Some opinions seem totally right to me. Other opinions seem demonstrably wrong. And other opinions, to paraphrase C+C Music Factory (and to horribly date me), "make you go hmmmm. . . ."
Today's opinion from the Court of Appeal is one of those last types.
Here are the underlying facts. Peter Koral lives in California, and he's rich. Super rich. Like, literally, G5 rich. (For yet another pop culture reference -- this time from the somewhat-modern here -- here's a classic G5 scene from Tropic Thunder.) He's got a Gulfstream G-550 that he bases in Camarillo, California.
But like most of us, Mr. Koral doesn't like to pay taxes. But if you've got a $45 million aircraft parked in California, you've got to pay taxes on it.
So on December 28, 2016, Mr. Koral flew the plane to Oregon, and kept it there while he put it up for sale.
Ventura County, however, said that he still owned the plane (through the underlying trust and LLC), so taxed him on it; roughly a quarter million dollars worth. Mr. Koral sued, claiming that's not okay. He lost in the trial court at a bench trial, and then files an appeal.
The Court of Appeal agrees with Mr. Koral, and reverses the judgment, instructing the trial court to find in favor of Mr. Koral and order Ventura County to refund the $250,000 in taxes.
There's a lot in favor of how the opinion comes out. Justice Baltodano explains at length how California is only able to tax property located within its borders, and here, the plane was undeniably outside of the state during 2017 and beyond. Hence the Court of Appeal's ruling that, under both the relevant statutes as well as the Due Process Clause, it was impermissible for a California municipality to tax the aircraft once it was moved to Oregon.
So, as I said, there's a lot about the opinion that I find persuasive, and nothing that I think is clearly and indisputably wrong. Or even that it close but that I definitely think is wrong.
Nonetheless, here are the two questions that still linger in my mind:
(1) Justice Baltodano says that it doesn't matter that the owner was still in California, that Oregon never taxed the property (because it was only "temporarily" there, abeit for a long time until it eventually sold), or that the property never changed its situs while owned by Mr. Koral since it was only temporarily in the other locations and hence never acquired the situs of another state (and hence was never taxed). The Court of Appeal says that the Due Process Clause nonetheless prohibits taxation and jurisdiction even in such a setting.
Really?
Take the one area I know a great deal about; personal jurisdiction and residency. Which is all about the Due Process Clause. For these purposes, you indisputably maintain your former residence -- even when you move -- until you permanently acquire another situs. So if I permanently reside in, say, California, and only temporarily relocate to Texas (say, for a work assignment, or on military orders), I remain a California resident unless and until I obtain a new permanent residence. Even though I'm no longer located here. California retains the ability, under the Due Process Clause and otherwise, to subject me to jurisdiction here, via taxation and otherwise (e.g., to assert personal jurisdiction over me).
Ventura County argues that this same rule should apply in the present case, but the Court of Appeal says that the Due Process Clause compels otherwise. But are the two situations really different? At least for purposes of the Constitution, I'd think not; jurisdiction to tax and to do those other things seems to me to be synonymous. (Put to a different side the statutory point; California might choose not to tax unless the property's physically located here, but I'm talking about the Due Process argument.)
Plus, even in the taxation realm, does the Due Process Clause really operate that way? Here's one thing I know for sure: the United States has the power to -- and actively does -- imposes taxes on residents regardless of where they're located and regardless of whether that income is earned in other countries. How's that consistent with today's interpretation of the Due Process Clause?
So, in the end, I'm just left to wonder if the scope of the Due Process Clause is really what the Court of Appeal today thinks it is. I get the argument. I just wonder if it's right.
(2) On a totally separate front, the Court of Appeal expressly says that since "the facts are undisputed" it reviews de novo, and on the basis of its holding, it reverses and instructs the trial court to find in favor of Mr. Koral and to order Ventura County to refund the money.
Is that really right too?
I agree that lots of the facts are undisputed; e.g., when the plane left, that Oregon didn't tax it, etc. But the only thing the trial court held was that, in its view, taxes were owed regardless of Mr. Koral's intent because (in its view) taxes are owed because no new situs for the aircraft was established.
The Court of Appeal says that's wrong as a legal matter, and okay, let's assume for present purposes that's right. Does that really mean -- as the Court of Appeal holds -- that Mr. Koral automatically wins because the facts are entirely undisputed?
It seems to me that there's at least a colorable argument -- indeed, one that, as a judge, I might factually find persuasive -- that Mr. Koral did not in fact intend to permanently relocate the plane outside of California. The Court of Appeal takes at his word Mr. Koral's testimony -- which might, perhaps, be 100% true -- that once he put the plane up for sale in 2016 and shipped it off to Oregon, he expected that the plane would be there forever and "never wanted anything to do with it."
But the trial court was surely not required to believe Mr. Koral's testimony. And there's at least some reason to think that he might have shipped the plane off to Oregon for perhaps other purposes, right? Do you think, for example, that it's just happenstance that he shipped the plane to a place outside California on December 28, 2016 -- just days before a new tax year started (and hence taxes would be due on planes located in California)? Were a credibility call to be made, surely it'd be permissible for the trial court to find, if it thought it true, that Mr. Koral didn't intend to dispossess himself of the plane on that date, and instead did it primarily for tax reasons, and intended to take the plane back if it didn't sell. (To be clear: I'm not saying it'd have to find that, but surely it could, right?)
Now, as it turns out, the trial court wasn't required to make any finding at all in that regard, because in its view, Mr. Koral's intent was irrelevant, since the plane never acquired a new situs in Oregon. But once the Court of Appeal says that latter view is legally erroneous, isn't the proper remedy to remand the case back down for the trial court to apply the proper law, at which point a finding as to Mr. Koral's intent now becomes relevant? Is the Court of Appeal really right that the relevant facts are undisputed even under the different test applied by the Court of Appeal? That reversal, not remand, is required?
Those are the questions that pop through my mind as I read this one. A case in which, perhaps, the right result is reached. But I wonder if the reasoning, or the process employed, really establishes what the Court of Appeal thinks it does.
