Case Number: 19TRCV00130 Hearing Date: June 18, 2019 Dept: S27

Timeline:

Baars is a dentist who initially leased his practice space in 2013 from Koll. Baars alleges he has operated his dental practice under a valid 2012 conditional use permit (“CUP”), which allows medical office uses in the City’s commercial office zone, since the inception of the lease. The lease was for an initial period of 10 years, beginning April 1, 2014 (when Baars took possession of the property) to March 31, 2024, with two options for another 5 years each. Baars alleges he made over $500,000 worth of improvements authorized under the lease.

Co-defendant SRE acquired the property from Koll in 2015, and Koll assigned its rights and obligations under the lease to SRE. Baars alleges that on July 26, 2016, SRE sought and obtained an entitlement (2016 CUP) changing the building’s use zoning to convert the building to a residential care facility for the elderly. (See City Ordinance No. 706 and Resolution No. 2374, City’s request for judicial notice, Exhibits 19-20.) Baars alleges that the entitlement did not seek to allow Baars’ office conditional use.

In June 2017, Baars alleges SRE sent Baars a default notice, stating his practice violated the new general commercial zoning. Baars contested the default, and SRE commenced a UD action, in which Baars prevailed in November 2017. The UD is now pending appeal.

Baars alleges that SRE began construction in December 2018, and in 2019 requested City declare Baars’ use of the property unlawful. Baars alleges the City Attorney sent him an opinion letter stating his vested rights in the 2012 CUP were extinguished, and SRE then sent another default dated January 23, 2019.

Baars filed the instant complaint and petitions for writ of mandate against SRE, City, and Does, alleging the following causes of action (against both SRE and City unless otherwise designated):

Declaratory Relief

Breach of Lease’s Covenant of Quiet Enjoyment (against SRE)

Breach of Lease’s Covenant of Good Faith and Fair Dealing (against SRE)

Anticipatory Breach of Contract (against SRE)

Quiet Title (against SRE)

Writ of Mandate re Issuance of Building Permit

Writ of Mandate re 2012 CUP

Inverse Condemnation (against City)

SRE served and filed a verified answer to the complaint March 15, 2019, and City filed the instant demurrer to the 1st, 6th, 7th, and 8th causes of action. City argues the complaint fails to allege facts sufficient to constitute a cause of action re all four (CCP 430.10(e)), and that the court is without jurisdiction to hear the 7th and 8th causes of action as they are time-barred attacks on the City’s 2016 zoning approval.

Demurrer arguments

City argues that it held a public hearing on May 26, 2015 to consider SRE’s zoning change request, and Baars did not attend or submit any comments. After the public meeting, SRE submitted the formal application for the zoning change, and the City then held a duly-noticed public hearing on June 6, 2016. City argues Baars again did not submit any comments or speak at the hearing, and the City then unanimously approved the application and recommended approval.

City states it then held two further public hearings on the 2016 CUP, one July 12, 2016 and the other July 26, 2016. City states Baars did not submit comments, speak at, or otherwise participate in those hearings. The City then unanimously adopted an ordinance changing the zoning on the property to allow SRE to develop the elderly care facility, and then issued the 2016 CUP.

City states that Baars’ rights under the initial 2012 CUP extended until the 2016 CUP rights vested, at which time Baars’ rights would extinguish. City states it expressed this stance to Baars in the above-referenced opinion letter from the City Attorney sent to Baars at his request during the UD matter between he and SRE.

After construction took place, SRE requested an update opinion letter from City re vesting of rights under the 2016 CUP. The City Attorney opined in response that the rights had vested, that rights held under the 2012 CUP were extinguished, but took no position on the landlord-tenant dispute/UD.

City states that each cause of action against it traces back to the City’s approval/issuance of the 2016 CUP, and are time-barred under the 90 day statute of limitations under Government Code section 65009 (c)(1)(E).

Requests for Judicial Notice:

Baars: Baars moves the court to take judicial notice of the following documents under Evidence Code section 452(b):

City of Rolling Hills Estates Planning Commission Resolution No. PA 12-12 – 2012 CUP under which Baars operated his practice under the landlord prior to SRE

City of Rolling Hills Estates Municipal Code, Chapter 17.30 – Municipal Code chapter pertaining to permitted land uses.

City of Rolling Hills Estates Ordinance No. 694 – an ordinance establishing definitions, regulations, and procedures for senior independent living facilities, residential care for the elderly, and skilled nursing facilities.

The court should take judicial notice of the requested documents.

City: City moves the court to take judicial notice of the following documents under Evidence Code section 452(b):

Rolling Hills Estates Municipal Code Chapter 1.16 (appeals)

Rolling Hills Estates Municipal Code Chapter 15.04 (Building Code)

Rolling Hills Estates Municipal Code Chapter 17.68 (Conditional Use Permits)

Rolling Hills Estates Municipal Code Chapter 17.72 (Administration and Enforcement)

Excerpts from LA County Code Title 26, as incorporate into Rolling Hills Estates Municipal Code Chapter 15.04.010

May 16, 2015 Joint City Council and Planning Commission meeting agenda

Approved meeting minutes from the May 16, 2015 meeting

Public hearing notice for Planning Application 18-15, set for June 6, 2016 Planning Commission Meeting

Proof of public hearing notice for Planning Application 18-15

Agenda for June 6, 2016 Planning Commission meeting

Approved meeting minutes for the June 6, 2016 Planning Commission meeting

Planning Commission Resolution PA 8-15

Public Hearing notice for Resolution NO. 2374 and Ordinance no. 706 set for July 12, 2016 City Council Meeting

Proof of publication of public hearing for Resolution No. 2374 and Ordinance No. 706 set for July 12, 2016

The agenda for July 12, 2016 City Council meeting

Approved meeting minutes for the July 12, 2016 City Council meeting

Agenda for the July 26, 2016 City Council meeting

Approved meeting minutes for the July 26, 2016 City Council meeting

City Council Resolution No. 2374

Ordinance No. 706

August 3, 2017 City Attorney Opinion Letter

January 18, 2019 City Attorney Opinion Letter

The court should take judicial notice of the foregoing documents. Said documents purportedly show City complied with the public hearings and related procedures in issuing the 2016 CUP and associated ordinance.

City also moves to the court to take judicial notice of the statement of decision in the UD matter between SRE and Baars. The court should deny this request, as the UD pertains to possession of the property, which is not at issue in this case.

Discussion:

Declaratory Relief

The court should OVERRULE the demurrer as to this cause of action.

As applied to City, Baars requests (1) “a determination that his rights under the 2012 CUP are not extinguished by the 2016 CUP,” (2) a declaration that the building, plumbing, electrical, mechanical, demolition, and grading permits issued by City are null and void, and (3) a declaration regarding City’s obligations to comply with its Municipal Code and City council Resolution No. 2374 (the 2016 CUP).

City argues that this request amounts to a challenge of the merits of an administrative decision, which is prohibited under Supreme Court precedent. City also argues that this request is time-barred under the applicable 90-day statute of limitations to attack, set aside, void, or annul a conditional use permit decision, or to determine the “reasonableness, legality, or validity” of zoning variances after the legislative body’s decision. (See Cal. Gov. Code section 65009, subd. (c)(1)(E).)

Re City’s statute of limitations argument, however, Gibson is instructive. In Gibson, the court held that the relevant then-120-day (now 90-day) statute of limitations under Government Code section 65009(c) did not apply to plaintiff’s request for declaratory and injunctive relief to “resolve the [County’s] fundamental misunderstanding of its responsibilities” under the Unruh Act and FEHA because it did not attack any specific zoning decision by the County. (Gibson v. County of Riverside (2002) 181 F.Supp.2d 1057, 1085.) Baars’ requested declarations analogize to Gibson, and are not barred under the relevant statute of limitations.

(1) Baars requests the court determine his rights under the 2012 CUP in the wake of the 2016 CUP; he is seeking a determination of the effect of the 2016 CUP on his rights to continue to use his office space. (See Complaint, paragraph 62.)

Declaratory relief may be sought by any person interested under a written instrument who desires a declaration of his or her rights or duties with respect to another over property in cases of actual prospective controversy. (See Cal. Code of Civ. Proc. Section 1060.) Baars and City did not contract together, so, liberally construing the complaint, the “written instrument” under which Baars may request a declaration of his rights with respect to City are the City Attorney’s two opinion letters, where the City expressed the opinion that Baars’ rights under the 2012 CUP extinguished upon the vesting of rights under the 2016 CUP. (See City’s Request for Judicial Notice, Exhibits 21-22.) Moreover, although not named on the 2016 CUP, Baars is interested under the 2016 CUP provided the effect thereof is to deprive him of his lease interest.

City cites Selby for the rule that “declaratory relief is not an appropriate method for judicial review of administrative decisions.” (Selby Realty Co. v. City of San Buenaventura (1973) 10 Cal.3d 110, 127.) City omits important case context. The Supreme Court held that to the extent the plaintiff sought a declaration re the propriety of the denial of its building permit, declaratory relief was not appropriate. (Ibid.) Baars does not request the court’s declaratory opinion on the validity of the 2016 CUP. Beyond this issue, however, Selby is instructive, and is expounded upon below.

In Selby, a private land developer sought, inter alia, a determination of the validity of a city’s general plan as it affected the developer’s land, as the general plan set forth proposed streets which, if implemented as reflected in the plan, would constitute a taking. (Id. at p. 117.) The court sustained the city’s demurrer, holding that it could not discern an actual controversy between the parties at that time because the county had not acted yet beyond enacting the “tentative” general plan, as it was required to do under the law. (Ibid.) The court held that the fact that some of the proposed streets, if ultimately constructed, would cross/take the developer’s property, did not entitle the developer to declaratory relief. (Ibid.) In short, there was no actual ripe controversy between the developer and the city on the taking issue at the time the complaint was filed. (Ibid.)

Here, the City approved the 2016 CUP, opined that upon vesting of rights contained therein, Baars’ rights under the 2012 CUP would be extinguished, and SRE accordingly commenced a UD action. Baars’ use and enjoyment of his office is already being adversely affected, as opposed to the Selby developer, who’s land had not yet been adversely affected when it filed the complaint. Therefore, at this demurrer stage, the court can find that the complaint alleges enough fact to establish an actual, ripe controversy exists between City and Baars.

(2) In addition to seeking declaratory relief that the building, plumbing, electrical, mechanical, demolition, and grading permits are null and void, Baars seeks an order ordering the City to comply with certain municipal code sections before issuing the building, plumbing, electrical, mechanical, demolition, and grading permits via writ of mandate (addressed below). Declaratory relief is part and parcel of a writ of mandate. And Baars is essentially seeking the court find the City abused its discretion in issuing these permits without following the procedure prescribed in the Municipal Code.

When a complaint alleging declaratory relief pleads facts sufficient to demonstrate the defendant failed to adhere to appropriate administrative processes under the governing statutes, the court may treat the complaint as a petition for a writ of mandate. (Lee v. Blue Shield of California (2007) 154 Cal.App.4th 1369, 1379.) If Baars’ petition for writ of mandate is successful, that order will necessarily render the issued permits null and void. Therefore, this request is addressed below.

(3) Regarding Baars’ request for a declaration regarding City’s obligations under the Municipal Code and the 2016 CUP, the court will necessarily address these issues by way of the writs of mandate causes of action addressed below.

Writ of Mandate re Issuance of Building Permits

The demurrer should be OVERRULED as to this cause of action.

A writ of mandate inquires into the validity of, inter alia, an administrative decision/action, and the inquiry extends to whether the administrative body has abused its discretion by not proceeding in a manner required by law. (Cal. Code of Civ. Proc. Section 1094.5, subds. (a)-(b).) The issuance of a conditional use permit is a quasi-judicial administrative action reviewable under the administrative mandamus procedures. (Harrington v. City of Davis (2017) 16 Cal.App.5th 420.)

Baars alleges City abused its discretion by: (a) failing to comply with City’s Municipal Code section 17.72.020(B) before issuing building permits to SRE an (b) by failing to comply with Condition 7 of the 2016 CUP.

City argues that the writs of mandate are time barred under the 90-day statute of limitations in which Baars could attack the validity of the 2016 CUP. Again, Baars is not attacking the validity of the 2016 CUP via the alleged abuses of discretion.

(a) Baars prays for a writ of mandate ordering City to comply with the City’s Municipal Code section 17.72.020(B). Section 17.72.020(B) requires the City, before issuing building permits where “the structure or structures to be erected will have the effect of depriving other persons of the use of their property…to first subject the proposals to the council for review and study of possible alternatives.” (See City’s Request for Judicial Notice, Exhibit 4.) Baars alleges the building effectively deprives him of the use of his leased property, and further alleges the City did not study possible alternatives before issuing said permits on November 19, 2018, and thus abused its discretion in issuing those permits.

City argues that Baars seeks to control the outcome of the building permit process inappropriately via a writ of mandate. This is untrue. Baars seeks compliance with the building permit issuance process, from which a different outcome may, or may not, result.

City also argues that it explored possible alternatives in 2016 when the 2016 CUP’s application was initially submitted by SRE, and the section 17.72.020(B) procedure only applies where there was not already a discretionary approval process in place. City may have complied with said procedure, but Baars sufficiently pleads a writ of mandate cause of action based upon City’s alleged failure to explore other alternatives to the 2018 building permits.

The demurrer should be OVERRULED as to the writ of mandate cause of action as to City’s failure to comply with section 17.72.020(B).

(b) Baars also alleges City abused its discretion by running afoul of Condition 7 of the 2016 CUP. Per Condition 7 of the 2016 CUP, the approvals for the elderly home project therein automatically expired “unless the use [was] inaugurated or construction of the project is commenced” not later than one year after the date of approval.” 2016 CUP was approved on July 26, 2016. On June 5, 2017, City extended the date of expiration for one year, as it was authorized to do under the 2016 CUP, thereby extending the expiration date to July 26, 2018. The building permits were not issued until November 19, 2018, and thus Baars alleges the 2016 CUP’s approvals expired.

City argues that Baars attempts to add a discretionary element to the solely ministerial function of the City’s building permit issuance process. City argues Baars attempts to require the permit issuer to consider whether the land use entitlement upon which the building permit is requested has expired. I believe City mischaracterizes Baars’ allegation. Baars argues that because the 2016 CUP approvals expired, SRE was divested of the authorization to continue with the elderly home project under the 2016 CUP, and thus the City abused its discretion by issuing the building permits and permitting SRE to continue developing the project.

The court should OVERRULE the demurrer to the writ of mandate cause of action as to whether the City abused its discretion by permitting SRE to continue developing its project under the 2016 CUP despite SRE not commencing construction before the July 26, 2018 expiration date of the 2016 CUP. The court may also deem this matter a request for declaratory relief, as the court can interpret the 2016 CUP and judicially declare whether the failure to commence construction before July 26, 2018 triggered the automatic expiration of the approvals therein.

Writ of Mandate re 2012 CUP

The demurrer should be SUSTAINED as to this cause of action.

Baars alleges City abused its discretion by: (c) failing to comply with City’s Municipal Code section 17.68.060(B) before attempting to revoke the 2012 CUP; and by (d) failing to recognize Baars’ use of the property as a nonconforming existing use under City’s Municipal Code section 17.72.060.

City again argues that the writs of mandate are time barred under the 90-day statute of limitations in which Baars could attack the validity of the 2016 CUP. Again, Baars is not attacking the validity of the 2016 CUP via the alleged abuses of discretion.

(c) Baars alleges that to formally revoke, or extinguish, his rights under the 2012 CUP, the City was required to comply with the City’s Municipal Code section 17.68.060(B) procedure. Baars argues the January 18, 2019 opinion letter, wherein the City Attorney opines that Baars’ rights under the 2012 CUP have extinguish upon vesting of the rights in the 2016 CUP, improperly revoked his 2012 CUP rights without the revocation proceedings required under section 17.68.060(B). (See City’s Request for Judicial Notice, Exhibit 3.) Section 17.68.060(B) requires a public hearing and the City’s planning commission making certain findings.

City again argues that Baars seeks to use the writ of mandamus instrument to force the City Attorney to reach a new decision/opinion. While a different outcome is possible if the section 17.68.060(B) procedure is followed, Baars’ true relief sought is compliance with that procedure.

City argues that Baars failed to exhaust the administrative remedies available to him before seeking writ of mandate based on this alleged abuse of discretion. Specifically, City argues Baars failed to seek review of the January 2019 opinion letter under Municipal Code section 1.16.010, which requires an appeal to be filed no later than 30 days after the date of the decision.

To withstand a demurrer for failure to allege exhaustion of available administrative remedies, the plaintiff must allege facts showing that he did exhaust administrative remedies or facts showing he was not required to. (Tejon Real Estate, LLC v. City of Los Angeles (2014) 223 Cal.App.4th 149, 156.) Baars conclusively states he exhausted all administrative remedies, without providing specific facts showing that compliance.

The demurrer should be SUSTAINED as to the writ of mandate cause of action as to City’s failure to comply with section 17.68.060(B). However, because Baars’ request for declaratory relief regarding the effect of the 2016 CUP on his rights under the 2012 CUP survives the demurrer, he still has recourse to determine his rights thereunder.

(d) Baars alleges City abused its discretion by taking “no formal action” regarding his practice’s status as a nonconforming existing use. (See Complaint paragraph 106.) Although the complaint does not expressly state, the court can infer that Baars means the City failed to address the nonconforming existing use issue in its January 18, 2019 opinion letter.

City again argues that Baars failed to exhaust the administrative remedies available to him before seeking writ of mandate based on this alleged abuse of discretion. Specifically, City argues Baars failed to seek review of the January 2019 opinion letter under Municipal Code section 1.16.010, which requires an appeal to be filed no later than 30 days after the date of the decision.

To withstand a demurrer for failure to allege exhaustion of available administrative remedies, the plaintiff must allege facts showing that he did exhaust administrative remedies or facts showing he was not required to. (Tejon Real Estate, LLC v. City of Los Angeles (2014) 223 Cal.App.4th 149, 156.) Baars’ complaint conclusively states he exhausted all administrative remedies and “all facts and issues raised [therein] were presented to City before the City issued the [2016 CUP] and building permits,” without providing specific facts showing that exhaustion.

The demurrer should be SUSTAINED as to whether the City abused its discretion in failing to address whether Baars’ practice qualified as a nonconforming existing use.

Inverse Condemnation

The demurrer should be SUSTAINED as to this cause of action.

Baars alleges that the City’s issuance of the 2016 CUP amounted to a taking of his rights to the property under the lease. Baars must prove that City, a public entity, has taken or damaged his property interest for a public use. (Pacific Bell v. City of San Diego (2000) 81 Cal.App.4th 596, 602.) Inverse condemnation requires public improvement to be a substantial cause of the plaintiff’s damages. (Marshall v. Department of Water & Power (1990) 219 Cal.App.3d 1124, 1139.) To state a claim for inverse condemnation, the plaintiff must allege the defendant substantially participated in the planning, approval, construction, or operation of a public project or improvement which proximately caused the injury to property. (Pacific Shores Property Owners Assn. v. Department of Fish & Wildlife (2016) 244 Cal.App.4th 12, 43.)

Baars fails to allege how the issuance of the 2016 CUP constitutes a taking for public use. SRE, an LLC, submitted the application resultant in the 2016 CUP to construct private property for private use. The complaint contains no allegations of how the elderly facility will be dedicated to public use. In Ellison, the court held that the defendant (City of San Buenaventura) could not be held liable for damages resultant from private improvement and development of property where the defendant “played no part other than their approval of plans and issuance of permits.” (Ellison v. City of San Buenaventura (1976) 60 Cal.App.3d 453, 459; but see also Sheffet v. County of Los Angeles (1970) 3 Cal.App.3d 720 [holding an inverse condemnation action lied where County issued permits for a private developer to construct public roads].)

Baars’ opposition points to a 2015 ordinance (see Baars’ RJN, Exhibit C), which amended City’s zoning code to facilitate development of residential facilities for senior citizens, as evidence that the 2016 CUP constitutes a taking for public use. Baars’ opposition further argues that by interfering with his investment-backed expectations in continuing his leasehold for its entire term, the 2016 CUP constitutes an economic deprivation of his use.

Baars’ argument re the 2015 ordinance is clever, but quite attenuated. Moreover, Baars simply cannot overcome the fact that the senior living facility is the private project of SRE. The demurrer should be SUSTAINED.

City also argues that Baars failed to exhaust the administrative remedies available to him before seeking writ of mandate based on this alleged abuse of discretion. Specifically, City argues Baars failed to seek review of the January 2019 opinion letter under Municipal Code section 1.16.010, which requires an appeal to be filed no later than 30 days after the date of the decision. Baars’ complaint conclusorily alleges he exhausted all administrative remedies and “all facts and issues raised [therein] were presented to City before the City issued the [2016 CUP] and building permits,” without providing specific facts showing that exhaustion.

Tentative Ruling:

The demurrer should be OVERRULED as to the declaratory relief and writ of mandate re Issuance of the building permits. The demurrer should be SUSTAINED WITH LEAVE TO AMEND as to the writ of mandate re the 2012 CUP and the inverse condemnation cause of action.