Gonzales v. Franchise Tax Board CA1/5

Filed 4/30/13 Gonzales v. Franchise Tax Board CA1/5 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

TOM GONZALES, as Personal Representative, etc., A134238 Plaintiff and Appellant, v. (San Francisco City and County FRANCHISE TAX BOARD, Super. Ct. No. CGC-06-454297) Defendant and Respondent.

Plaintiff and appellant Tom Gonzales (appellant), as personal representative of the estate of Thomas J. Gonzales II, contends the trial court erred in rejecting his tax refund claim against defendant and respondent Franchise Tax Board (respondent) on collateral estoppel grounds. We affirm. BACKGROUND The taxpayer, Thomas J. Gonzales II, died in December 2001. In July 2006, appellant, as personal representative of the taxpayer‟s estate, filed a complaint seeking refund of California personal income taxes under Revenue and Taxation Code, section 19385. The first cause of action sought a year 2000 tax refund based on an alleged capital loss of over $142 million in a bond transaction. The second cause of action, which concerned the 2001 tax year, was withdrawn in June 2008. In July 2008, appellant filed a tax refund action in the United States District Court for the Northern District of California (federal action). That federal action sought a federal tax refund due to disallowance of the same $142 million capital loss at issue in the

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present case. In March 2011, the federal district court granted summary judgment in favor of the federal government. The federal district court explained that the critical issue was whether appellant could prove the taxpayer entered into the transaction primarily for profit. The court concluded appellant had not submitted evidence creating a triable issue of fact on that issue. In September 2012, the Ninth Circuit affirmed the district court‟s ruling. While the appeal from the federal district court‟s ruling was pending, respondent filed a motion for judgment on the pleadings in the present action, contending that the judgment in the federal action collaterally estopped appellant from claiming that the taxpayer engaged in the disputed transaction primarily for profit. The trial court concluded appellant‟s tax refund action failed as a matter of law and, in November 2011, the court entered its judgment.1 This appeal followed. DISCUSSION Appellant contends the trial court erred in concluding that, due to grant of summary judgment in the federal action, his year 2000 tax refund claim is barred by the doctrine of collateral estoppel. “Collateral estoppel is one of two aspects of the doctrine of res judicata. In its narrowest form, res judicata „ “precludes parties or their privies from relitigating a cause of action [finally resolved in a prior proceeding].” ‟ [Citation.] But res judicata also includes a broader principle, commonly termed collateral estoppel, under which an issue „ “necessarily decided in [prior] litigation [may be] conclusively determined as [against] the parties [thereto] or their privies . . . in a subsequent lawsuit on a different cause of action.” ‟ [Citation.] [¶] Thus, res judicata does not merely bar relitigation of identical claims or causes of action. Instead, in its collateral estoppel aspect, the doctrine may also preclude a party to prior litigation from redisputing issues therein decided against him, even when those issues bear on different claims raised in a later case.” (Vandenberg v.