HomeMy WebLinkAboutAgreement A-22-200 with BNSF Railway Company.pdf Agreement No. 22-200
SETTLEMENT AGREEMENT
This settlement agreement(the "Agreement") is made and entered into as of the last date
of signature indicated below by and between BNSF Railway Company ("BNSF") and the
County of Fresno (the "County"), by and through its Board of Supervisors. BNSF and the
County are referred to collectively and/or interchangeably herein as a "Party" or the "Parties."
Recitals
WHEREAS,the County levies and collects taxes on BNSF's unitary property as provided
in California Revenue and Taxation Code section 100 ("Section 100");
WHEREAS, on November 1, 2019 BNSF filed an action (the "Federal Action") against
fifteen California Counties, including the County, asserting that the Defendant Counties' levy
and collection of taxes on BNSF's unitary property at a tax rate under Section 100 exceeds the
maximum tax rate permitted by Section 306 of the Railroad Revitalization and Reform Act of
1976, now codified at 49 U.S.C. § 11501 ("4-R Act");
WHEREAS, on April 8, 2020, the Court in the Federal Action issued an Order granting
BNSF's Motion for a Preliminary Injunction(the "Preliminary Injunction Order"), enjoining the
Defendant Counties from levying or collecting ad valorem property taxes from BNSF on its
unitary property based on a tax rate higher than the annual average tax rate of general property
taxation calculated and reported for each county by the California State Board of Equalization
under Cal. Rev. & Tax. Code §11403;
WHEREAS, the Preliminary Injunction Order effectively prohibited the County from
levying or collecting ad valorem property taxes from BNSF as provided in Section 100 when
Section 100 provided for a tax rate higher than the annual average tax rate of general property
taxation calculated and reported for the County by the California State Board of Equalization
under Cal. Rev. & Tax. Code §11403;
WHEREAS, on April 21, 2022, the Court in the Federal Action entered a Final Judgment
as to all remaining defendants in the Federal Action, including the County (BNSF Railway Co. v.
Alameda Cnty., 4:19-cv-07230 (N.D. Cal.), Dkt. No. 116) (the "Final Judgment");
WHEREAS, in the Final Judgment, the Court in the Federal Action stated that the
Defendant Counties' levy or collection of ad valorem property taxes on BNSF's unitary property
is unlawful under 49 U.S.C. section 11501, if and to the extent that tax rate is higher than the
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annual average tax rate of general property taxation calculated and reported for each county by
the California State Board of Equalization under Cal. Rev. & Tax. Code §11403;
WHEREAS, in the Final Judgment, the Court in the Federal Action enjoined the
Defendant Counties from levying or collecting ad valorem property taxes from BNSF on its
unitary property based on a tax rate higher than the annual average tax rate of general property
taxation calculated and reported for each county by the California State Board of Equalization
under Cal. Rev. & Tax. Code § 11403;
WHEREAS,the Final Judgment effectively prohibits the County from levying or
collecting ad valorem property taxes from BNSF as provided in Section 100 when Section 100
provides for a tax rate higher than the annual average tax rate of general property taxation
calculated and reported for the County by the California State Board of Equalization under Cal.
Rev. & Tax. Code §11403;
WHEREAS, BNSF timely filed property tax refund claims for the 2015-16, 2016-17,
2017-18, and 2018-19 tax years (the "Refund Claims"), seeking refunds in the amounts of
$26,876.82, $26,584.74, $31,531.17, and $47,571.76, respectively;
WHEREAS, the full aggregate principal amount of the Refund Claims is $132,564.49
(the "Refund Amount");
WHEREAS, BNSF sought the Refund Claims on the ground that BNSF's payment to the
County of ad valorem property taxes on unitary property as provided in Section 100 for the years
in question was payment of taxes at a rate that exceeded the tax rate generally applicable to
commercial and industrial property in the same assessment jurisdiction in violation of the 4-R
Act, and to the extent of that exceedance were illegally levied and erroneously and illegally
collected;
WHEREAS, prior to the entry of the Final Judgment, the County rejected all four of the
Refund Claims;
WHEREAS, on October 20, 2020, the County and BNSF entered into an agreement to
toll the statute of limitations under California Revenue and Taxation Code section 5141 for
BNSF to file a refund action based on its 2015-16 tax year property tax refund claim, which the
County rejected, providing a tolling period that ends 30 days after the Final Judgment in the
Federal Action becomes final and unappealable as between the County and BNSF;
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WHEREAS, on September 1, 2021, the County and BNSF entered into an agreement to
toll the statute of limitations under California Revenue and Taxation Code section 5141 for
BNSF to file a refund action based on its 2016-17 tax year property tax refund claim, which the
County rejected, providing a tolling period that ends 30 days after the Final Judgment in the
Federal Action becomes final and unappealable as between the County and BNSF;
WHEREAS,the statute of limitations under California Revenue and Taxation Code
section 5141 for BNSF to file a refund action based on its 2017-18 and 2018-19 tax year
property tax refund claims has not yet run;
WHEREAS, the Parties wish to avoid the disruption, inconvenience, uncertainty, and
expense associated with further litigation of the Refund Claims;
WHEREAS, to that end, the parties with to compromise, settle, and resolve the Refund
Claims on the terms provided in this agreement.
'Perms
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
Property Tax Credits
l. Pursuant to California Revenue and Taxation Code section 5103, the Refund
Amount will be treated as a credit against BNSF's future property tax payments to the County.
2. The application of the Refund Amount will be spread across multiple tax years.
Starting with the 2022-23 tax year, and in each year until the Refund Amount has been fully
credited against BNSF's future property tax payments to the County, an amount equal to the least
of the following shall be applied as a credit to offset BNSF's ad valorem unitary property tax
liability for that tax year: (a) BNSF's ad valorem unitary property tax liability to the County for
that tax year, (b) $44,188.17 (representing one third of the Refund Amount), or (c) the Refund
Amount reduced by the total applications of the Refund Amount toward BNSF's ad valorem
unitary property tax liability for prior tax years. No interest shall accrue on the unused portion of
the Refund Amount before it is credited to BNSF's ad valorem property tax liability. For the
avoidance of doubt, for purposes of the preceding sentence, BNSF's ad valorem unitary property
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tax liability for each tax year will be as determined in conformity with the Final Judgment in the
Federal Action.
Waiver and Release
3. Subject to the provisions of this Agreement, BNSF, for itself, its officers,
employees, agents, administrators, successors, and assigns, hereby releases the County, its
elected and appointed officials, officers, employees, agents, attorneys, administrators, successors,
and assigns, from any and all claims, demands, actions, proceedings, liabilities, obligations, and
causes of action for interest (including but not limited to interest under California Revenue and
Taxation Code sections 5103 and 5151), attorneys' fees and/or costs, related to or arising out of
the Refund Claims.
4. Civil Code Section 1542. The Parties intend this Agreement to be and to
constitute a full general release and to constitute a full and final accord and satisfaction
extending to all claims related to or arising out of the Refund Claims, whether the same are
known, unknown, suspected, anticipated, unsuspected, or unanticipated. Accordingly, BNSF, by
signing this Agreement, agree.and warrant that it as read, understood, and expressly release and
waives the provisions of California Civil Code Section 1542, which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR
OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
Additional Terms
5. Attorneys' Fees and Costs. Each Party will bear its own costs, attorneys' fees,
and expenses in connection with this Agreement.
6. Severability. In the event that any of the terms, conditions, or covenants
contained in this Agreement are held to be invalid,then any such invalidity shall not affect any
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other terms, conditions, or covenants contained herein, which shall remain in full force and
effect.
7. Construction. Each Party to this Agreement has had an opportunity to review the
Agreement, confer with legal counsel regarding the meaning of the Agreement, and negotiate
revisions to the Agreement. Accordingly, neither Party shall rely upon Civil Code Section 1654
in order to interpret any uncertainty in the meaning of the Agreement. The headings and section
titles in this Agreement are for convenience only and are not part of this Agreement.
8. Governing Law. This Agreement shall be governed by, and interpreted and
construed in accordance with, the laws of the State of California.
9. Authority. The Parties hereby represent, warrant and covenant that each Party has
complete and plenary authority to enter into this Agreement.
10. Complete Agreement; Amendments and Modifications. This Agreement
constitutes the entire agreement between the Parties on the subject matter hereof and may not be
modified or amended except in writing signed by each of the Parties. There are no
understandings, agreements, or representations, express or implied, not specified in this
Agreement.
11. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the Parties to this Agreement and any and all of their current and former affiliates, parents,
subsidiaries, divisions, agents, insurers, attorneys, representatives, employees, directors, trustees,
shareholders,beneficiaries, successors, or assigns, and all parties in active concert or
participation with any of the Parties hereto.
12. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute one and the same
Agreement,binding on each signatory thereto.
13. Electronic Signatures.ate. The Parties agree that this Agreement may be executed by
electronic signature as provided in this section.
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a. An"electronic signature"means any symbol or process intended by an
individual signing this Agreement to represent their signature, including
but not limited to (1) a digital signature; (2) a faxed version of an original
handwritten signature; or(3) an electronically scanned and transmitted
(for example by PDF document) version of an original handwritten
signature.
b. Each electronic signature affixed or attached to this Agreement (1) is
deemed equivalent to a valid original handwritten signature of the person
signing this Agreement for all purposes, including but not limited to
evidentiary proof in any administrative or judicial proceeding, and (2) has
the same force and effect as the valid original handwritten signature of that
person.
C. The provisions of this section satisfy the requirements of Civil Code
section 1633.5, subdivision (b), in the Uniform Electronic Transaction Act
(Civil Code, Division 3, Part 2, Title 2.5, beginning with section 1633.1).
d. Each party using a digital signature represents that it has undertaken and
satisfied the requirements of Government Code section 16.5, subdivision
(a),paragraphs (1) through(5), and agrees that each other party may rely
upon that representation.
e. This Agreement is not conditioned upon the parties conducting the
transactions under it by electronic means and either party may sign this
Agreement with an original handwritten signature.
14. Notices. Any notice under this Agreement shall be delivered in writing (email or
overnight delivery)to the Parties' legal counsel as follows:
On behalf of BNSF:
Benjamin J. Horwich
Munger, Tolles & Olson LLP
6
560 Mission Street, 27th Floor
San Francisco, CA 94105
415.512.4066
ben.horwich@mto.com
and
Munsoor Hussain
Assistant Vice President of Tax
BNSF Railway Company
2301 Lou Menk Drive, GOB 3W
Fort Worth, TX 76131
817;352.3413
munsoor.hussain@bnsf.com
On behalf of the County:
Peter Wall
Chief Deputy County Counsel
Fresno County Counsel
2220 Tulare Street, 5th Floor
Fresno, CA 93721
559.600.3479
pwall@fresno countyca.gov
and
Kyle Roberson
Deputy County Counsel
Fresno County Counsel
2220 Tulare Street, 5th Floor
Fresno, CA 93721
559.600.3479
kroberson@fresnocountyca.gov
and
CountyCounselMailbox@fresnocountyca.gov
(Signature Page Follows)
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IN WITNESS WHEREOF, each of the signatories has read and understood this
Agreement, has executed it,represents that he or she is authorized to execute this Agreement on
behalf of the Party for whom he or she has signed,has agreed on behalf of his or her respective
Parry to be bound by its terms, and has entered into this Agreement on behalf of the Parry for
whom he or she has signed as of the date indicated below.
DATED: `; -0�-"Z BNSF RAILWAY COMPANY
By:
Name Mark Liniado
Title Vice President of Taxes and
General Tax Counsel
DATED: 4-c 20.;l aZ- COUNTY tFUSNO
By: lu,
Name Brian Pacheco
Title Chairman of the Board of Supervisors of
the County of Fresno
Attest:
Bernice E. Seidel
Clerk of the Board of Supervisors
County of Fresno, State of California
By:
Deputy
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