Case Name: Hacienda Realty, LLC, et al. v. City of Monte Sereno, et al.
Case No.: 2015-1-CV-286983

Demurrer to the First Amended Petition for Writ of Mandate by Respondents City of Monte Sereno and Monte Sereno City Council

Factual and Procedural Background

This is a petition for writ of mandate regarding compliance with state housing laws. Since 1999, the California Department of Housing and Community Development (“HCD”) has directed respondents and defendants City of Monte Sereno and the Monte Sereno City Council (“City Council”) (collectively, “City”) to facilitate multifamily housing. (First Amended Petition for Writ of Mandate [“FAP”] at ¶ 17.) In May 2009, HCD explicitly instructed the City that “identifying multifamily opportunities was crucial to compliance in the previous planning period.” (Ibid.) HCD told the City that its [2009-2014] Housing Element must provide multifamily opportunities pursuant to [Government Code] sections 65583.2 and 65583(c)(1) and as identified in the element. (Ibid.)

The City’s 2009-2014 Housing Element Update was adopted by the City Council in 2010. (FAP at ¶ 18.) As part of the Housing Element, cities are required to address local housing needs, including housing affordable to seniors, families and workers and to provide a variety of housing types including multifamily housing. (Ibid.) Periodic updates of the Housing Element are mandated by state law. (Ibid.)

Petitioner and plaintiff Russel Stanley is the managing member of Hacienda Realty, LLC (collectively, “Hacienda”). (FAP at ¶¶ 1-2.) Hacienda owns real property just outside the City limits but within the City’s sphere of influence. (Id. at ¶ 2.) Hacienda is beneficially interested in the proper implementation of the State Housing Element Law and the City’s mandatory public duties to comply with the requirements of the Housing Element Law, and its General Plan. (Id. at ¶ 10.) Hacienda appeared at the City’s public hearings and meetings in connection with its decision to adopt the 2015 Housing Element Update and submitted written evidence for the City’s consideration in taking such actions. (Id. at ¶ 3.)

In May 2015, the City Council adopted the 2015 Housing Element Update which included Program H-2.5 to rezone the First Baptist Church site located at 17765 Daves Avenue and its preschool (“Church Site”). (FAP at ¶ 37.) Under Program H-2.5, the City will amend its “Public” zoning designation for the Church Site by the end of 2016 to allow multifamily housing by-right at densities of 15 units on 1.18 acres of “open space” on the 3.48 acre Church Site with a net residential density of approximately 15 units/acre in order to “ensure that the City’s site inventory can accommodate all housing types, including multifamily.” (Id. at ¶ 38.)

However, at that time, the church which owns the property and operates a day care and after-school program, clearly stated that it had no intention or desire to have multifamily development on its site because: (1) the church does not plan to relocate; (2) the church had informed the City that it did not want the zoning amendment; (3) the church operates after-school programs that use the church’s open space property for its children’s programs (meaning the land is not truly “under-developed” as claimed in the 2015 Housing Element Update); and (4) existing traffic and congestion issues (in part from church activities and a nearby elementary school) make multifamily development infeasible. (FAP at ¶¶ 39-40.)

The 2015 Housing Element Update is also flawed, among other reasons, because: (1) it fails to properly analyze the fact that the area that it considers available for development is segmented by a wide public utility easement that would prohibit development in that area; (2) its analysis of other inventory sites is legally inadequate; and (3) it does not adequately set forth zoning to accommodate the development of housing affordable to lower income households. (FAP at ¶¶ 40, 46, 50.)

In May 2016, the City Council proposed and adopted a General Plan amendment (Resolution No. 3621) to the land use designation for Church Site to allow multifamily residential use only in connection with a “public” use (e.g., a church use). (FAP at ¶ 73.) Thereafter, a citizens group commenced a signature-gathering effort to bring a referendum against Resolution No. 3621 and timely submitted sufficient signatures to the City Clerk to qualify the referendum. (Id. at ¶ 75.) After the City Clerk rejected the referendum, the group filed a petition for writ of mandate in Santa Clara County Superior Court directing the City Clerk to certify the sufficiency of the referendum. (Ibid.) The court granted the writ petition and ordered the City Clerk to qualify the referendum. (Id. at ¶ 77.)

On May 2, 2017, the City Clerk certified the referendum. (FAP at ¶ 78.) By virtue of the referendum being certified, the general plan amendment adopted by Resolution No. 3621 became ineffective under Elections Code section 9241, and thus the rezoning was ineffective as well. (Ibid.)

On June 6, 2017, the City Council, faced with the Elections Code options of either adopting the referendum (thus vacating the general plan amendment), or placing it on the ballot, chose to place the referendum on the ballot for the general election scheduled for November 2018. (FAP at ¶ 79.) In response, Hacienda urged the City Council to adopt the referendum and look for alternative sites. (Ibid.) Hacienda also claimed that Program H-2.5 had a deadline of December 2016 for the City to change the general plan and zoning for the site, and that by postponing the action until at least November 2018, the City was violating its own Housing Element program. (Ibid.) The City however decided to place referendum on the ballot anyway. (Ibid.)

On August 14, 2017, Hacienda filed the operative FAP against the City setting forth causes of action for: (1) Writ of Mandate – Violation of State Law; (2) Writ of Mandate – Abuse of Discretion for Violation of State Housing Element Law; (3) Writ of Mandate – Failure to Implement Housing Element (Code Civ. Proc. § 1085); (4) Unlawful Conflict with State Law; (5) Failure to Comply with Least Cost Zoning Law [Gov’t Code §§ 65913 and 65913.1; Code Civ. Proc. § 1085]; (6) Violation of Gov’t Code § 65008; (7) Declaratory Relief; and (8) Writ of Mandate – Abuse of Discretion for Violation of State Housing Element Law.

Demurrer to the FAP

Currently before the Court is the City’s demurrer to the eighth cause of action in the FAP on the ground that it fails to state a valid claim. (Code Civ. Proc., § 430.10, subd. (e).) Both sides submitted requests for judicial notice in conjunction with the motion. Hacienda filed written opposition. The City filed reply papers.

City’s Request for Judicial Notice

In support, the City requests judicial notice of the following: (1) Verified Petition for Writ of Mandate and Complaint filed on May 4, 2012 in Hacienda Realty, LLC and Russel Stanley v. City of Monte Sereno, et al. (case no. 1-12-CV-223767) in Santa Clara County (Exhibit A); (2) First Amended Verified Petition for Writ of Mandate and Complaint filed on June 4, 2012 in Case No. 1-12-CV-223767 (Exhibit B); (3) Court’s Order re: Demurrer to First Amended Writ Petition, filed on October 1, 2012 in Case No. 1-12-CV-223767 (Exhibit C); (4) Verified Petition for Writ of Mandate and Complaint filed on November 4, 2013 in Hacienda Realty, LLC and Russel Stanley v. City of Monte Sereno, et al. (case no. 1-13-CV-255588) in Santa Clara County (Exhibit D); (5) Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief filed on October 16, 2015 in this action (Exhibit E); and (6) First Amended Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief filed on August 14, 2017 in this action (Exhibit F).

In addition, the City requests judicial notice of: (1) a letter dated December 12, 2014 from HCD’s Assistant Deputy Director, Glen A. Campora, to Brian Loventhal, City Manager of the City of Monte Sereno (Exhibit G); (2) a letter dated April 24, 2015 from HCD’s Assistant Deputy Director, Glen A. Campora, to Brian Loventhal, City Manager of the City of Monte Sereno (Exhibit H); and (3) a copy of the Monte Sereno City Council’s Resolution No. 3591, dated May 19, 2015, adopting the 2015-2023 Housing Element of the City’s General Plan (Exhibit I).

With respect to Exhibits A through F, the Court takes judicial notice of these documents as records of the superior court under Evidence Code section 452, subdivision (d). (See Stepan v. Garcia (1974) 43 Cal.App.3d 497, 500 [the court may take judicial notice of its own file].) With respect to Exhibits G through I, the Court takes judicial notice of the letters and City Council resolution as official acts by a public entity under Evidence Code section 452, subdivision (c). (See Stevens v. Super. Ct. (1999) 75 Cal.App.4th 594, 608 [appellate court took judicial notice of departmental approval letters].) Furthermore, there is no opposition and the request appears relevant to the issues raised on this demurrer. (See Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 [judicial notice is confined to those matters which are relevant to the issue at hand].)

Consequently, the City’s request for judicial notice is GRANTED.

Hacienda’s Request for Judicial Notice

In opposition, Hacienda requests judicial notice of the following: (1) a letter dated August 19, 2015 from HCD to the City of Monte Sereno regarding the City’s adopted 2015 housing element (Exhibit 1); (2) copy of publicly recorded covenants, conditions, and restrictions applicable to the First Baptist Church Site which contain a prohibition against residential development other than single family homes (Exhibit 2); and (3) a letter dated January 30, 2017 from the City of Monte Sereno to HCD (Exhibit 3).

With respect to Exhibits 1 and 3, these letters are subject to judicial notice as official acts of public entities under Evidence Code section 452, subdivision (c). (See Pan Pacific Properties, Inc. v. County of Santa Cruz (1978) 81 Cal.App.3d 244, 255, fn. 2 [court may take judicial notice of resolutions, reports, and other official acts of the county].) Exhibit 2 is subject to judicial notice as a document recorded in Santa Clara County under Evidence Code section 452, subdivision (h). (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264 [disapproved on other grounds in Yvanova v. New Century Morg. Corp. (2016) 62 Cal.4th 919] [courts may take judicial notice of the existence and recordation of real property records].) The request also appears relevant to issues raised in the opposition.

Accordingly, Hacienda’s request for judicial notice is GRANTED.

Legal Standard

In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law. … [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 850.)

Eighth Cause of Action: Writ of Mandate – Abuse of Discretion for Violation of State Housing Element Law

“A petition for writ of mandate under Code of Civil Procedure section 1085 must plead facts showing that a public body or official has a clear legal and usually ministerial duty and that the petitioner has a beneficial interest in or right to the performance of that duty. [Citations.] On the other hand, a writ of mandate is not available to control the discretion of that public body or official. Although a court may order a public body to exercise its discretion in the first instance when it has refused to act at all, the court will not compel the exercise of that discretion in a particular manner or to reach a particular result. [Citation.] When the duty of a public body is broadly defined, the manner in which it carries out that responsibility ordinarily requires the exercise of discretion; under such circumstances, mandate is not available to order that public body to proceed in a particular manner. [Citation.]” (Building Industry Assn. v. Marin Mun. Water Dist. (1991) 235 Cal.App.3d 1641, 1645-1646 [Building Industry Assn.].)

With respect to the Eighth cause of action, Hacienda alleges that the City has received sufficient information demonstrating that the Church Site is not available for development. (FAP at ¶¶ 135-136.) In addition, Program H-2.5 requires the City to identify other sites for multifamily residential if it was not successful in amending its general plan and zoning for the Church Site by December 2016. (Id. at ¶ 135.) Despite Program H-2.5’s deadline, state law, and the City’s awareness that the Church Site is not available for development, the City has allegedly abused its discretion and failed to amend its Housing Element as required. (Id. at ¶ 136.) The City must, by virtue of state law and its own adopted Housing Element immediately identify, and take action to make available an alternative site or sites zoned at sufficient densities in order to accommodate multifamily housing. (Ibid.)

As this is a claim for writ of mandate, Hacienda must allege facts showing that the City has a clear ministerial duty to amend the Housing Element and find alternative sites to accommodate multifamily housing. (See Building Industry Assn., supra, 235 Cal.App.3d at pp. 1645-1646.) Hacienda alleges that such a duty arises under state law and the language under Program H-2.5 of the Housing Element. (FAP at ¶¶ 134-135.)

With respect to state law, Hacienda alleges that a ministerial duty originates under Government Code section 65588. (FAP at ¶ 134.) Subdivision (a) of that section provides in relevant part that “[e]ach local government shall review its housing element as frequently as appropriate…” (Gov’t Code, § 65588, subd. (a).) Similarly, subdivision (b) states in pertinent part that “[t]he housing element shall be revised as appropriate…” (Gov’t Code, § 65588, subd. (b).) As the City persuasively argues, the direction to review and update a housing element “as appropriate” requires a local government to exercise discretion to evaluate the housing element. Thus, the provisions under Government Code section 65588 do not describe a clear and ministerial duty on the part of the City to amend the housing element.
Hacienda also relies upon the language set forth in Program H-2.5 of the Housing Element to allege that the City has a ministerial duty to immediately amend the Housing Element and find alternative sites to accommodate multifamily housing. Program H-2.5 provides in relevant part that:

“The City will revise the Municipal Code (Section 10.05.045) Public (“P”) zoning district by December 2016 to allow multifamily residential uses by right on the First Baptist Church site (17765 Daves Avenue). Revisions will include development standards that include those described in Section 6 of this document (Site Inventory: ‘Proposed Guidelines for Public/Residential Multi-Family Zone First Baptist Church Site).’ The City will also complete any amendments to the General Plan that may be necessary to allow multifamily uses in the Public (“P”) zoning district by December 2016. If the necessary amendments are not adopted by December 2016 and not successful in encouraging multi-family development, the City will provide alternate multi-family residential opportunities and will amend the Housing Element as necessary to correct any inconsistencies.”

(City’s Request for Judicial Notice at Exhibit I.)

The City concedes that its General Plan and zoning were not adopted before December 2016. This is in part because of the pending vote on the referendum petition scheduled for November 2018. (FAP at ¶ 79.) However, the language under Program H-2.5 does not set forth any mandatory duty on the part of the City to find amend the Housing Element. Most notably, the provision does not contain any specific timetable for the City to provide multifamily housing. This situation distinguishes itself from the decision cited by Hacienda in opposition, Urban Habitat Program v. City of Pleasanton (2008) 164 Cal.App.4th 1561, where the housing element in that case set forth mandatory duties to be taken by April 15, 2004. (Id. at p. 1578.) In any case, the City has no ministerial duty to immediately provide multifamily housing under this provision. Instead, the City has discretion to amend the Housing Element as necessary to correct any inconsistencies.

Therefore, the demurrer to the eighth cause of action is SUSTAINED WITHOUT LEAVE TO AMEND for failure to state a claim. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading]; see also Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 401 [“[W]here the nature of the plaintiff’s claim is clear, and under substantive law no liability exists, a court should deny leave to amend because no amendment could change the result.”].)