City of San Diego v. DeLeeuw

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Opinion

FROEHLICH, J.

We affirm a judgment of the superior court, rendered after an order granted summary judgment in favor of plaintiff City of San Diego (City), requiring defendant DeLeeuw to pay $35,365.27 representing the City’s entitlement to transient occupancy taxes collected in the operation of the Kona Kai hotel (as well as penalties and interest resulting from default in payment of the taxes).

DeLeeuw contends that summary judgment should not have been rendered because triable issues of fact were established as to:

1. Whether DeLeeuw was an “operator” as defined by the provisions of the Transient Occupancy Tax (San Diego Mun. Code,

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§ 35.0101 et seq.) so as to be liable for unremitted tax;

2. Whether DeLeeuw, even though found to be an “operator” after a transfer of interest in the hotel to a partnership of which he was a partner, can be held liable for taxes collected before the transfer;

3. Whether the total taxes owed were established or are in dispute.

Separate statements of fact were submitted by both parties in connection with the summary judgment motion. The facts summarized in the City’s statement are not disputed by DeLeeuw. The statement filed by DeLeeuw is titled “Statement of Disputed Facts,” but it and its supporting documentation constitute at minimum binding admissions of fact by DeLeeuw. From these statements, as well as representations made in DeLeeuw’s appellate brief, the following essential facts emerge: The Kona Kai Club was operated from May 1985 through November 1988 by Kona Kai, Inc., a California corporation. As of December 1988 the hotel was transferred to Kona Kai Resort Associates, a partnership, of which DeLeeuw was a 25 percent partner.

Transient occupancy taxes were owed as of the date of transfer. They were unpaid because (1) a check tendered in the sum of $16,346 for such taxes was dishonored by the bank because of lack of funds in the account, and (2) a subsequent City audit revealed additional taxes owed for the period. At the time of the sale a fund of $206,625 was “held back” to pay creditors’ claims, including any claims related to the transient occupancy tax. Although DeLeeuw asserts no knowledge of why the City’s claims were not paid from this fund, and claims not to know the disposition of the fund, he does not now dispute the City’s contention that the taxes were not paid.