Filed 6/15/20

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

AIDS HEALTHCARE 

FOUNDATION,

Plaintiff and Appellant,

v.

CITY OF LOS ANGELES et al.,

Defendants and Respondents;

CH PALLADIUM, LLC et al.,

Real Parties in Interest and 

Respondents.

B303308

Los Angeles County

Super. Ct. No.

19STCP03387

APPEAL from a judgment of dismissal of the Superior 

Court of Los Angeles County, Robert S. Draper, Judge. Affirmed.

AIDS Healthcare Foundation, Thomas A. Myers, Arti L. 

Bhimani, Liza M. Brereton; Strumwasser & Woocher and 

Beverly Grossman Palmer for Plaintiff and Appellant.

Office of the Los Angeles City Attorney, Michael N. Feuer, 

Terry Kaufmann-Macias, John W. Fox, Jennifer Tobkin, 

Kathryn Phelan, Kabir Chopra, Craig Takenaka, Mei-Mei Cheng, 

Elaine Zhong; Burke, Williams & Sorensen, Charles E. 

Slyngstad, Nicholas J. Muscolino; Best, Best & Krieger and 
2

Christi Hogin for Defendants and Respondents City of 

Los Angeles and the Los Angeles City Council.

Latham & Watkins, James L. Arnone and Benjamin 

J. Hanelin for Real Parties in Interest and Respondents 

CH Palladium, LLC, CH Palladium Holdings, LLC and 

5929 Sunset (Hollywood), LLC.

DLA Piper, A. Catherine Norian, Kyndra Joy Casper, 

Andrew Brady and Karen L. Hallock for Real Party in Interest 

and Respondent CRE-HAR Crossroads SPV, LLC.

Glaser Weil Fink Howard Avchen & Shapiro, Patricia L. 

Glaser, Joel Klevens and Alexander J. Suarez for Real Party 

in Interest and Respondent 6400 Sunset, LLC.

_________________________

INTRODUCTION

This appeal concerns four separate multi-use development 

projects within a one-mile radius along Sunset Boulevard in 

Hollywood. After filing unsuccessful petitions for writ of 

mandate challenging the approval of two of the projects under 

various land use laws,

1 appellant AIDS Healthcare Foundation

(AHF) sued the City of Los Angeles and the Los Angeles City 

Council (collectively, City) for violating the federal Fair Housing 

Act (the FHA) and the state Fair Employment and Housing Act 

(FEHA) based on a disparate-impact theory of liability. AHF now 

alleges the City’s approval of the four “upscale” developments will 

cause housing prices in the area to rise and disproportionately 

1 AHF filed separate petitions for writ of mandate to 

challenge the projects under CEQA, the Los Angeles City Charter

and Municipal Code, and other zoning and land use laws. Final

judgments have been entered against AHF on two of its 

challenges and its other two petitions await trial.
3

displace Black and Latino residents who no longer will be able to 

afford to live there.

The City and Real Parties in Interest—the projects’ owners 

and developers—separately demurred to AHF’s complaint. The 

trial court sustained the demurrers without leave to amend after

finding AHF failed to state a cause of action for violation of the 

FHA or FEHA, the statute of limitations barred the complaint

as to three of the projects, and the doctrine of res judicata and 

prohibition against basing two lawsuits on a single cause of 

action precluded the action.

We conclude the trial court correctly found AHF cannot 

assert a cause of action under the FHA and FEHA based on 

its alleged disparate-impact theory of liability and affirm the 

judgment on that basis alone.

FACTS AND PROCEDURAL BACKGROUND

Consistent with the applicable standard of review, we draw 

our statement of facts from the allegations in the complaint and 

matters properly subject to judicial notice.2 (Blank v. Kirwan

2 The trial court properly took judicial notice of several court 

documents and City records. Our summary includes facts stated 

in those documents. On appeal, Real Parties in Interest 5929 

Sunset (Hollywood), LLC and CRE-HAR Crossroads SPV, LLC

filed a joint motion requesting we take judicial notice of court 

records from the related petitions for writ of mandate AHF 

and others filed against them. AHF did not oppose the motion. 

We now grant the joint motion and take judicial notice of the 

identified documents. (See Evid. Code, § 452, subd. (d) [“Judicial 

notice may be taken of . . . [r]ecords of [ ] any court of this state.”];

§ 453 [court “shall” take judicial notice of a matter specified in 

Evidence Code section 452 on request of a party if the party 

provides notice to the adverse party and provides the court with 

“sufficient information to enable it to take judicial notice of the 

matter”].)
4

(1985) 39 Cal.3d 311, 318; Landmark Screens, LLC v. Morgan, 

Lewis & Bockius, LLP (2010) 183 Cal.App.4th 238, 240.) 

We treat as true “ ‘all material facts properly pleaded, but not 

contentions, deductions or conclusions of fact or law.’ ” (Blank, 

at p. 318.)

1. AHF

AHF is a nonprofit organization based in Los Angeles that 

provides medicine and advocacy to over 1,250,00 people in 43 

countries. Many of AHF’s clients are at risk of homelessness 

and are in extremely low to moderate income households. AHF’s

“Housing is a Human Right” project advocates for housing 

policies that reduce homelessness, protect racial minorities, and 

avoid or reduce gentrification. AHF also provides affordable 

housing to lower-income people in the Los Angeles area through 

its Healthy Housing Foundation.

2. The Real Parties in Interest

The Real Parties in Interest (real parties) are four

unrelated real estate developers that each applied for and 

secured entitlements from the City to develop four different

mixed-use development projects along Sunset Boulevard in 

an area of Hollywood known as the “Hollywood Center.” The 

projects are known as: the Palladium project, the Sunset Gordon 

project, the Crossroads project, and the 6400 Sunset project 

(collectively, the Projects).

3

3 The Palladium project belongs to real parties CH 

Palladium, LLC and CH Palladium Holdings, LLC (Palladium);

the Sunset Gordon project belongs to real party 5929 Sunset 

(Hollywood), LLC (Sunset Gordon); the Crossroads project 

belongs to real party CRE-HAR Crossroads SPV, LLC

(Crossroads); and the 6400 Sunset Project belongs to real party 

6400 Sunset, LLC (6400 Sunset).
5

a. The Palladium Project

The Palladium project is a 28-story, 927,354 square foot 

development consisting of an 86-foot high, 800,000 square foot 

parking “podium” and a pair of “luxury residential towers” with 

731 condominium units and 24,000 square feet of restaurant/bar 

and retail space. The proposed site is on two surface lots located 

alongside and behind the Hollywood Palladium music and 

entertainment building. The project will restore the Palladium 

building and also include 33,800 square feet of landscaped public 

courtyards. Ninety-five percent of the dwelling units will be sold 

or rented at market rate and five percent (about 37) of the units 

will be reserved for “ ‘households earning between 50 and 120 

percent of the area’s median income.’ ”

The City approved the project on March 22, 2016 after 

holding public hearings. In April 2016, AHF filed a petition for 

writ of mandate challenging the Palladium project’s approvals.

The trial court entered judgment on the pleadings on some of 

AHF’s claims and separately denied AHF’s petition on the 

remaining causes of action. On August 29, 2019, the Court of 

Appeal affirmed the trial court’s judgment, and the Supreme 

Court denied AHF’s petition for review on November 13, 2019.

b. The Sunset Gordon Project

The Sunset Gordon project is a 22-story, 324,693 square 

foot mixed-use development on about 1.65 acres. It includes

a four-story parking podium, a luxury residential tower with 

299 apartments, 46,100 square feet of restaurant/bar, retail, 

and office space, and a 18,962 square foot public park. Of the 

299 apartments, five percent (15 units) are set aside for very 

low income residents, and five percent (15 units) are set aside for 
6

workforce housing.

4 The remaining apartments are market rate 

units.

Sunset Gordon purchased the property in 2011 after the 

original developer and owner went bankrupt. In 2015, it applied 

to the City to re-entitle the project. After holding public 

hearings, the City approved the Sunset Gordon project on 

December 12, 2018.

On January 15, 2019, Coalition to Preserve L.A. filed 

a petition for writ of mandate challenging the Sunset Gordon 

project. AHF joined the lawsuit as a petitioner in an amended 

petition alleging additional causes of action.5 On December 13, 

2019, the trial court denied the petition as to the original six 

causes of action brought by Coalition to Preserve L.A. Trial 

on the causes of action added by the amended petition is yet to 

be conducted.

c. The Crossroads Project

The Crossroads Project is a 1,381,000 square foot 

mixed-use development on about 8.34 acres at the edge of the 

Crossroads of the World complex. It consists of a 26-story hotel, 

an eight-story parking podium, 95,000 square feet of office space, 

and 190,000 square feet of restaurant/bar, retail, and commercial

space. It includes 18 proposed restaurants, a supermarket, 

a 30,000 square foot movie theater, a private gym, publicly 

4 Although not alleged in the complaint, according to the 

City’s Notice of Determination for the Sunset Gordon project, 

of which the court took judicial notice, the project also included 

15 moderate income units.

5 On October 15, 2019, the trial court granted Coalition to 

Preserve L.A.’s motion for leave to add AHF as a petitioner and 

to file the amended petition. The amended petition was not filed 

until December 17, 2019, however.
7

accessible courtyards, and a “pedestrian paseo” for outdoor 

events.

The project also includes 950 dwelling units: 89 percent

(845) are market-rate units and 11 percent (105) are reserved 

for very low income residents. The project will demolish an

apartment building with 84 units of existing rent-stabilized 

housing. Forty units are to be reserved for former tenants of 

the demolished apartments who qualify as very low income 

households.

In November 2016, Governor Brown certified the 

Crossroads project as an Environmental Leadership Development 

Project (ELDP) under the Jobs and Economic Improvement Act 

of 2011, Public Resources Code section 21178 et seq. The City 

approved the project on January 22, 2019.

On February 19, 2019, AHF and another entity filed a 

petition for writ of mandate challenging the City’s approval of 

the Crossroads project.

6 The trial court denied the petition. 

On July 26, 2019, the Court of Appeal dismissed AHF’s appeal 

as untimely. The Supreme Court denied AHF’s petition for

review on October 16, 2019.

d. The 6400 Sunset Project

The 6400 Sunset project is a 26-story, 231,836 square foot 

development with a six-story parking podium, a luxury 

residential tower with 200 dwelling units, and 7,000 square feet 

of restaurant/bar and retail space. The development is proposed 

on a lot “looming over the historic ArcLight Cinerama Dome.” 

Ninety-five percent of the project’s dwelling units (190) will 

be sold or rented at market rates and five percent of the units

6 Crossroads filed a notice of related case in this action. The 

trial court granted it and found the earlier petition was the lead 

case.
8

(10) will be set aside for very low income residents. The City 

approved the project on June 25, 2019.

On July 22, 2019, AHF and Coalition to Preserve L.A. filed 

a petition for writ of mandate challenging the City’s approval 

of the 6400 Sunset project. The trial has not yet taken place.

3. Hollywood Center

a. The Hollywood Community Plan

In 1988, the City Council of the City of Los Angeles adopted 

the Hollywood Community Plan “to provide an official guide to 

the future development of the Community.” The Community 

Plan describes the Hollywood Center as the “focal point of the 

Community,” and states it “shall function . . . as the commercial 

center for Hollywood and surrounding communities . . . and as 

an entertainment center for the entire region.” The Community 

Plan provides that “[f]uture development [in the Hollywood 

Center] should be compatible with existing commercial 

development, surrounding residential neighborhoods, and 

the transportation and circulation system.” It “especially 

encourage[s]” “[d]evelopments combining residential and 

commercial uses” in this area.

The Community Plan was implemented “to promote an 

arrangement of land use, circulation, and services which will 

encourage and contribute to the economic, social and physical 

health, safety, welfare, and convenience of the Community . . .; 

guide the development, betterment, and change of the 

Community to meet existing and anticipated needs and 

conditions; balance growth and stability; reflect economic 

potentials and limits, land development and other trends; 

and protect investment to the extent reasonable and feasible.” 

Its objectives include to (1) “coordinate the development of 

Hollywood with that of other parts of the City,” including, 

“the development of Hollywood as a major center of population, 
9

employment, retail services, and entertainment”; (2) “designate 

lands at appropriate locations for the various private uses and 

public facilities in the quantities and at densities required to 

accommodate population and activities”; (3) “make provision for 

the housing required to satisfy the varying needs and desires of 

all economic segments of the Community”; (4) “promote economic 

wellbeing and public convenience through: [¶] (a) allocating and 

distributing commercial lands for retail, service, and office space 

in quantities and patterns based on accepted planning principles 

and standards.”

The City found each Project is “consistent with and/or

will help to implement one or more of the” Community Plan’s

objectives and goals. The City also found the Projects “to be 

consistent with the goals, objectives, and policies of the General 

Plan Framework,” including its objective to “[r]einforce existing 

and encourage the development of new regional centers that 

accommodate a broad range of uses that serve, provide job 

opportunities, and are accessible to the region, are compatible 

with adjacent land uses, and are developed to enhance urban 

lifestyles.” The Projects are located in an area designated as 

a “Regional Center.”

For example, the City found the Palladium project

consistent with the above goals and objectives because it 

“would enliven the Hollywood Center area by contributing 

to the Regional Center’s identity through the replacement 

of surface parking with the provision of new housing and 

commercial uses in a high quality development that reinforces 

the iconic character of Sunset Boulevard, thereby enhancing 

the existing concentration of housing and amenities that serve 

nearby residents, the City, and which caters to tourists.”
10

Together, the four Projects will net 2,096 new housing units

with 182 of those units reserved for very low, low, and moderateincome households.

b. Gentrification/Demographics7

In 2015, the City was awarded a grant to create a team “to 

study gentrification8 from a data-driven perspective.” According 

to the City Manager at the time, the City’s goal was “ ‘to take 

advantage of something that’s clearly positive: neighborhoods

seeing more private investment—and [to] ensure the current 

residents and businesses in those neighborhoods enjoy the 

benefits.’ ” (Emphasis omitted.) The team created “two tools 

to evaluate the potential for displacement and neighborhood 

change”: the “ ‘Los Angeles Index of Displacement Pressure’ ” 

and the “ ‘Los Angeles Index of Neighborhood Change.’ ”9

According to those indices, which take into account several 

metrics, the neighborhoods in and around the Projects’ sites 

have had “high levels of change” from 2000 to 2014, reflecting 

“the fact that gentrification in this area has begun, and will 

be exacerbated by the Projects.” Based on the City’s Index of 

7 The complaint spends several paragraphs describing the 

factors of gentrification and causes of displacement, and their 

effects, as stated by various academic studies and analyses. 

We do not repeat those studies here.

8 The complaint defines “gentrification” as “ ‘a 

simultaneously spatial and social practice that results in “the 

transformation of a working-class or vacant area of the central 

city into middle-class residential or commercial use” – meaning 

the influx of both capital (real estate investment) and highincome or – educated residents.’ ”

9 Displacement, according to the complaint, occurs “ ‘when 

households are forced to move out of their neighborhood.’ ”
11

Displacement Pressure, the area surrounding the Projects 

has a “ ‘Very High’ rate of displacement pressure,” making 

the “residents in the area around the Project[s] at ‘risk’ of 

displacement.”

In the part of Hollywood where the Projects are located, 

32 percent of residents are Hispanic or Latino, 12 percent are 

Asian, and 6 percent are Black or African American. Twenty-one 

percent of the Latino population in the area live below the 

poverty rate. The median household income for Latino residents 

is $44,492, less than the county-wide median of $57,952, and the 

per capita income for Latino residents is $17,241 versus $30,798 

county-wide.10 “Over two-thirds of Latino households are 

classified by the Department of Housing and Urban Development 

as ‘low income’ (income at 80% or below of the County median 

income), and 44% as ‘very low income’ (at or below 50% of County 

median).” About “half of all Latino renter households are rentburdened, spending over 30 percent of their household income on 

rent.” The “significant” disparity “between non-Hispanic whites 

and Latino per capita income . . . show[s] that Latino residents 

will more likely be impacted and displaced by the Projects.”

“The approvals of the Projects involve at least three of 

the [four] factors that lead to gentrification and displacement: 

they add amenities in the form of improved retail and restaurant 

facilities in a more attractive shopping center; they add 

productivity by providing office space and additional jobs in the 

hotel and retail/restaurant facilities; and they provide access 

throughout the LA area through the nearby Metro stations. . . .

Even though the amenities and productivity may benefit the 

10 AHF drew its statistics from the U.S. Census Bureau’s 

American Community Survey Public Use Microdata Area for 

the Projects’ location within the 90028 zip code.
12

area, without appropriate mitigation, these features are likely 

to result in displacement of the current local community.”

Based on, among other things, the area’s “ ‘Very High’ ” risk of 

displacement, “the amenities and productivity that the Project[s] 

will bring to the area which are shown to cause gentrificationrelated displacement, and the already rent-burdened status of 

the Black and Latino population, the Projects are likely to have a 

disparate impact on Black and Latino residents by increasing the 

likelihood that these residents will be displaced from the homes 

in which they currently reside.”

4. The complaint

AHF filed its complaint against the City and City Council

on August 8, 2019, alleging two causes of action: (1) violation 

of the FHA, 42 U.S.C. § 3601 et seq., and HUD regulations, 

24 C.F.R. § 100.1 et seq. (2020); and (2) violation of FEHA, 

Gov. Code, § 12955 et seq. The complaint challenges the 

City’s decisions to permit construction of the Projects “without 

providing adequate measures to ensure that the Projects would 

not displace protected minorities, as required by the [FHA] and 

[FEHA].” AHF alleges the City approved the Projects “without 

including measures that will address the displacement of Black 

and Latino residents, such as requiring sufficient affordable 

housing be included in the Projects, or by requiring the provision 

of other permanent affordable housing elsewhere near the 

Project[s].”

In support of its FHA claim, AHF alleges the “approval 

of the Projects and the terms of their respective Conditions 

of Approval constitute policies of the City . . .” which will 

disparately impact Black and Latino residents through “the 

gentrification of the surrounding community by the construction 

of a large number of residential housing units that are 

unaffordable to the vast majority of current Black and Latino 
13

residents of the surrounding neighborhood.” AHF alleges the 

City’s determinations about what community benefits should 

be included in the development agreements for the Projects 

are “policy determination[s] made by the City in agreeing to 

the terms of each” project’s development agreement, rendering 

“the approval of the Projects . . . a facially-neutral policy under 

the FHA.”

The complaint asserts the City made findings that the 

Projects were consistent with previously adopted City policies, 

including the Hollywood Community Plan, the General Plan 

Amendment, and the Community Redevelopment Area for 

the Hollywood Redevelopment Area. AHF alleges those listed 

policies “cause the disparate impacts identified in th[e] 

Complaint because [they] encourage development that, like 

the Projects, has the effect of displacing lower income Black 

and Latino residents by providing amenities like ‘high quality’ 

restaurants, retail, and entertainment options that make the 

neighborhood more attractive to higher income residents, while 

only providing housing that is unaffordable to the vast majority 

of the current Black and Latino residents. The Projects’ 

operation will lead to rising rents and increase the likelihood 

that current residents will be displaced from their homes in the 

neighborhoods around the Projects without housing affordable 

to these residents within the Projects themselves.” Because 

the approval of the Projects “has an unjustified discriminatory 

effect on members of minority communities” and “perpetuates 

segregated housing patterns because of race, color, or national 

origin,” the approval of the Projects “violates the FHA as 

implemented through the HUD Regulations.” AHF makes 

similar allegations in support of its FEHA cause of action.
14

AHF asks the court to void the City’s “approvals”

11 of the 

four projects and enjoin the City and Real Parties from “taking 

any action to implement the Projects” or to construct them “until 

such time as the City Council has issued approvals without a 

discriminatory effect as required by the FHA and FEHA, which 

approvals include measures that adequate [sic] mitigate for 

the future displacement of Black and Latino residents.”

5. The demurrers and judgment

The City and real parties filed separate demurrers to 

the complaint. The Crossroads real party also filed a separate 

motion for an order confirming the case is subject to California 

Rules of Court, rules 3.2220 et seq. and 8.700 et seq., that govern

ELDP litigation (ELDP rules).

The trial court heard oral argument on November 15, 2019. 

After hearing argument, the court sustained the demurrers 

without leave to amend and filed its final written ruling that 

same day. The court found the complaint failed to state a cause 

of action against the City or the real parties under the FHA and 

FEHA. The court also concluded AHF’s causes of actions as to 

the Crossroads, Palladium, and Sunset Gordon projects were 

barred by the statute of limitations, and the case as it relates to 

all four Projects was barred on res judicata (or related) grounds.

Finally, the trial court granted Crossroads’ ELDP motion. On 

11 The “approvals” AHF challenges include “(a) an 

Environmental Impact Report [(EIR)] and various Errata[,] (b) a 

General Plan Amendment, (c) Zone and Height District Changes, 

(d) a Conditional Use for Alcohol, (e) a Finding of Convenience 

and Necessity for an Offsite Alcohol License, and Conditional 

Use Permits for on-site alcohol consumption, (f) a Zoning 

Administrator’s Interpretation specifying front, rear and side 

yards, (g) a Site Plan Review, and other associated entitlements.”
15

December 13, 2019, the trial court entered judgment in favor 

of the City and real parties.

AHF appealed within the time prescribed by the ELDP 

rules. Palladium, Sunset Gordon, and Crossroads filed a joint 

respondents’ brief and joined in the City’s respondent’s brief. 

The City also joined in part of the joint respondents’ brief. 

6400 Sunset joined in the City’s respondent’s brief.

DISCUSSION

1. Standards of review

“On appeal from a judgment after a demurrer is sustained 

without leave to amend, we assume the truth of the properly 

pleaded factual allegations, facts that reasonably can be inferred 

from those expressly pleaded, and facts of which judicial notice 

can be taken.” (Syngenta Crop Protection, Inc. v. Helliker

(2006) 138 Cal.App.4th 1135, 1181.) “[W]e give the complaint 

a reasonable interpretation, and read it in context.” (Schifando 

v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 (Schifando).) 

“[W]e examine the complaint de novo to determine whether it 

alleges facts sufficient to state a cause of action under any legal 

theory.” (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 

415.) “If the complaint fails to plead, or if the defendant negates, 

any essential element of a particular cause of action, this court 

should affirm the sustaining of a demurrer.” (Consumer Cause, 

Inc. v. Arkopharma, Inc. (2003) 106 Cal.App.4th 824, 827.)

We also “must decide whether there is a reasonable 

possibility the plaintiff could cure the defect with an amendment. 

[Citation.] If we find that an amendment could cure the defect, 

we conclude that the trial court abused its discretion and we 

reverse; if not, no abuse of discretion has occurred. [Citation.]

The plaintiff has the burden of proving that an amendment 

would cure the defect. [Citation.]” (Schifando, supra, 31 Cal.4th 

at p. 1081.) 
16

2. The complaint fails to state a cause of action for 

violation of the FHA and FEHA as a matter of law

a. Disparate-impact theory of liability

The FHA makes it unlawful to “refuse to sell or rent . . . 

or otherwise make unavailable or deny, a dwelling to any person 

because of race, color, religion, sex, familial status, or national 

origin.” (42 U.S.C. § 3604(a).) “A dwelling can be made 

otherwise unavailable by, among other things, action that limits 

the availability of affordable housing.” (Mt. Holly Gardens 

Citizens in Action, Inc. v. Township of Mt. Holly (3d Cir. 2011) 

658 F.3d 375, 381 (Mt. Holly).) The statute was enacted to 

“eradicate discriminatory practices within [the housing] sector 

of our nation’s economy.” (Texas Dept. of Housing & Community 

Affairs v. Inclusive Communities Project, Inc. (2015) __ U.S. __, __

[135 S.Ct. 2507, 2521] (Inclusive Communities).)

AHF alleges a disparate-impact claim under both the FHA 

and FEHA.12 A disparate-impact claim challenges “practices 

that have a ‘disproportionately adverse effect on minorities’ and 

are otherwise unjustified by a legitimate rationale.” (Inclusive 

Communities, supra, 135 S.Ct. at p. 2513; 24 C.F.R. § 100.500(a)

(2020) [“A practice has a discriminatory effect where it actually 

or predictably results in a disparate impact on a group of persons 

or creates, increases, reinforces, or perpetuates segregated 

housing patterns because of race, color . . . or national origin.”].)

12 The Legislature sought to make FEHA substantially 

equivalent to the FHA and its amendments. (Sisemore v. 

Master Financial, Inc. (2007) 151 Cal.App.4th 1386, 1421, 1420.) 

“Accordingly, ‘[c]ourts often look to cases construing the FHA . . . 

when interpreting FEHA.’ ” (Id. at p. 1420.) We address, as the 

parties and trial court did, the two claims together and intend 

our references to the FHA also to cover FEHA.
17

Disparate-impact claims are cognizable under both the FHA and 

FEHA. (Inclusive Communities, at p. 2525; Sisemore, supra, 

151 Cal.App.4th at p. 1423.) Suits challenging “zoning laws 

and other housing restrictions that function unfairly to exclude 

minorities from certain neighborhoods without any sufficient 

justification. . . . reside at the heartland of disparate-impact 

liability.” (Inclusive Communities, at pp. 2521-2522.)

Although the Supreme Court in Inclusive Communities

recognized disparate-impact liability under the FHA, it cautioned

that the “FHA is not an instrument to force housing authorities 

to reorder their priorities. Rather, the FHA aims to ensure that 

those priorities can be achieved without arbitrarily creating 

discriminatory effects or perpetuating segregation.” (Inclusive 

Communities, supra, 135 S.Ct. at p. 2522.) The Court thus held 

“[g]overnmental or private policies are not contrary to the 

disparate-impact requirement unless they are ‘artificial, 

arbitrary, and unnecessary barriers.’ ” (Id. at pp. 2522, 2524.)

The Court also explained, “a disparate-impact claim that 

relies on a statistical disparity must fail if the plaintiff cannot 

point to a defendant’s policy or policies causing that disparity. 

A robust causality requirement ensures that ‘[r]acial imbalance 

. . . does not, without more, establish a prima facie case of 

disparate impact’ and thus protects defendants from being 

held liable for racial disparities they did not create.” (Inclusive 

Communities, supra, 135 S.Ct. at p. 2523.) The Supreme Court 

directed courts to “examine with care whether a plaintiff has 

made out a prima facie case of disparate impact . . . . A plaintiff 

who fails to allege facts at the pleading stage or produce 

statistical evidence demonstrating a causal connection cannot 

make out a prima facie case of disparate impact.” (Ibid.)

The Supreme Court emphasized these “limitations on 

disparate-impact liability . . . are also necessary to protect 
18

potential defendants against abusive disparate-impact claims.” 

(Inclusive Communities, supra, 135 S.Ct. at p. 2524.) Finally, 

the Court noted “[r]emedial orders in disparate-impact cases 

should concentrate on the elimination of the offending practice 

that ‘arbitrar[ily] . . . operate[s] invidiously to discriminate on 

the basis of rac[e].’ ” (Ibid.)

With these principles in mind, we consider AHF’s alleged 

theory of disparate-impact liability.

b. AHF has not alleged a policy that is an “artificial, 

arbitrary, and unnecessary barrier[ ]” to fair housing

AHF initially contends the complaint alleges the existence 

of a policy or practice, challenging the City’s argument that 

the alleged policy is too vague or constitutes the lack of a policy.

As articulated by AHF, “the City’s specific implementation of the 

Hollywood Community Plan and its approval of these four major 

projects constitutes various policies and decisions.” It contends 

the City approved the Projects after “numerous negotiations

[and] determinations,” including zoning waivers and the granting 

of conditional use permits, and imposing certain “conditions,” 

all of which constitute “policy decisions, made to implement 

the Hollywood Community Plan.”

We agree that AHF has sufficiently alleged the existence 

of a City policy or practice, at this early pleading stage. For 

example, in Mhany Management v. County of Nassau (2016) 

819 F.3d 581, 619 (Mhany), the Second Circuit concluded a City’s 

decision to rezone an area for single family dwellings rather than 

multi-family dwellings—that affected one piece of property—fell 

“within a classification of a ‘general policy,’ ” where the zoning 

change involved months of hearings and meetings, consideration 

of objections, and the passage of a local law. (See also Avenue 6E 

Investments, LLC v. City of Yuma (D.Ariz. Jan. 29, 2018, 2:09-cv00297 JWS) 2018 U.S. Dist. Lexis 14913 at *19-20 (Avenue 6E)
19

[finding a city was “setting policy” in an area by denying a 

rezoning request to allow for smaller lots; denial “involved 

hearings and discussions as to how neighboring developments 

in the area would be affected and also directly resulted in 

a change to the adjacent property’s zoning to ensure future 

development in that area was reserved for the largest lots”].)

The complaint makes similar express and implied 

allegations about the City’s approval of the Projects to revitalize 

the area. AHF alleges the approval process for the Projects was 

“lengthy,” and included debate “in public hearings and in written 

communications” about what “community benefits” should be 

included as part of the development agreements (presumably 

between the City and the Projects’ developers). AHF also alleges 

the City approved the Projects, including granting various land 

use entitlements, to “aid in the implementation” of the City’s 

existing land use policies, including the Hollywood Community 

Plan, the General Plan Amendment, and the Community 

Redevelopment Area for the Hollywood Redevelopment Area.

Accepting these allegations as true, the City’s approval of the 

Projects made in the context of implementing its land use plans

can be classified as a policy.

Whether the complaint alleges a policy that is an 

“ ‘artificial, arbitrary, and unnecessary barrier[ ]’ ” to fair 

housing is another matter. In essence AHF alleges the City’s 

implementation of its land use policy by approving “these four 

large, upscale, multiuse projects within a one-mile radius”—

without requiring measures to mitigate against the displacement 

of minority residents—creates a barrier to fair housing because 

the Projects will lead to gentrification and thereby drive rents up, 

disparately displacing Latino and Black residents who will be 

unable to afford the higher rents.
20

The City contends there is no barrier to housing for the 

court to remove because its approval of the Projects creates

housing—both market rate and income-restricted units.

13 We do 

not agree that the creation of housing alone is an absolute shield 

from disparate-impact liability. After all, in Mhany, the city’s 

decision to rezone an area for single-family dwellings—instead 

of multi-family housing—opened the door for the construction of

housing where none had existed due to the area’s former public 

zone designation. (Mhany, supra, 819 F.3d at pp. 589, 597-598.)

But there, the city’s shift from zoning for multi-family to singlefamily housing decreased the availability of affordable housing in 

the area, which disparately impacted minorities. (Id. at pp. 598, 

619-620.)

Nevertheless, as the City argues, its alleged discriminatory 

policy is missing a key feature of the policies examined in the 

cases relied on by AHF: the City’s approval of the Projects

neither prohibits the construction of affordable housing in 

the area nor physically removes affordable housing to make 

way for more expensive housing or other uses. 

AHF relies on Mhany, supra, 819 F.3d 581; Avenue 6E, 

supra, 2018 U.S. Dist. Lexis 14913; and Mt. Holly, supra, 658 

F.3d 375. In Mhany, the zoning decision prevented the building 

of multi-family dwellings thereby decreasing the availability 

of housing for minorities where affordable housing already was 

scarce. (Mhany, at pp. 588, 620.) The court of appeals thus 

affirmed the district court’s finding that the plaintiffs established 

a prima facie case of disparate-impact liability under the FHA. 

13 As alleged by AHF, the City’s approval of the Projects will 

result in a net increase of 2,096 residential units, at least 182 

of which will be income-restricted.
21

(Id. at p. 620.) In other words, the restriction on the development 

of multi-family housing created a barrier to fair housing.

Similarly, in Avenue 6E, the city’s denial of a developer’s 

request to rezone an area to allow for smaller lots prevented the 

building of affordable or moderately priced homes that allegedly 

“exclude[d] Hispanic homebuyers from [the] area.” (Avenue 6E, 

supra, 2018 U.S. Dist. Lexis 14913 at *3-5, 18, 24 [denying city’s 

motion for summary judgment on plaintiffs’ disparate-impact 

claim under the FHA].) Finally, in Mt. Holly, the Third Circuit 

reversed an order granting summary judgment on residents’ 

disparate-impact claim under the FHA where their township

implemented a redevelopment plan that “would eliminate

existing homes in [a neighborhood], occupied predominately by 

low-income residents, and replace them with significantly more 

expensive housing units.” The replacement housing was “well 

outside the range of affordability for a significant portion of the 

African-American and Hispanic residents.” (Mt. Holly, supra, at 

pp. 377, 379-380 [concluding district court misapplied standard 

to determine whether residents could establish a prima facie

disparate-impact case].)

In other words, in all of these cases the defendant’s 

policy affirmatively prevented the building of or removed 

affordable housing in areas where minority residents were 

disproportionately affected. The City’s approval of the Projects

here does not. AHF responds it has alleged a barrier to housing 

for a protected class because the Projects will (1) demolish 

existing “rent-controlled housing occupied by a significant 

number of minorities”; (2) create housing “disproportionately 

unavailable and unaffordable to a protected group”; and 

(3) “cause[ ] the disproportionate displacement of a protected 

group by making surrounding housing unaffordable (thus 

eliminating previously existing affordable housing).” Assuming 
22

the truth of these allegations, AHF has not alleged the City’s 

approval of the Projects—and its decisions and implementation 

of land use policies that went with it—is itself a barrier to fair 

housing as Inclusive Communities requires.

14

i. AHF has not alleged the City’s policy 

restricts affordable housing

First, AHF has not alleged the City has restricted the 

building of affordable housing in the area through zoning, 

an ordinance, or other land use decision, as part of its approval 

of the Projects. AHF does not allege, for example, that the City 

applied a zoning or other land use law effectively to preclude 

construction of affordable housing in the area, as in Mhany’s

restriction on multi-family dwellings or Avenue 6E’s lot-size 

restrictions. Moreover, in both Mhany and Avenue 6E, the 

cities were faced with development proposals requiring a less 

restrictive zoning designation to enable the construction of more 

affordable housing than the ultimate designations allowed. AHF 

does not suggest the City’s approval of the Projects prevented

a competing development from constructing affordable housing.

14 In discussing causation, AHF argues that, for purposes of 

establishing a prima facie case, the HUD regulations—left intact 

by Inclusive Communities—require it to allege only that the 

City’s policy “predictably will cause a discriminatory effect on 

a protected class.” (Citing 24 C.F.R. § 100.500(c)(1).) While we 

need not address the parties’ causation arguments, Inclusive 

Communities made clear “[g]overnmental . . . polices are not

contrary to the disparate-impact requirement unless they are 

‘artificial, arbitrary, and unnecessary barriers.’ ” (Inclusive 

Communities, supra, 135 S.Ct. at p. 2524, italics added.) 

Accordingly, as part of its prima facie case, AHF must plead 

the City’s policy itself is the barrier to fair housing.
23

Second, AHF has not alleged what actual restrictions

the City’s approval of the Projects places on access to affordable 

housing. Instead, under AHF’s gentrification theory, the 

City’s development policy has disproportionately limited the 

availability of housing to Latinos by “making surrounding 

housing unaffordable.” AHF theorizes the “upscale” Projects

will revitalize the area causing rents to rise as higher-earning 

residents are attracted to the developments. Latinos will be 

disproportionately displaced from the area as they no longer 

will be able to afford their current housing and cannot afford 

the new market rate housing the Projects will create.

Assuming the Projects will cause a rise in surrounding 

rents and disproportionately impact Latinos as AHF portends, 

AHF has not alleged the City’s implementation of its land use 

plan is the barrier to affordable housing. Rather, the anticipated 

barrier to affordable housing rests in the hands of private third 

parties. AHF alleges the possibility of private landowners raising 

rents as property values in the area increase when the Projects 

are built. Of course, landlords could raise rents—or not—due to 

other socio-economic forces, too. Nonetheless, the City’s land use 

decisions and policies associated with its approval of the Projects 

themselves do not impose higher rents, do not physically reduce 

the number of available affordable housing units, and do not 

preclude the development of affordable housing units. In the 

absence of the City placing actual restrictions on housing, we 

cannot conclude the City’s approval of the Projects is actionable 

under the FHA or FEHA based on the reduction of affordable 

housing units as a result of private actors’ anticipated increase 

of rents due to the revitalization of the area stemming from new 

development.

ii. The City’s approval of the Projects does

not eliminate housing
24

AHF alleges minorities disproportionately will be unable 

to afford most of the new housing the Projects will construct, 

but that new housing will not eliminate existing housing. 

The market rate housing the Projects will build does not replace 

existing, occupied housing: the Palladium project will be built 

on an empty parking lot; the Sunset Gordon project will re-open 

an already built tower that has sat vacant for about three years

with empty housing units; the Crossroads project creates new 

income-restricted units with a net increase in affordable housing;

and the 6400 Sunset project will be built on a lot with no current 

housing units. Accordingly, the new market rate units will not 

displace current residents who cannot afford them because they 

do not replace existing affordable units.

As AHF alleges, and the City does not dispute, the 

Crossroads project will result in the destruction of an existing 

rent-stabilized apartment building. The 84 rent-stabilized units 

slated for demolition, however, will be replaced with 105 units 

restricted for very-low income households.15 Rather than reduce

available affordable housing, the replacement of the existing 

building will increase the number of affordable housing units 

on that site. And, 40 of those new units will be reserved for 

former tenants of the demolished building. In stark contrast to 

Mt. Holly, the City’s policy does not remove existing affordable 

15 The City notes that units subject to its rent stabilization 

ordinance are not income restricted. (L.A. Mun. Code, ch. 15, 

§ 151.00 et seq.) The ordinance protects tenants from excessive 

rent increases, but allows “landlords to re-set rent to market 

rates in several circumstances, including, when units are 

voluntarily vacated.” (See, e.g., id., § 151.06(C)1.(a).) The new 

construction not only will add 21 affordable units to the area, but 

the 84 units replaced with income-restricted units arguably will 

be more affordable than they are now.
25

housing to make way for less affordable housing; thus it cannot 

be classified as a barrier to housing under the FHA.16

iii. AHF seeks to impose a new development 

policy on the City, rather than to

eliminate one

Finally, as we have noted, the “FHA is not an instrument 

to force housing authorities to reorder their priorities.” (Inclusive 

Communities, supra, 135 S.Ct. at p. 2522.) Here, the remedy 

AHF seeks—the halting of the Projects until the City initiates 

measures to mitigate the effects of gentrification—is precisely 

the type of remedy Inclusive Communities explained the FHA

was not intended to impose. AHF would have the court force 

the City to “reorder” its development priorities by requiring, 

16 Moreover, in the February 2019 Crossroads petition for 

writ of mandate, AHF litigated and lost its contention that the 

City did not sufficiently mitigate the loss of affordable housing 

from the demolition of the rent-stabilized building, and that the 

project failed to provide sufficient affordable housing. In denying 

the petition, the superior court found AHF’s “evidence of 

affordable housing shortages in the [Hollywood Redevelopment 

Area] is lacking.” The trial court concluded that, “even if 

Petitioners substantiated a severe affordable housing shortage,” 

the Community Development Law provisions relating to 

providing affordable housing as part of a redevelopment project 

“did not compel the City to condition the [Crossroads project’s] 

approvals on the inclusion of more affordable housing.” Rather, 

the statute in question, Health and Safety Code section 33413, 

requires the City to produce the required number of incomerestricted housing units anywhere within the Hollywood 

Redevelopment Area—not the Crossroads project’s site itself—

within the City’s discretion. And, because the redevelopment 

agency’s implementation plan does not expire until May 7, 2027, 

the City has another seven years to satisfy the requirement.
26

for example, additional affordable housing to be built within or 

near the Projects, as opposed to some other area. 

Rather, disparate-impact liability under the FHA should 

“solely ‘remov[e] . . . artificial, arbitrary, and unnecessary 

barriers.’ ” (Inclusive Communities, supra, 135 S.Ct. at p. 2524.) 

Eliminating the City’s alleged “offending” policy—its approval of 

the Projects—would not make affordable housing more available 

to minorities, however. As we have discussed, the Projects add 

affordable housing units to the area’s existing supply. Thus, 

declaring the City’s approval of the Projects void will serve only 

to reduce the number of existing income-restricted housing units, 

rather than provide greater access to affordable housing, as 

contemplated by the FHA.

No one disputes the existence of gentrification or its 

potential ill effects. But, in the absence of a policy that actually 

limits the availability of affordable housing, AHF’s remedy is 

to petition the City or the Legislature to enact laws or policies 

to counteract the future effects of gentrification. The FHA and 

FEHA, however, were designed not to impose land use policies 

on public and private actors, but rather to eliminate those policies 

that are barriers to fair housing. AHF has not alleged such 

a policy exists here.

Because we conclude the City’s approval of the Projects

is not actionable as a matter of law under the FHA or FEHA

on the ground it does not constitute a policy that is an artificial, 

arbitrary, or unnecessary barrier subject to disparate-impact 

liability, we need not consider the parties’ other arguments or the 

other grounds on which the trial court sustained the demurrers. 

Having affirmed the judgment, we also need not consider AHF’s

contention the trial court erred when it confirmed this action is 

subject to the ELDP rules.
27

3. The trial court did not abuse its discretion by denying 

AHF leave to amend

When a demurrer is sustained without leave to amend, 

the plaintiff bears the burden of proving there is a reasonable 

possibility of amendment. To satisfy that burden on appeal, a 

plaintiff “must show in what manner he can amend his complaint 

and how that amendment will change the legal effect of his 

pleading.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) 

The assertion of an abstract right to amend does not satisfy 

this burden. (McKelvey v. Boeing North American, Inc. (1999) 

74 Cal.App.4th 151, 161.) Further, the plaintiff must set forth 

factual allegations that sufficiently state all required elements 

of that cause of action. (McMartin v. Children's Institute 

International (1989) 212 Cal.App.3d 1393, 1408.) Allegations 

must be factual and specific, not vague or conclusory. (Cooper 

v. Equity Gen. Insurance Co. (1990) 219 Cal.App.3d 1252, 1263-

1264.)

Here, AHF has set forth vague or conclusory factual 

allegations to satisfy its burden of showing that there is a 

reasonable possibility that it can amend the legal effect of its 

complaint. For example, while it states it can plead more robust 

statistics regarding the disparate impact of displacement on 

Latinos, it offers no specific allegations to support the possibility 

of amendment and no legal authority showing the viability of 

new or amended causes of action.17 Indeed, in its reply brief, 

17 At oral argument AHF’s counsel suggested it could amend 

its complaint to plead additional facts to support the complaint’s

conclusory allegation that the City’s “approval of the Projects . . . 

perpetuates segregated housing patterns” in violation of the 

FHA. Arguably, some Latino residents in the area will be unable 

to afford the market rate units in the Projects’ new “upscale” 
28

AHF asks this court to “provide guidance” as to what additional 

evidence may be required under Inclusive Communities. Of 

course, the burden of showing that a reasonable possibility exists 

that amendment can cure the defects remains with the plaintiff; 

neither the trial court nor this court will rewrite a complaint. 

(Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 

1137, 1153.)

DISPOSITION

The judgment is affirmed. In the interests of justice, the 

parties are to bear their own costs on appeal.

CERTIFIED FOR PUBLICATION

EGERTON, J.

We concur:

LAVIN, Acting P. J. DHANIDINA, J.

buildings. But AHF has not said how the unaffordability of 

the new units perpetuates segregation in the area when currently

a disproportionate number of the residents are minorities. Put 

differently, AHF offers no specific facts explaining how making 

the area less segregated and more socioeconomically diverse 

violates the FHA or FEHA.