of an interest in a legal entity holding title to a property can result in
a change in ownership in the property triggering the transfer tax.
      The Supreme Court concluded a transfer of an interest in a legal entity
can trigger the tax “so long as there is a written instrument reflecting a sale
of the property for consideration.” (North Ardmore, supra, 3 Cal.5th at
p. 338.) Because the sons’ trusts paid the wife’s subtrusts “for the interests
they acquired in the [b]uilding,” there was consideration for the sale. (Ibid.)

                                        20
Accordingly, the transfer from the wife’s three subtrusts to the sons’ trusts
was a sale of property to which the documentary transfer tax applied. (Ibid.)
         As we have pointed out, there is no “change of ownership” issue in this
case, let alone any issue arising from the transfer of an interest in an entity
for consideration as was the case in North Ardmore.
         In sum, the “beneficial interest” cases on which the LLCs rely involved
materially different circumstances and do not advance their assertion that
CalSTRS holds all “beneficial interest in the properties” and therefore “the
essential indicia of ownership” for purposes of the documentary transfer
tax.12
The Property Tax Context
         In urging affirmance, the City and County direct our attention to
constitutional and statutory provisions pertaining to property taxation and
point out that despite the constitutional exemption from such tax for property
“owned by the State” (Cal. Const., art. XIII, § 3, subd. (a)), the LLCs have
never claimed to be exempt and have paid property taxes since purchasing
the properties. Indeed, the City and County assert the Legislature has

         The LLCs have sought judicial notice of a copy of the July 21, 2016,
         12

contract of sale, asserting it supports their exemption claim because it was
signed on behalf of the LLCs by the deputy chief investment officer of
CalSTRS, the LLCs’ “sole member.” The document was not before the trial
court or part of the administrative record. It is also irrelevant as there is no
dispute that CalSTRS is the sole member of the LLCs and as such manages
and controls the LLCs. In any case, “the existence of a contract between
private parties cannot be established by judicial notice under Evidence Code
section 452, subdivision (h).” (Gould v. Maryland Sound Industries, Inc.
(1995) 31 Cal.App.4th 1137, 1145.) Nor is the document subject to judicial
notice an “[o]fficial act[]”of a government agency as it was signed by the
deputy chief investment officer of CalSTRS as the sole member of the LLCs.
We therefore deny the request for notice.

                                         21
expressly stated that only property directly owned by CalSTRS is exempt
from property taxation and that property owned indirectly by CalSTRS
through an entity like an LLC is not exempt.
      The Legislature has made a number of explicit references to LLCs, in
the context of property taxation. Section 214, for example, expands on the
state constitutional exemptions from property taxation and provides a litany
of additional exemptions. One such exemption, commonly referred to as the
“welfare exemption,” states in pertinent part: “Property used exclusively for
religious, hospital, scientific, or charitable purposes owned and operated by
community chests, funds, foundations, limited liability companies, or
corporations organized and operated for religious, hospital, scientific, or
charitable purposes is exempt from taxation. . . .” (§ 214, subd. (a), italics
added.)
      Section 214.8, in turn, states “the ‘welfare exemption’ shall not be
granted to any organization unless it is qualified as an exempt organization”
under specified state or federal tax statutes. (§ 214.8, subd. (a).) Subdivision
(c) specifically addresses LLCs and states in pertinent part, “a limited
liability company wholly owned by one or more qualifying organizations,
which may include governmental entities and nonprofit organizations, that
are exempt under Section 23701d or under Section 501(c)(3) of the Internal
Revenue Code, shall qualify as an exempt organization.” (Id., subd. (c)(1),
italics added.)
      State Board of Equalization regulations further elucidate that, “A
qualifying organization is also a government entity that is exempt from
property taxation under section 3 of Article XIII of the California
Constitution, as to property owned by the state under subdivision (a), or as to
property owned by a local government under subdivision (b), or as to property

                                        22
used exclusively for public schools, community colleges, state colleges and
state universities under subdivision (d). A limited liability company is a
qualifying organization if one or more of its members is a government entity,
as specified, and all other members are exempt under section 501(c)(3) of the
Internal Revenue Code or under section 23701d of the Revenue and Taxation
Code and qualify for exemption under section 214 of the Revenue and
Taxation Code.” (Cal. Code Regs., tit. 18, § 136, subd. (b)(2).)
      Thus, in the context of property taxation, the Legislature and the
Board of Equalization have drawn a clear distinction between property
owned directly by the “state” and local governments, and property owned by
an LLC of which a “government entity” may be a member. In other words,
the Legislature and Board appear to consider the general statutory
provisions governing LLCs to be controlling in the tax context unless a
statutory provision specifies otherwise. The Board has therefore observed,
“While specific statutory and regulatory provisions may allow a single
member limited liability company (LLC) to disregard its separate existence
for purposes of income tax filing, there is no authority for disregarding an
LLC’s separate entity status for purposes of ownership, operation, or use of
property in determining eligibility for the welfare exemption under Revenue
and Taxation Code section 214.”13 (California State Board of Equalization,

      13 California Board of Equalization annotations are not controlling
upon the courts, but they do “ ‘ “ ‘constitute a body of experience and informed
judgment to which courts and litigants may properly resort for guidance.’ ” ’ ”
(Letterman Digital Arts Ltd. v. City and County of San Francisco (2020)
59 Cal.App.5th 317, 326, fn. 6, quoting Dyanlyn Two v. County of Orange
(2015) 234 Cal.App.4th 800, 811.)
      As the Board has explained, “Annotations are primarily summaries of
the conclusions reached in selected legal rulings of counsel. ‘Legal rulings of
counsel’ means a legal opinion written and signed by the Chief Counsel or an

                                       23
Property Tax Annotation,
 [as of May 31, 2023].)
      The City and County direct our attention specifically to Government
Code section 7510, which states in pertinent part: “An investment by a state
public retirement system in a legal entity that invests assets in real property
and improvements thereon shall not constitute an investment by the state
public retirement system of assets in real property and improvements
thereon. For purposes of this paragraph, ‘legal entity’ includes, but is not
limited to, partnership, joint venture, corporation, trust, or association.
When a state public retirement system invests in a legal entity, the state
public retirement system shall be deemed to be a person for the purpose of
determining a change in ownership under Section 64 of the Revenue and
Taxation Code.” (Gov. Code, § 7510, subd. (b)(3).)
      As the court explained in California State Teachers’ Retirement System
v. County of Los Angeles (2013) 216 Cal.App.4th 41 (Teachers’ Retirement

attorney who is the Chief Counsel’s designee, addressing a specific tax
application inquiry from a taxpayer or taxpayer representative, a local
government, or Board of Equalization staff. [¶] Property Taxes annotations
are a research tool to locate selected legal rulings of counsel. Annotations are
intended to provide guidance regarding the interpretation of statutes and
Board rules as applied to specific factual situations. They do not have the
force or effect of law. Although annotations are synopses of past advice
provided by the Board’s legal staff, the advice is not binding and may be
revised at any time. The date appearing at the end of an annotation reflects
the agency’s interpretation of statutes existing as of that date. In any
instance where there is an inconsistency between the statute and an
annotation, statutory law is controlling.” (California State Board of
Equalization, Applicability of Annotations and Source Documents
.)

                                       24
System), this statute was enacted in 1982 when CalSTRS was statutorily
authorized “to invest a portion of its assets in real estate, so as to broaden
[Cal]STR[S]’s investment opportunities on behalf of its members and
retirees.” (Id. at p. 57.) The Legislature recognized, however, that since
property owned by CalSTRS is constitutionally exempt from property
taxation, its purchases would negatively affect the local tax base. (Ibid.) The
Legislature therefore required CalSTRS “to reimburse local governments by
way of an ‘in lieu’ fee, so as to offset the local governments’ loss of property
tax revenues resulting from such investments.” (Ibid.)
      In 1991, the Attorney General opined the “ ‘in lieu’ ” fee was
unconstitutional because it was effectively an ad valorem tax on property
owned by CalSTRS. (Teachers’ Retirement System, supra, 216 Cal.App.4th at
p. 58.) In light of this opinion, CalSTRS commenced a number of lawsuits to
recoup the fees it had paid. To resolve this litigation, the Legislature
amended former section 7510 in 1992 to abolish the “ ‘in-lieu fee and instead
require that all leases include a provision which would directly pass the full
property tax onto the lessee.’ (Governor’s Office of Planning & Research,
Enrolled Bill Rep. on Sen. Bill 1687, Sept. 2, 1992, p. 1.) Thus, the
Legislature decided to shift the entire property tax burden to the lessee, even
though the lessee merely held a possessory interest in the property.” (Ibid.)
Even at the time this amendment was moving through the Legislature there
was considerable concern the new methodology did not cure the
constitutional problem, and CalSTRS eventually challenged it in court. (Id.
at p. 59.) CalSTRS lost in the trial court but prevailed on appeal, the Court
of Appeal agreeing that the new methodology impermissibly taxed lessees for
more than the value of their leaseholds and effectively continued to be an
unconstitutional tax on CalSTRS’s property. (Id. at pp. 60–64.) The

                                        25
Legislature subsequently amended the statute to eliminate the offending
provisions. (Gov. Code, § 7510, subd. (b)(1), Stats. 2015, ch. 454, § 1.)
      The statutory provision pertinent here is that stating “An investment
by a state public retirement system in a legal entity that invests assets in real
property and improvements thereon shall not constitute an investment by the
state public retirement system of assets in real property. . . . For purposes of
this paragraph, ‘legal entity’ includes, but is not limited to, partnership, joint
venture, corporation, trust, or association.” (Gov. Code, § 7510, subd. (b)(3),
italics added.) This provision was added to the statute as part of the 1992
amendments at the request of the Board of Equalization. (State Board of
Equalization, Legislative Bill Analysis on Sen. Bill No. 1687 (1991–1992 Reg.
Sess.) amended June 15, 1992, p. 3.14) The Board urged that the term
“ ‘investment’ ” be “clarified to mean the acquisition of stock or other
ownership interest in a legal entity as an investment to differentiate between
that term, as it is used in Section 64 of the Revenue and Taxation Code, and
an investment in real property.” (Ibid.; Assem. Com. on Rev. & Tax., Sen.
Bill No. 1687 (1991–1992 Reg. Sess.) amended June 26, 1992, p. 3 [Board
requested “[t]he term ‘investment’ [] be clarified to distinguish between entity
ownership interest in a business and an investment in real property”].) It
further urged that the clarifying language “should use language parallel to
that of Section 64, using ‘corporation, partnership, or other legal entity” in
order to maintain consistency between the sections. (State Board of
Equalization, supra, amended June 15, 1992, p. 3.) Thus, the purpose of the
additional language was to reinforce the distinction between direct ownership

      14 We take judicial notice of this legislative history on our own motion.
(Evid. Code, §§ 452, subds. (a), (c), 459.)

                                        26
of real property and ownership of an interest in an entity owning real
property. Moreover, this was done in the context of trying to ameliorate the
loss of local property tax revenue arising from the purchase of income
producing properties by the state’s pension plans. (Sen. Rules Com., Sen. Bill
No. 1687 (1991–1992 Reg. Sess.) amended June 26, 1992, p. 3 [“The revisions
proposed by Senate Bill 1687 will conform to the legislative intent of Section
7510 by protecting local agencies from revenue losses associated with PERS
investment in real property.”].)
      In a 2010 annotation, the Board of Equalization relied in part on this
provision in considering whether property purchased by a limited partnership
in which CalSTRS held a two-thirds interest and subsequently held a one
hundred percent interest which it converted to an LLC, was exempt from
property taxation. There was “no dispute,” said the Board, “that property
directly owned by CalSTRS is property owned by the state” and thus
constitutionally exempt from property taxation. (California State Board of
Equalization, Property Tax Annotation 735.0009, Retirement Systems
(Public) Property, p. 2
.) The Board concluded, however, that ownership of an
LLC that owns real property is not equivalent to direct ownership of the
property. It first cited to the general statutory provisions governing LLCs,
stating Corporations Code “section 17300 specifically states that members of
a limited liability company hold no direct ownership interest in an LLC’s
assets, and as such, ownership of such interests is not simply a method of
holding title tantamount to direct ownership. The Legal Department has
also opined that for property tax purposes, an LLC is a separate and distinct
entity from its sole member. Thus, although limited liability companies may

                                      27
be treated as a disregarded entity and ‘looked through’ for income tax
purposes, such is not the case for California property tax purposes.”
(California State Board of Equalization, Property Tax Annotation 735.0009,
at p. 3, fn. omitted.) “[A] member of a limited liability company does not hold
any interest in the real property owned by the limited liability company.
Once members contribute assets to an LLC, those assets become assets of the
LLC and the members lose any direct ownership interest they had in the
assets.” (Id. at p. 2, fns. omitted.)
      The Board cited secondly to Government Code section 7510, subdivision
(b)(3). “That section provides specifically that investment by a state public
retirement system in a legal entity that invests assets in real property and
improvements is not an investment by the state public retirement system of
assets in the real property and improvements themselves.” (California State
Board of Equalization, Property Tax Annotation 735.0009, Retirement
Systems (Public) Property, supra, at pp. 3–4.) The Board expressly rejected
the assertion Government Code section 7510 is “meant to address partial
ownership” and not “wholly owned legal entities” as “not supported by the
plain language of the statute.” (California State Board of Equalization,
Property Tax Annotation 735.0009, at p. 4.) “If the legislature did not intend
for this subdivision to apply to wholly owned legal entities, the legislature
could have so provided.” (Ibid.)
      In the more than a decade that has ensued since the Board of
Equalization’s opinion, the Legislature has taken no action to alter the
propositions therein articulated.15 (See Towner, supra, 63 Cal.App.5th at
p. 773.)

      15 At least one other jurisdiction has taken the same view as the Board
of Equalization. (See Middlesex Retirement System, LLC v. Board of

                                        28
      Given these legislative and administrative pronouncements
acknowledging that government entities can be members, and even the sole
member, of an LLC and reinforcing the separateness of LLCs from its
members, and even a sole member, we conclude these propositions
reasonably extend to the documentary transfer tax context. This also
comports with the Legislature’s concern that cities and counties not lose tax
revenue they would otherwise derive from a private sale of an investment
property, when the property is procured by a tax-exempt public retirement
system. Government Code section 7510 resolves this problem with respect to
the loss of property tax revenue through the taxation of lessees’ personal
property interests. That, of course, is not a strategy that can be employed to
recoup a lost documentary transfer tax. This loss is mitigated, however, by
acknowledging the separateness of an LLC or any other legal entity through
which a public retirement system acquires the property.
      The Legislature could, of course, enact legislation providing that such
separateness be overlooked in the context of documentary transfer taxes, just
as the LLC statutes provide with respect to income taxation. And as we have
observed, there is some tension between the statutory mandate to CalSTRS
to achieve the highest return responsibly possible on the retirement funds it
manages, and the exaction of transfer taxes when CalSTRS creates an LLP of
which it is a sole member to purchase an investment property rather than

Assessors of Billerica (Mass. 2009) 453 Mass. 495, 500 [rejecting argument
that LLC whose sole member was a government retirement system was
exempt from paying state property tax; “the property here is not owned by a
regional retirement system but by LLC, which is not an instrumentality of
government, and the [property] taxes were properly assessed to LLC, as
owner”].)

                                      29
purchasing the property itself. However, reconciling these varying concerns
and objectives is a matter that remains with the Legislature.
                              DISPOSITION
      The judgment is affirmed. Costs on appeal to respondent.

                                     30
                                           _________________________
                                           Banke, J.

We concur:

_________________________
Margulies, Acting P.J.

_________________________
Swope, J.*

**Judge of the San Mateo County Superior Court, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.

A163369, CSHV 1999 Harrison v. County of Alameda

                                      31
Trial Court: Alameda County Superior Court

Trial Judge:      Hon. Frank Roesch

Counsel:

Greenberg Traurig LLP, Bradly Randolph Marsh, Brian Quinn Hall and
Colin W. Fraser for Plaintiffs and Appellants.

Office of the Alameda County Counsel, Farand Kan; Office of the City
Attorney, Maria S. Bee; Jarvis Fay LLP, Benjamin Peters Fay, Gabriel James
McWhirter, Carolyn C. Liu for Defendants and Respondents.

Colantuono, Highsmith & Whatley, PC, Ryan Thomas Dunn as Amicus Curiae on behalf
of Respondent.

                                       32