Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-02093/USCOURTS-cand-4_09-cv-02093-1/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 28:1331 Federal Question: Other Civil Rights

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

VICTOR AIUTO, et al.,

Plaintiffs,

 v.

SAN FRANCISCO’S MAYOR’S OFFICE OF

HOUSING, et al.,

Defendants. /

No. C 09-2093 CW

ORDER GRANTING IN

PART DEFENDANTS’

MOTION FOR JUDGMENT

ON THE PLEADINGS AND

DENYING DEFENDANTS’

ALTERNATIVE MOTION

TO ABSTAIN

(Docket No. 18)

 Plaintiffs Victor Aiuto, et al., allege that provisions of

San Francisco’s Below Market Rate Condominium Conversion Program

constitute an uncompensated regulatory taking of their property and

deprive them of their rights under the United States and California

constitutions. Plaintiffs also maintain that Defendants San

Francisco’s Mayor’s Office of Housing (MOH), et al., have

administered the Program in a manner that violates their

constitutional rights. Defendants move for judgment on the

pleadings or, in the alternative, for the Court to abstain from

proceeding on Plaintiffs’ federal claims. Plaintiffs oppose the

motions. The Court GRANTS in part Defendants’ Motion for Judgment

on the Pleadings. Defendants’ alternative motion to abstain is

DENIED. 

BACKGROUND

Plaintiffs own condominium units that are designated “Below

Market Rate” (BMR) units under the Below Market Rate Condominium

Conversion Program. The BMR Program was created to expand

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1 Defendants ask the Court to take judicial notice of several

documents, including a copy of Ordinance Number 320-08. Plaintiffs

oppose Defendants’ request but do not contest the accuracy of

Exhibit 1, which contains a copy of Ordinance Number 320-08. The

Court grants Defendants’ Request for Judicial Notice as to Exhibit

1 because it is not subject to reasonable dispute. Fed. R. Evid.

201. 

2

“opportunities for homeownership while preserving and expanding the

supply of low- and moderate-income housing.” Defendants’ Request

for Judicial Notice (RJN),1 Ex. 1 § 1(a). From 1979 to 1988,

property owners who converted apartments to condominiums were

required to designate at least ten percent of the new housing stock

as BMR units. Renters already residing in BMR units were given the

right of first refusal to purchase the converted condominiums;

senior citizen renters who decided not to purchase their units were

given the option to enter into a lifetime lease. Under the

Program, those who chose to purchase a BMR condominium generally

paid a below-market price for the unit. In exchange, the Program

restricted the sale and rental of the unit to ensure that it would

remain available for purchase or rent by preferred groups,

including low- to moderate-income households. 

Plaintiffs allege that some owners “had no idea they owned a

BMR unit” and, as a result, were not aware of these restrictions. 

First Am. Compl. (FAC) ¶ 10. Other owners, Plaintiffs aver, were

“duped, tricked and actively misled about the rules” of the program

and “unwittingly purchased or inherited” the restricted BMR units. 

FAC ¶ 10. Plaintiffs claim that, beginning in the 1990s, some

owners were deceived by an affidavit developed by the MOH, which

purportedly explained the Program’s restrictions. Plaintiffs

assert that the MOH did not consistently require purchasers to

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28 2 Plaintiffs present no legal support for this claim. 

3

review and sign the affidavit. 

Plaintiffs assert that, in the late 1980s, there were

approximately 1,100 BMR units in the program; currently, there are

approximately 550. Plaintiffs account for the difference by

asserting that some units “have been released from the program or

‘escaped’ the program and have been sold and re-sold at market

value.” FAC ¶ 10. 

Plaintiffs claim that, in 2008, Defendants MOH, Mayor Gavin

Newsom and the Board of Supervisors sought to reform the BMR

Program following complaints that it was mismanaged. These efforts

resulted in Ordinance Number 320-08, enacted in December, 2008,

which revised the Program’s provisions and amended San Francisco’s

Subdivision Code. 

Plaintiffs assert that Ordinance 320-08 imposes restrictions

on their property that deprive them “of their constitutional and

civil rights.” FAC ¶¶ 14 and 16. For instance, they maintain

that, prior to the enactment of Ordinance 320-08, owners of BMR

units were entitled to have their units “automatically released

from resale restrictions and rights of first refusal” if they owned

their unit for over twenty years.2 FAC ¶ 13. Under Ordinance 320-

08, only owners who purchased or acquired their unit before

December 1, 1992 can obtain relief from the restrictions of the BMR

Program, and those owners can do so only 

if they enter into an agreement with the City to pay a

fee adjusted for income level and number of

bedrooms . . . , or 50% of the difference between the BMR

Resale Price and the Fair Market Value at the time of

payment, as defined herein, whichever is less. The fee

may be paid immediately upon execution of the Agreement

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or as a City lien, recorded through a note and deed of

trust in favor of the City against the property, with a

simple interest of 3%. . . . Upon payment of the fee or

recordation of a lien in favor of the City, a release of

the restrictions under the Program will be recorded

against the property. 

S.F., Cal., Subdivision Code div. 1, art. 5, § 1344(i)(a). The fee

varies, from $150,000 to $500,000. Id. Owners who purchased or

acquired their BMR unit prior to the January, 2009 effective date

of Ordinance 320-08 can opt to 

receive a one-time increase in the base resale price of

their unit. In return, the owner agrees to be governed

by the provisions of this ordinance applicable to

“Post-Legislation” owners.

S.F., Cal., Subdivision Code div. 1, art. 5, § 1344(i)(b). Owners

who are eligible to proceed under either or both of these options

must elect to do so within twenty-four months after the effective

date of Ordinance 320-08.

In addition to challenging the constitutionality of Ordinance

320-08, Plaintiffs complain that the MOH, which is charged with

administering the BMR Program, is inadequately staffed and uses

“unwritten or non-existent policies” that are enforced “unequally

and arbitrarily.” FAC ¶ 17. In particular, Plaintiffs cite the

MOH’s “Implementation Procedures” for Ordinance 320-08, which they

maintain are “convoluted, ambiguous and unintelligible.” FAC ¶ 18. 

Based on these allegations, Plaintiffs assert various claims

for relief. They claim that Ordinance 320-08 constitutes an

uncompensated regulatory taking of their property, in violation of

the United States and California constitutions, and that it is

unconstitutional because it violates their due process and equal

protection rights. Plaintiffs also assert a claim under 42 U.S.C.

§ 1983, alleging that the manner in which Defendants have

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administered the Program violates their constitutional rights. 

Plaintiffs also ask the Court to invalidate Ordinance 320-08, on

the basis that it is preempted by the Costa-Hawkins Rental Housing

Act, Cal. Civ. Code §§ 1954.50-1954.535. Finally, Plaintiffs seek

declaratory relief, appointment of a receiver of the MOH and

injunctive relief against the continued operation of the BMR

Program. 

LEGAL STANDARD

Rule 12(c) of the Federal Rules of Civil Procedure provides,

“After the pleadings are closed but within such time as not to

delay the trial, any party may move for judgment on the pleadings.” 

Judgment on the pleadings is proper when the moving party clearly

establishes on the face of the pleadings that no material issue of

fact remains to be resolved and that it is entitled to judgment as

a matter of law. Hal Roach Studios, Inc. v. Richard Feiner & Co.,

Inc., 896 F.2d 1542, 1550 (9th Cir. 1990).

DISCUSSION

I. Justiciability of Plaintiffs’ Federal Takings Claims

Defendants assert that Plaintiffs lack standing to bring their

takings claims and that, even if Plaintiffs had standing, these

claims are not ripe for review. 

A. Standing

Article III limits the jurisdiction of the federal courts to

“cases” and “controversies.” In order to satisfy the “case or

controversy” requirement, a plaintiff must have standing to bring

an action by showing that: “(1) he or she has suffered an injury in

fact that is concrete and particularized, and actual or imminent;

(2) the injury is fairly traceable to the challenged conduct; and

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(3) the injury is likely to be redressed by a favorable court

decision.” Salmon Spawning & Recovery Alliance v. Gutierrez, 545

F.3d 1220, 1225 (9th Cir. 2008). To plead an actual injury in

cases involving constitutional challenges, a plaintiff must “have

‘alleged such a personal stake in the outcome of the controversy as

to assure that concrete adverseness which sharpens the presentation

of issues upon which the court so largely depends for illumination

of difficult constitutional questions.’” Guggenheim v. City of

Goleta, 582 F.3d 996, 1005 (9th Cir. 2009) (quoting Baker v. Carr,

369 U.S. 186, 204 (1962)). 

Defendants assert that Plaintiffs do not plead an injury-infact. Citing Carson Harbor Village Ltd. v. City of Carson, 37 F.3d

468 (9th Cir. 1994), overruled on other grounds by WMX Techs., Inc.

v. Miller, 104 F.3d 1133, 1136 (9th Cir. 1997) (en banc),

Defendants argue that Plaintiffs acquired their units after the BMR

Program was adopted in 1979 and therefore do not have standing to

assert their facial takings claim. In Carson Harbor Village, the

Ninth Circuit held that a plaintiff mobile home park owner, which

had acquired burdened property after a municipality enacted an

allegedly unconstitutional ordinance, lacked standing to assert a

facial takings claim. Id. at 475-77; see also Equity Lifestyle

Props., Inc. v. County of San Luis Obispo, 548 F.3d 1184, 1193 (9th

Cir. 2008) (holding that a plaintiff’s facial takings claim failed

“for lack of standing because the injury is treated as having

occurred to the previous landowner”). The court stated, “In a

facial taking, the harm is singular and discrete, occurring only at

the time the statute is enacted.” Carson Harbor Vill., 37 F.3d at

476 (emphasis in original). Thus, a “landowner who purchased land

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after an alleged taking cannot avail himself of the Just

Compensation Clause because he has suffered no injury.” Id. 

Defendants are correct that Plaintiffs lack standing to assert

a facial takings claim regarding any restriction existing at the

time they acquired their property. However, Plaintiffs have

standing to raise such a challenge against any new restriction that

Ordinance 320-08 may have imposed. Defendants assert that

Ordinance 320-08 “merely clarifies” existing restrictions and, as a

result, does not cause an injury-in-fact. Reply at 3. However,

Ordinance 320-08 does add to San Francisco’s Subdivision Code a new

section 1344, which, among other things, prescribes the abovementioned options available to BMR owners who acquired their

property before the Ordinance’s effective date. Plaintiffs

challenge the provisions of section 1344 as, among other things,

exacting an uncompensated taking. 

Accordingly, Plaintiffs have standing to assert a facial

takings challenge to any additional restriction imposed on their

property by Ordinance 320-08. They cannot, however, state claims

based on restrictions existing at the time they acquired their

property. 

B. Ripeness

Defendants assert that Plaintiffs’ facial and as-applied

federal takings claims are not ripe for review. In Williamson

County Regional Planning Commission v. Hamilton Bank of Johnson

City, 473 U.S. 172 (1985), the Supreme Court defined when takings

claims are ripe. In federal court, “a takings claim is not ripe

until the property owner has attempted to obtain just compensation

for the loss of his or her property through the procedures provided

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by the state for obtaining such compensation and been denied.” 

Guggenheim, 582 F.3d at 1006 (citing Williamson County, 473 U.S. at

195). An additional requirement is imposed on as-applied

challenges: “the property owner must have received a ‘final

decision’ from the appropriate regulatory entity as to how the

challenged law will be applied to the property at issue.” 

Guggenheim, 582 F.3d at 1006 (citing Williamson County, 473 U.S. at

192-93).

Plaintiffs do not claim that they have been denied redress in

state court. Citing Guggenheim, they nevertheless argue that the

Court can and should deem their claims ripe because the

requirements provided by Williamson County are only prudential, not

jurisdictional, in nature. Guggenheim, 582 F.3d at 1008 (“[T]he

Williamson requirements are merely prudential requirements.”) In

Guggenheim, the Ninth Circuit held the plaintiffs’ takings claims

were ripe, even though they did not pursue a formal inverse

condemnation action in state court. Id. at 1010-11. The court

found two reasons why it was “‘not prudent’” to apply Williamson

County’s requirements. Id. at 1011 (quoting Lucas v. S.C. Coastal

Council, 505 U.S. 1003, 1013 (1992)). First, the defendant city

waived its claim that the plaintiffs’ case was not ripe; the city

did not timely raise the issue before the district court or on

appeal. Guggenheim, 582 F.3d at 1011. Second, the court concluded

that the plaintiffs had “substantially satisfied the Williamson

requirements.” Id. at 1012. Litigation on the plaintiffs’ claims

spanned “three full rounds at the trial level, including one in

state court and two in federal court.” Id. at 1004. In the state

court proceedings, the plaintiffs “litigated and settled several

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3

 Plaintiffs plead, without factual support, that they “have

exhausted all remedies afforded by state or local law to obtain

relief from the requirements of Ordinance No. 320-08” and that any

further recourse to state or local remedies “would be futile.” FAC

¶ 19. However, they neither allege in their FAC nor argue in their

opposition that they have sought just compensation through any

state procedure, such as an inverse condemnation action, and been

denied. The Court “need not accept baseless allegations as proof

of futility.” Equity Lifestyles Props., 548 F.3d at 1191. 

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state law issues relevant to the alleged taking with the City,

including issues necessary to establish the timeliness of the

takings claim.” Id. at 1012. The court concluded that there was

“no doubt that they have . . . unsuccessfully attempted to obtain

just compensation through procedures by the State.” Id. Moreover,

there was “sufficient evidence in the record to determine whether

the regulation goes too far.” Id. (citation and internal quotation

and editing marks omitted).

Neither factor cited by the Guggenheim court is present here. 

Defendants have timely asserted that Plaintiffs’ claims are not

ripe. Further, Plaintiffs have not sought redress through any

state or local procedures.3

 Unlike the Guggenheim plaintiffs, they

have not resolved any matters before a state court. Nor is there

any record before the Court to illuminate whether the regulation

exacts an unconstitutional taking without just compensation. 

Plaintiffs also cite other cases that adjudicated takings

claims on the merits, even though the Williamson County

requirements were not met. In McClung v. City of Sumner, the Ninth

Circuit did not address the Williamson County requirements and

assumed the plaintiffs’ takings claim was ripe. 548 F.3d 1219,

1224 (9th Cir. 2008). There, as in Guggenheim, the plaintiffs had

litigated their dispute with the defendant city for several years

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in state court. Id. at 1223. After the plaintiffs amended their

complaint to add a takings claim, the defendant removed the case to

federal court. Id. In deciding that the takings claim was ripe,

the court stated, “The McClungs installed the storm pipe over ten

years ago, resulting in a clearly defined and concrete dispute.” 

Id. at 1224. Here, Plaintiffs’ dispute is not similarly developed. 

Although they assert that they have lost a right to be

automatically released from the program, they do not aver that they

tried to exercise such a right, only to be denied. Nor do

Plaintiffs indicate how the provisions of Ordinance 320-08 reduce

the value of their already restricted properties. 

Plaintiffs contend that the Court must find their claims ripe

because, otherwise, they will not be able to “seek redress of their

injuries before they are whipsawed by this unconstitutional statute

in December 2010.” Opp’n at 15. They appear to refer to the

requirement that an owner seeking to remove a BMR unit from the

Program must choose one of the above-mentioned options within “24

months from the effective date of” Ordinance 320-08. S.F., Cal.,

Subdivision Code div. 1, art. 5, § 1344(i). This argument does not

persuade the Court to cast aside the Williamson County

requirements. If Plaintiffs were to seek redress in state court,

nothing precludes them from moving that court to enjoin

preliminarily any provision that could cause them irreparable harm. 

Notably, Plaintiffs could have filed their claims in state court in

the first instance and avoided the potential delay of which they

now complain. 

The Court declines to waive the prudential requirements of

Williamson County and concludes that Plaintiffs’ takings claims are

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not ripe for review. Although there are cases in which courts have

decided the merits of takings claims despite a property owner’s

failure to seek just compensation through state and local

procedures, Plaintiffs have not established that their case

justifies such an exception. Their takings claims are dismissed

without prejudice to refiling in state court. 

II. Equal Protection Claims

Plaintiffs claim that Ordinance 320-08 violates their rights

under the Equal Protection Clause of the Fourteenth Amendment,

arguing that they are treated differently than “other BMR unit

owners who were released from the [Program] or escaped from the

[Program] without financial or other penalty or requirement.” FAC

¶ 24. Defendants assert that Plaintiffs are not members of a

suspect class and that they do not claim a violation of a

fundamental right. As a result, Defendants maintain, Plaintiffs’

equal protection claim fails because Ordinance 320-08 is rationally

related to a legitimate government interest. 

Unless a classification warrants heightened review because it

categorizes on the basis of an inherently suspect characteristic or

jeopardizes a fundamental right, the Equal Protection Clause

requires only that the classification rationally further a

legitimate government interest. Nordinger v. Hahn, 505 U.S. 1, 10

(1992). A court “will not overturn a statute that does not burden

a suspect class or a fundamental interest unless the varying

treatment of different groups or persons is so unrelated to the

achievement of any combination of legitimate purposes that” the

only conclusion is “that the legislature’s actions were

irrational.” Pennell v. City of San Jose, 485 U.S. 1, 14 (1988)

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4 Even if Plaintiffs did not plead that Ordinance 320-08

(continued...)

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(quoting Vance v. Bradley, 440 U.S. 93, 97 (1979)) (internal

quotation and editing marks omitted). 

Plaintiffs do not allege that they are members of a suspect

class. Nor do they assert that Ordinance 320-08 burdens a

fundamental right. Thus, Defendants are correct that Ordinance

320-08 must be upheld if the classification it creates is

rationally related to a legitimate government interest. 

Plaintiffs admit that Defendants acted in pursuit of a

legitimate government interest. Concerning Ordinance 320-08, the

FAC states:

Plaintiffs do not doubt that the City and MOH were

attempting to address a legitimate governmental interest

that is of genuine concern to its constituents and that

is the City’s need to provide affordable housing to its

residents. However, plaintiffs vigorously dispute the

effectiveness, reasonableness, validity,

constitutionality and legality of Ordinance No. 320-08 as

well as its application to plaintiffs . . . . 

FAC ¶ 17. Plaintiffs’ FAC lacks any allegation that Ordinance 320-

08 contains a classification that is not rationally related to this

legitimate government interest. Instead, they maintain that

Ordinance 320-08 was poorly conceived and is ineffective. However,

as the Ninth Circuit has stated, “under equal protection rational

basis review, it is not for [courts] ‘to judge the wisdom,

fairness, or logic’ of the choices made.” Kahawaiolaa v. Norton,

386 F.3d 1271, 1283 (9th Cir. 2004) (quoting Heller v. Doe, 509

U.S. 312, 319 (1993)). Thus, because Plaintiffs do not show that

Ordinance 320-08 is irrational, their equal protection challenge

fails.4 Plaintiffs’ as-applied equal protection claim is dismissed

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4(...continued)

serves a legitimate government interest, as discussed below,

numerous reasons support the premise that Ordinance 320-08

rationally serves such an interest.

5 To the extent that this allegation re-asserts Plaintiffs’

unsuccessful takings claim, their substantive due process claim

fails. See Ventura Mobilehome Cmtys. Owners Ass’n v. City of San

Buenaventura, 371 F.3d 1046, 1054 (9th Cir. 2004) (concluding that

a substantive due process claim failed “because ‘the alleged

violation is addressed by the explicit textual provisions of the

Fifth Amendment Takings Clause’”) (quoting Madison v. Graham, 316

F.3d 867, 870-71 (9th Cir. 2002)).

13

as not ripe for review; they have not plead facts to show how the

Ordinance has been applied to them. 

III. Due Process Claims

Plaintiffs claim that “Ordinance No. 320-08 as written and as

applied violates the substantive and procedural due process rights

of plaintiffs.” FAC ¶ 21. They claim that Ordinance 320-08

“retroactively deprives” them of their constitutional rights. FAC

¶ 21. Defendants assert that, as based on these allegations,

Plaintiffs’ due process claims fail as a matter of law.

A. Substantive Due Process

Plaintiffs do not plead clearly how Ordinance 320-08 violates

their substantive due process rights. They state that Ordinance

320-08 “compels them to release otherwise valid legal claims

against defendants if plaintiffs choose to buy their way out of the

broken and unlawful [Program]. In some cases, plaintiffs have no

right to even buy out of the broken and unconstitutional program.”5

FAC ¶ 22. 

When a plaintiff challenges economic legislation on

substantive due process grounds, courts afford “great deference to

the judgment of the legislature.” Levald, Inc. v. City of Palm

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Desert, 998 F.2d 680, 690 (9th Cir. 1993). “‘Ordinances survive a

substantive due process challenge if they were designed to

accomplish an objective within the government’s police power, and

if a rational relationship existed between the provisions and

purpose of the ordinances.’” Id. (quoting Boone v. Redev. Agency

of San Jose, 841 F.2d 886, 892 (9th Cir. 1988)) (editing marks

omitted). 

Defendants assert that the City and County enacted Ordinance

320-08 to clarify and update the BMR Program, which itself was

adopted to expand “opportunities for homeownership while preserving

and expanding the supply of low- and moderate-income housing.” 

RJN, Ex. 1 § 1(a). Concerning the “release fee” complained of by

Plaintiffs, Ordinance 320-08 states,

Many owners have testified in hearings on this

legislation that they were unaware of the permanent

nature of the resale restriction on BMR Units. The Board

finds as a policy matter that, regardless of the fact

that all BMR Unit owners were given notice of the

restrictions on their Units through the recorded

Subdivision Map, owners who purchased on or after

December 1, 1992 were given additional, specific notice

of the permanency of the restrictions and those who

purchased “pre-affidavit” were not given this additional

notice. For those who were not given additional notice,

the Board finds as a matter of policy and equity, that

these “pre-affidavit owners” should be given the option

to permanently exit the Program under a shared equity

model. The City’s share of the equity will be used to

create affordable housing opportunities. 

RJN, Ex. 1 § 1(e). 

Plaintiffs do not allege or argue that the provisions of

Ordinance 320-08 lack a rational relationship with its purpose. As

Plaintiffs state, Mayor Newsom and the Board of Supervisors likely

enacted Ordinance 320-08 to address problems with the BMR Program. 

Owners complained that they were not aware of the Program’s

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permanent restrictions and, in response, Ordinance 320-08 offers an

option through which owners can seek relief. Although this option

requires payment of a fee, Plaintiffs do not allege that the fee

itself or its intended use is irrational. Indeed, legislators

could have imposed the fee for two legitimate purposes: (1) to

dissuade owners from removing their properties from the BMR

Program, thus reducing the availability of housing intended for

purchase by low- to moderate-income households; and (2) if the fee

did not dissuade owners from doing so, to provide a fund that, as

Ordinance 320-08 states, “will be used to create affordable housing

opportunities,” RJN, Ex. 1 § 1(e). Plaintiffs also complain that

if owners choose to exit the program, they must waive any legal

claim against the City and County concerning the Program. However,

requiring owners to waive such claims rationally serves the purpose

of reducing litigation against the City. Plaintiffs offer no

reason for the Court to conclude that either the fee or any other

provision of Ordinance 320-08 lacks a rational relationship to

increasing the stock of affordable housing in San Francisco. 

Accordingly, the Court concludes that Plaintiffs’ facial

substantive due process challenge fails as a matter of law. 

Although they assert an as-applied substantive due process claim,

Plaintiffs do not allege that Defendants have applied the fee or

any other provision of Ordinance 320-08 in a particular case; thus,

such an as-applied claim is dismissed as not ripe for review. 

B. Procedural Due Process 

Plaintiffs’ procedural due process challenge, like their

substantive due process claim, is not clear. Defendants assert

that their actions have not deprived Plaintiffs of their procedural

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due process rights because the City and County enacted Ordinance

320-08 through the ordinary legislative process. “Generally, if

the ‘action complained of is legislative in nature, due process is

satisfied when the legislative body performs its responsibilities

in the normal manner prescribed by law.’” Hotel & Motel Ass’n of

Oakland v. City of Oakland, 344 F.3d 959, 969 (9th Cir. 2003)

(quoting Halverson v. Skagit County, 42 F.3d 1257, 1260 (9th Cir.

1995)). “‘[G]overnmental decisions which affect large areas and

are not directed at one or a few individuals do not give rise to

the constitutional procedural due process requirements of

individualized notice and hearing; general notice as provided by

law is sufficient.’” Hotel & Motel Ass’n of Oakland, 344 F.3d at

969 (quoting Halverson, 42 F.3d at 1261). 

Plaintiffs have not alleged that Defendants enacted Ordinance

320-08 through a defective legislative process; nor have they

argued that Ordinance 320-08 is not a law of general applicability,

or that it is directed at “one or a few” property owners, Hotel &

Motel Ass’n of Oakland, 344 F.3d at 969. Thus, to the extent that

Plaintiffs complain that the procedure by which Defendants enacted

Ordinance 320-08 deprived them of due process, their procedural due

process claim fails as a matter of law. Plaintiffs have not

alleged that Defendants have applied Ordinance 320-08 in a manner

that deprives them of their procedural due process rights. 

Accordingly, Plaintiffs’ as-applied procedural due process

challenge is not ripe for review. 

IV. Mismanagement Claims under 42 U.S.C. § 1983

Plaintiffs plead that Defendants’ mismanagement of the Program

deprives them of rights under the Fifth and Fourteenth Amendments

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6

 As noted above, Defendants move in the alternative for the

Court to abstain, pursuant to Railroad Commission of Texas v.

Pullman Co., 312 U.S. 496 (1941), from deciding Plaintiffs’ federal

claims. However, Defendants’ arguments in support of their motion

for abstention address Plaintiffs’ challenges to Ordinance 320-08,

not Plaintiffs’ § 1983 claims. Because the Court dismisses

Plaintiffs’ challenges to Ordinance 320-08 on other grounds,

Defendants’ alternative motion to abstain from deciding those

claims is denied as moot. However, neither the pleadings nor

Defendants offer any reason for the Court to abstain from deciding

the § 1983 claims. Accordingly, to the extent that Defendants ask

the Court to abstain from deciding these claims, their request is

denied.

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of the United States Constitution. The Court understands

Plaintiffs to allege that Defendants’ mismanagement violated their

rights to substantive and procedural due process and equal

protection. As explained below, Plaintiffs fail to state § 1983

claims for violations of these rights. The Court therefore

dismisses these claims with leave to amend.6

A. Substantive Due Process

“To state a substantive due process claim, the plaintiff must

show as a threshold matter that a state actor deprived it of a

constitutionally protected life, liberty or property interest.” 

Shanks v. Dressel, 540 F.3d 1082, 1087 (9th Cir. 2008) (citing

Action Apartment Ass’n, Inc. v. Santa Monica Rent Control Bd., 509

F.3d 1020, 1026 (9th Cir. 2007)). If this element is met, “the

‘irreducible minimum’ of a substantive due process claim

challenging land use action is failure to advance any legitimate

governmental purpose.” Shanks, 540 F.3d at 1088 (quoting North

Pacifica LLC v. City of Pacifica, 526 F.3d 478, 484 (9th Cir.

2008)). To show that executive action is “arbitrary in the

constitutional sense,” a plaintiff must demonstrate “an abuse of

power lacking any reasonable justification in the service of a

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7 To the extent that Plaintiffs complain that Defendants’

enactment of Ordinance 320-08 violated their substantive due

process rights, their § 1983 claim fails for the reasons stated

above. 

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legitimate governmental objective.” Shanks, 540 F.3d at 1088

(quoting County of Sacramento v. Lewis, 523 U.S. 833, 846 (1998)).

Plaintiffs have not identified action taken by Defendants in

managing the BMR Program that deprives them of a property interest. 

Plaintiffs make conclusory allegations that Defendants’ actions

have been arbitrary, but they do not point to any specific

conduct.7 Even if Plaintiffs identified conduct, they would need

to meet the “excessively high burden” to establish that Defendants

acted arbitrarily. Shanks, 540 F.3d at 1088 (citing Matsuda v.

City & County of Honolulu, 512 F.3d 1148, 1156 (9th Cir. 2008)). 

Plaintiffs’ unadorned allegations of poor administration and gross

mismanagement do not satisfy this standard. If Plaintiffs intend

to seek liability based on Defendants’ alleged negligence in

administering the BMR Program, their claims would fail. Section

1983 liability cannot be predicated on a state actor’s mere

negligence. See Lewis, 523 U.S. at 849 (stating that “liability

for negligently inflicted harm is categorically beneath the

threshold of constitutional due process”) (citing Daniels v.

Williams, 474 U.S. 327, 327 (1986)).

Accordingly, the Court dismisses Plaintiffs’ § 1983

substantive due process claims with leave to amend. Plaintiffs

must plead, with factual support, action by Defendants, other than

enactment of Ordinance 320-08, that deprived them of a

constitutionally protected property interest and that the action

complained of was not taken in pursuit of a legitimate governmental

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objective. 

B. Procedural Due Process

“To obtain relief on a procedural due process claim, the

plaintiff must establish the existence of ‘(1) a liberty or

property interest protected by the Constitution; (2) a deprivation

of the interest by the government; and (3) lack of process.’” 

Shanks, 540 F.3d at 1090 (quoting Portman v. County of Santa Clara,

995 F.2d 898, 904 (9th Cir. 1993)) (editing marks omitted). 

Plaintiffs do not plead how Defendants’ alleged mismanagement

of the BMR Program deprived them of a cognizable property interest. 

Further, Plaintiffs appear to allege that Defendants acted

negligently; this allegation does not support a procedural due

process claim. See Davidson v. Cannon, 474 U.S. 344, 348 (1986)

(stating that the protections of procedural due process are not

triggered by lack of due care). 

Even if Plaintiffs alleged that Defendants intended to deprive

Plaintiffs of a property interest without due process, still more

is required. Generally, “due process of law requires notice and an

opportunity for some kind of hearing prior to the deprivation of a

significant property interest.” Halverson, 42 F.3d at 1260

(citation and editing marks omitted). Even if a pre-deprivation

hearing is not offered, in some cases, if a “meaningful

post-deprivation remedy exists for an alleged deprivation of

property, then that post-deprivation remedy is sufficient to

satisfy the requirements of due process.” Sorrels v. McKee, 290

F.3d 965, 972 (9th Cir. 2002) (citation omitted); see also Kildare

v. Saenz, 325 F.3d 1078, 1085 (9th Cir. 2003) (“A procedural due

process violation under § 1983 is not complete ‘when the

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deprivation occurs; it is not complete unless and until the State

fails to provide due process.’”) (quoting Zinermon v. Burch, 494

U.S. 113, 125-26 (1990)). Plaintiffs do not allege that they were

not provided sufficient notice of some action Defendants planned to

take or that they were deprived of the right to be heard before or

after such an action was taken. 

Accordingly, the Court dismisses with leave to amend

Plaintiffs’ § 1983 claim that Defendants have violated their

procedural due process rights by mismanaging the BMR Program. 

C. Equal Protection

Plaintiffs do not allege that they are members of a suspect

class or that Defendants are burdening a fundamental right. Thus,

if Defendants treat Plaintiffs differently from similarly situated

individuals, Defendants’ conduct would survive constitutional

scrutiny if it “bears some fair relationship to a legitimate public

purpose.” Hoffman v. United States, 767 F.2d 1431, 1436 (9th Cir.

1985) (citation omitted). 

Plaintiffs have not adequately plead that Defendants acted

unlawfully. They provide an insufficient, conclusory allegation

that the MOH somehow alters the BMR Program “without regard to

whether any or all of the individuals in this class of BMR owners

is treated equally under the law.” FAC ¶ 15. Plaintiffs also

allege that Defendants have implemented Ordinance 320-08 in such a

convoluted manner that BMR owners must be warned to retain legal

counsel before making decisions concerning their property. 

Plaintiffs contend that this “denies equal protection of the law to

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8 If Plaintiffs intend to suggest that Defendants deny equal

protection to persons who lack financial resources, this would not

elevate the Court’s scrutiny of Defendants’ actions. See NAACP v.

Jones, 131 F.3d 1317, 1321 (9th Cir. 1997) (“Wealth is not a

suspect category in Equal Protection jurisprudence.”) (citing

Harris v. McRae, 448 U.S. 297, 322-23 (1980)).

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those unable to afford legal counsel . . . .”8 FAC ¶ 18. However,

Plaintiffs do not plead any facts to describe the irrationality of

Defendants’ implementation procedures. 

Accordingly, the Court dismisses with leave to amend

Plaintiffs’ § 1983 equal protection claim based on Defendants’

mismanagement of the BMR Program. Plaintiffs must provide factual

allegations of Defendants’ alleged misconduct. Unless Plaintiffs

aver that they are part of a class warranting heightened scrutiny

or that Defendants are burdening a fundamental right, Plaintiffs

must plead how Defendants’ actions do not rationally relate to a

legitimate governmental interest. 

D. Statute of Limitations

Defendants argue that Plaintiffs’ § 1983 claims are timebarred. The statute of limitations for § 1983 claims borrows from

the most analogous state statute of limitations; in California, the

personal injury statute of limitations of two years applies. The

Comm. Concerning Cmty. Improvement v. City of Modesto, 583 F.3d

690, 701 n.3 (9th Cir. 2009). 

Plaintiffs do not plead specific dates on which Defendants’

actions caused them harm, but assert that their injury is ongoing. 

Thus, as Defendants concede, the statute of limitations does not

bar Plaintiffs’ claims to the extent that they complain of conduct

that occurred after May 13, 2007, two years before the date that

Plaintiffs filed their action. Accordingly, if Plaintiffs amend

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their § 1983 claims, they may complain of conduct that took place

after May 13, 2007. 

V. Preemption by Costa-Hawkins Rental Housing Act

Plaintiffs allege that the Costa-Hawkins Rental Housing Act,

Cal. Civ. Code §§ 1954.50-1954.535, preempts Ordinance 320-08. In

particular, they state, “Said Ordinance purports to set aside

and/or restrict the rental of units which are separately alienable

and or constitute a subdivided interest and/or control the rental

prices of said units or interests, in direct violation of CostaHawkins, to wit, in violation of Civil Code section

1954.52(a)(3)(A).” FAC ¶ 40.

Plaintiffs are correct that the Court can exercise

supplemental jurisdiction over their state law preemption claim. 

See generally 28 U.S.C. § 1367. However, the exercise of such

jurisdiction is discretionary. See 28 U.S.C. § 1367(c). 

In Ventura Mobilehome Community Owners Association, the

plaintiff argued that a section of California’s Civil Code

preempted a municipal ordinance governing rent control. 371 F.3d

at 1055. The district court dismissed the plaintiff’s federal

claims. Id. Pursuant to its supplemental jurisdiction, the

district court dismissed the plaintiff’s preemption claim with

prejudice. Id. The Ninth Circuit concluded that the lower court

erred by retaining supplemental jurisdiction over the preemption

claim, stating, “Given the ‘important, unsettled, and policy-laden

issues of California law’ involved, ‘the appropriate forum for

addressing the state law claims is clearly the state court.’” Id.

(quoting Holly D. v. Cal. Inst. of Tech., 339 F.3d 1158, 1181 n.28

(9th Cir. 2003)). 

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Because Plaintiffs’ challenges to Ordinance 320-08 either fail

as a matter of law or are not ripe for review, the Court declines

to exercise jurisdiction over their preemption claim. Defendants

assert, and Plaintiffs do not dispute, that the Costa-Hawkins

preemption claim against Ordinance 320-08 and the BMR Program is

novel. As noted above, Plaintiffs must assert their takings claims

before a California court. In litigating those claims, Plaintiffs

may ask the state court to invalidate Ordinance 320-08 based on

preemption by Costa-Hawkins. 

VI. Declaratory Relief

Plaintiffs seek a declaration that the manner in which

Defendants administer the BMR Program violates their constitutional

rights. However, as noted above, they do not adequately state

§ 1983 claims against Defendants. Accordingly, because they fail

to establish a case or controversy warranting declaratory relief,

this claim is dismissed with leave to amend. 

VII. Appointment of a Receiver and Injunctive Relief 

In their FAC, Plaintiffs appear to ask the Court to appoint a

receiver for the MOH and to enjoin enforcement of the BMR Program

for the pendency of their action. They maintain that a receiver is

required “for the purpose of preserving the property and/or rights

of plaintiffs.” FAC ¶ 46; see also Cal. Code of Civ. Proc.

§ 564(b)(9) (providing that a receiver may be necessary in “all

other cases where necessary to preserve the property or rights of

any party”). If Plaintiffs seek such preliminary relief, they must

make their request through a noticed motion, not through their FAC.

Plaintiffs style these requests as causes of action, even

though they are forms of relief for their substantive claims. 

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Thus, these “claims” are construed as requests for relief based on

Plaintiffs’ § 1983 claims. Because the Court dismisses Plaintiffs’

§ 1983 claims with leave to amend, their requests for an

appointment of a receiver and for injunctive relief are likewise

dismissed. 

CONCLUSION

For the foregoing reasons, the Court GRANTS in part

Defendants’ Motion for Judgment on the Pleadings. (Docket No. 18.) 

Plaintiffs’ takings claims addressed to Ordinance 320-08 are

dismissed without prejudice to refiling in state court. 

Plaintiffs’ facial equal protection and due process challenges to

Ordinance 320-08 fail as a matter of law; their as-applied equal

protection and due process challenges to Ordinance 320-08 are not

ripe for review. The Court declines to exercise supplemental

jurisdiction over Plaintiffs’ claim that the Costa-Hawkins Act

preempts Ordinance 320-08. The Court DENIES Defendants’

alternative motion for the Court to abstain from deciding

Plaintiffs’ federal claims.

Plaintiffs’ § 1983 claims addressed to the mismanagement of

the BMR Program are dismissed with leave to amend to cure the

deficiencies noted above. Plaintiffs may file an amended complaint

within fourteen days from the date of this order. If Plaintiffs do

so, Defendants may file a motion to dismiss three weeks thereafter,

with Plaintiffs’ opposition due two weeks following and Defendants’

reply due one week after that. Alternatively, Plaintiffs may

assert their § 1983 claims against Defendants in state court, along

with their takings claims and challenges to Ordinance 320-08. If

Plaintiffs do not file an amended complaint as allowed in this

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Order, their § 1983 claims will be dismissed without prejudice. If

the case has not been dismissed, a case management conference will

be held on July 6, 2010 at 2:00 p.m. 

IT IS SO ORDERED.

Dated: April 16, 2010 

CLAUDIA WILKEN

United States District Judge

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