Dicon Fiberoptics v. Franchise Tax Bd. 5/7/09 CA2/8

State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: B202997

Case Date: 08/20/2009

Preview:Filed 5/7/09

CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION EIGHT

DICON FIBEROPTICS, INC., Plaintiff and Appellant, v. FRANCHISE TAX BOARD, Defendant and Respondent.

B202997 (Los Angeles County Super. Ct. No. BC 367885)

APPEAL from a judgment of the Superior Court of Los Angeles County. Mel Red Recana, Judge. Reversed and remanded. Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg, Thomas R. Freeman and Paul S. Chan; Dakessian Law Firm; Akerman Senterfitt and Marty Dakessian for Plaintiff and Appellant. Silverstein & Pomerantz, Amy L. Silverstein and Edwin P. Antolin for Deluxe Corp. as Amicus Curiae on behalf of Appellant. Edmund G. Brown, Jr., Attorney General, Dane R. Gillette, Chief Assistant Attorney General, Pamela C. Hamanaka, Assistant Attorney General, W. Dean Freeman, Felix Leatherwood, Mark P. Richelson and Ronald Ito, Deputy Attorneys General, for Defendant and Respondent.

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Dicon Fiberoptics, Inc., appeals from the trial courts judgment sustaining without leave to amend the demurrer of the Franchise Tax Board to Dicons complaint seeking refund of a tax credit for employing disadvantaged workers. To receive the credit, Dicon submitted vouchers to the board certifying Dicon had employed disadvantaged workers. After auditing the vouchers, the board partially denied the tax credit to Dicon. Dicon contends the board has no legal authority to audit its vouchers, a contention we reject. We nevertheless conclude Dicon states a cause of action that the board exercised its audit power improperly, and therefore the trial court erred in sustaining the boards demurrer. Accordingly, we reverse and remand. FACTS AND PROCEEDINGS Certain areas and localities in California suffer from persistently high unemployment, poverty, and anemic economic growth and activity. Hoping to remedy these problems, the Legislature enacted Government Code section 7070 et seq., which is known as the Enterprise Zone Act (Act). The Acts purpose is to reduce obstacles the Legislature believes impede private investment and business in economically depressed areas in California. (See Gov. Code,

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