American Airlines, Inc. v. County of San Diego

This is an action for partial refund of personal property taxes on certain aircraft (hereinafter certificated aircraft). The plaintiffs and appellants who are seeking refunds are several airlines (hereinafter the airlines). The defendants and respondents are various counties which have collected tax on the aircraft (hereinafter the counties). Fifty-six related actions throughout the state were coordinated in Los Angeles Superior Court pursuant to Code of Civil Procedure section 404 et seq. and California Rules of Court, rule 1501 et seq., under the special title Aircraft Taxation Cases (Judicial Council Coordination Proceeding No. 2070). The airlines appeal from a summary judgment entered in favor of the counties.

The theory of the airlines’ action for refund of personal property taxes is that the airlines do not own the certificated aircraft, but lease them from banks and financial corporations. According to this theory, the certificated aircraft are exempt from personal property tax because qualified banks and financial corporations pay a franchise tax which is in lieu of most other taxes, including personal property tax. (Cal. Const., art. XIII, § 27; Rev. & Tax.…