Taxes sure seem to be at the heart of a lot of disputes between citizens and their government. Such is the case in City of Santa Cruz v. Patel, case no. H030689 (6th Dist. Sept. 18, 2007), where wrangling over the right of the government to audit business records to ensure compliance with tax law leads to an opinion on the appealability of orders compelling compliance with legislative subpoenas.
The City sent out a notice to hotel operators that it would be conducting audits to determine operators’ compliance with an occupancy tax ordinance under which hotel operators were required to collect a tax on lodging and remit the proceeds to the City. The ordinance provided that such audits were permitted and required operators to keep appropriate records.
When the operators of nine hotels refused to open their books, they were served with legislative subpoenas pursuant to Government Code section 37104. When the operators continued to resist, the City obtained on OSC and the operators claimed the ordinance and subpoenas were constitutionally invalid under a number of theories. The trial court ordered compliance with the subpoenas, the operators appealed, and their separate appeals were consolidated in this case.
Tackling jurisdiction first, the court notes a split of authority on the appealability of orders compelling compliance with administrative subpoenas issued under Government Code section 11181. Its analysis of these cases is worth reading.
The court concludes than an order enforcing compliance with a legislative supoena is appealable (case citations omitted):
A judgment is the “final determination of the rights of the parties in an action or proceeding.” (Code Civ. Proc., § 577.) The statutory scheme at hand provides for an original proceeding in the superior court, initiated by the mayor’s report to the judge, which results in an order directing the respondent to comply with a city’s subpoena. Indeed, the compliance order is tantamount to a superior court judgment in mandamus, which, with limited statutory exceptions, is appealable. (Id., § 904.1, subd. (a).) Whether the matter is properly characterized as an “action” (Code Civ. Proc., § 22) or a “special proceeding” (id., § 23), it is a final determination of the rights of the parties. It is final because it leaves nothing for further determination between the parties except the fact of compliance or noncompliance with its terms.
The court specifically rejects the theory that an enforcement order is not final because the subpoenaed party is not aggrieved until he or she has disobeyed the order and been found in contempt. That rationale makes no sense, of course, because — as the court points out — contempt orders are not appealable. Interestingly, even though it would seem that a contemnor could challenge the underlying subpoena in a writ proceeding, the court apparently feels that is not enough (presumably in light of the rarity with which writ petitions are reviewed on the merits): “review of the underlying order can reliably be had only if that order is appealable.” (Emphasis added.)
Note, too, that the trial court took up the jurisdictional issue even though the City never sought dismissal on that ground. I hope you don’t get tired of reading this, but I’ll say it again — never take appellate jurisdiction for granted.