City National Corp. v. Franchise Tax Board

Plaintiff and appellant City National Corporation (City National) appeals from an order dismissing its tax refund action after the trial court sustained without leave to amend the Franchise Tax Board’s (FTB) demurrer to City National’s amended complaint. FTB asserted in its demurrer that the trial court was without jurisdiction to hear City National’s claim for a refund because City National had not yet paid approximately $50 million in proposed assessments for the tax years at issue. City National contends it had paid all taxes that were due at the time it filed its refund action, and that it was not required to pay the proposed assessments because they were not yet due. City National also contends that, in any event, dismissal of its complaint was improper because: (1) the proposed assessments issued before the action commenced were withdrawn, and the proposed assessments issued after the action commenced could not divest the trial court of jurisdiction; and (2) if, as FTB contends, FTB is required to litigate in a single action all disputed tax issues for the years at issue, the appropriate course is for FTB to assert the proposed assessments as a defense to City…