Ventas Finance I, LLC v. Franchise Tax Board

California’s Franchise Tax Board (FTB) appeals from a judgment ordering a refund to Ventas Finance I (Ventas), a limited liability company (LLC), of $29,540, the entire amount it paid pursuant to former Revenue and Taxation Code section 17942 for the years 2001, 2002, and 2003, and a postjudgment order awarding attorney fees to Ventas in the amount of $215,016 pursuant to Code of Civil Procedure section 1021.5.

The trial court ordered the refund based upon its conclusion that, as applied to Ventas, the levy imposed by former section 17942 violated the commerce clause of the United States Constitution (U.S. Const., art. I, § 8, cl. 3) (Commerce Clause) because the levy was based upon total income without apportionment to income attributable to, or derived from, California sources. Although at least some of Ventas’s income did derive from California sources, the court ordered FTB to refund the entire amount.

In its postjudgment order awarding attorney fees, the court rejected FTB’s contention that section 19717 is the exclusive means of obtaining fees in a tax refund suit. It further ruled that Ventas was the successful party within the meaning of Code of Civil Procedure…