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Carson’s Victory in Effort to Enforce Sales Tax Sharing Agreement Affirmed on Appeal

The Second District Court of Appeal has affirmed a favorable ruling obtained by Aleshire & Wynder attorneys on behalf of the City of Carson on enforcement of a judgment against the City of La Mirada and La Mirada Redevelopment Agency: City of Carson v. City of La Mirada, Second District Court of Appeal Case No. B235315.  The judgment was the result of earlier litigation arising out of La Mirada Redevelopment Agency’s 2000 agreement with Corporate Express providing financial assistance to Corporate Express as an incentive for Corporate Express to abandon its facilities in the City of Carson and relocate to the City of La Mirada.  The agreement between Corporate Express and the City of La Mirada provided for La Mirada to rebate sales tax to Corporate Express.

In 2000, California law required a community providing financial assistance to a big box retailer or automobile dealer relocating from one community to another within the same trade area to share sales tax with the community from which the business relocated for up to 10 years.  (Health & Safety Code § 33426.7 and Government Code § 53084, repealed eff. Jan. 1, 2004).  La Mirada, however, contended Corporate Express was not a big box retailer. The City of Carson sued and, in a published opinion, the California Court of Appeal concluded Corporate Express met the statutory definition of a big box retailer, which was premised solely on whether the business generated sales tax and the size of the building in which it was located.  City of Carson v. City of La Mirada (2004) 125 Cal.App.4th 532.

The judgment entered after the appeal provided for La Mirada to share with the City of Carson the sales tax generated by Corporate Express through the 2012-2013 fiscal year.  However, in July 2008, Corporate Express merged with Staples and La Mirada ceased making the payments required by the judgment.  The City of Carson prevailed at the trial court in 2011 based on the ruling of Los Angeles Superior Court Judge James Chalfant that the merger was not a basis for terminating the payments required by the judgment.

La Mirada appealed the judgment.  On December 6, 2012, in an unpublished opinion, the Second District Court of Appeal affirmed the judgment in full, finding continued payments for the entire 10-year period through the 2012-2013 fiscal year consistent with both the prior judgment and the legislative intent behind the statutes.  The City of La Mirada will be required to pay Carson amounts past due, with interest, and to resume making sales tax sharing payments to Carson through the 2012-2013 fiscal year.  In addition, the Court of Appeal awarded the City of Carson its costs on appeal.

For further information regarding this case, please contact June Ailin in our Los Angeles office at 310-527-6665.