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Filed 1/30/15 Modified and Certified for Publication 2/26/15 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

CITY OF BERKELEY,

Plaintiff and Respondent,

v.

1080 DELAWARE, LLC,

Defendant and Appellant.

A142162

(Alameda County

Super. Ct. No. RG13672597)

Defendant 1080 Delaware, LLC (1080 Delaware), the owner of a mixed-use 

residential rental project in Berkeley, appeals from a judgment compelling it to comply 

with a condition in the use permit for the project requiring compliance with the 

inclusionary housing ordinance of the City of Berkeley (City). Defendant contends the 

City may not enforce the condition, included in the use permit obtained by former owners 

of the property, because the ordinance has subsequently been preempted by the CostaHawkins Rental Housing Act (Civ. Code, § 1954.50 et seq.; the Costa-Hawkins Act). 

Although the City does not dispute that its ordinance has now been preempted by the 

Costa-Hawkins Act, we agree with the City that it may nonetheless enforce the condition 

of the use permit, the validity of which was not challenged in the many years since the 

permit was issued. We shall therefore affirm the judgment.

Background

In July 2004, the City issued to Said Adeli-Nadjafi (Adeli) a use permit for the 

construction of a mixed-use building which currently has the address of 1080 Delaware 

Street, consisting of 51 residential rental units and ground floor commercial space. 
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Condition 10 of the use permit provides as follows: “Before submission for building 

permit, the applicant shall submit floor plans and schedules, acceptable to the Zoning 

Officer, showing the location of each inclusionary unit and the sales or rental prices. Said 

plans and schedules must adequately demonstrate that the unit types are reasonably 

dispersed throughout the project, are of the same size and contain, on average, the same 

number of bedrooms as the market-rate units and that the unit rent or sales price complies 

with Chapter 23C.12 of the Zoning Ordinance.”

Chapter 23C.12 of the Berkeley Municipal Code (Chapter 23C.12), first adopted 

in 1986, sets forth what is referred to as the “Inclusionary Housing Ordinance.” Chapter 

23C.12 was designed to comply with Government Code section 65580 et seq. requiring a 

general plan to contain a housing element stating how the local agency will accommodate 

its share of the regional need for affordable housing. The ordinance requires that 20 

percent of all newly constructed residential units be reserved for households with belowmedian incomes and rented at prices that are, under a prescribed formula, below market 

prices and affordable to such households. (Chapter 23C.12, § 23C.12.030.A.)1In 

Palmer/Sixth Street Properties, L.P. v. City of Los Angeles (2009) 175 Cal.App.4th 1396, 

1405-1406 (Palmer), the court held that a comparable ordinance adopted by the City of 

Los Angeles was preempted by the Costa-Hawkins Act, which was enacted in August

1995 and provides, generally, that residential landlords may “establish the initial rental 

rate for a dwelling or unit” (Civ. Code, § 1954.53, subd. (a)). The City of Berkeley 

acknowledges that under this decision, it is now precluded from conditioning the issuance 

of use permits on compliance with its Inclusionary Housing Ordinance.

Adeli (and his related company, Berkeley Delaware Court, LLC) did not complete 

construction of the Delaware Street project for more than seven years after obtaining the 

use permit. Adeli’s financial difficulties led to the filing of two bankruptcy petitions. 

Ultimately in 2011, First-Citizens Bank & Trust Company (First-Citizens), which had 

 

1 At least 50 percent of the affordable units shall be rented to households with federal 

Section 8 vouchers, under which the owner receives market rent. (Chapter 23C.12, 

§ 23C.12.060.C.)
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financed the project, obtained title to the property by recording a deed-in-lieu of 

foreclosure. In 2013, First-Citizens sold the property to 1080 Delaware, its current owner.

Adeli executed the deed in lieu of foreclosure pursuant to a settlement agreement 

with First-Citizens entered as of May 4, 2010, under which the bank agreed not to record 

the instrument unless Adeli failed to meet its obligations under the settlement agreement. 

In August 2011, before Adeli defaulted and the deed-in-lieu was recorded, he entered into 

a “Regulatory Agreement” with the City, specifying the 10 “inclusionary units” in the 

project that would be rented or sold to low and very-low income households at less than 

market rates affordable to those households. Adeli then began renting units in the project.

In April 2012, prior to the purchase of the property by 1080 Delaware, its attorney 

wrote to the City, stating his opinion that neither the use permit nor the Regulatory 

Agreement applied to the project,2that the City’s Inclusionary Housing Ordinance was 

unenforceable following the Palmer decision, and that “should our client complete the 

purchase of the Project, our client does not intend to comply with the inclusionary 

requirements.” City promptly indicated its disagreement. 1080 Delaware nonetheless 

proceeded with the purchase on April 26 and, subsequently, confirmed that it would not 

comply with condition 10 of the use permit or provide any inclusionary units in the 

project.

In March 2013, the City filed the present action, seeking a declaration that 

condition 10 of the use permit and the Regulatory Agreement “are valid and in full force 

and effect and that [1080 Delaware] is obligated to fully comply with both” documents, 

and requesting injunctive relief compelling compliance. The complaint contains two 

causes of action, the first of which is captioned “Violation of Municipal Ordinance” and 

alleges that the use permit “runs with the land and is binding on subsequent owners,” that 

the owner of the project “is required to comply with the inclusionary housing 

 

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The letter stated the Regulatory Agreement and condition 10 of the use permit no longer 

apply because paragraph 21.D of the Regulatory Agreement provides that “ ‘[a]ny party, 

and its successors and assigns, receiving title to an Inclusionary Unit through a . . . deed 

in lieu of foreclosure . . . , or by any conveyance or transfer thereafter, shall receive the 

title free and clear of the provisions of this Regulatory Agreement . . . .’ ”
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requirements of Chapter 23C.12,” and that the “refusal to comply with [condition 10 of 

the use permit] is a violation of [Berkeley Municipal Code s]ection 23A.12.010 and the 

Regulatory Agreement.” The cause of action alleges that both condition 10 and the 

Regulatory Agreement are valid and effective, “but that even if the Regulatory 

Agreement were ineffective, [condition 10] remains effective.” The second cause of 

action is labeled “Breach of Contract” and alleges that 1080 Delaware has “breached, and 

threatens to continue to breach, the Regulatory Agreement.”

The answer of 1080 Delaware pleaded as affirmative defenses, among other 

things, that “[t]he Inclusionary Housing Ordinance is preempted by State law and void, in 

particular, by the rent decontrol provisions of the Costa-Hawkins Act, [Civil] Code 

[section] 1954.50 et seq. See Palmer/Sixth Street Properties, L.P. v. City of Los Angeles, 

(2009) 175 Cal App. 4th 1396. To the extent the Use Permit or the Regulatory Agreement 

are relied upon by the City to implement or enforce the terms of the preempted 

Inclusionary Housing Ordinance, the Use Permit and the Regulatory Agreement are 

likewise void and unenforceable.” The answer also alleged that under paragraph 21.D of 

the Regulatory Agreement (see fn. 2, ante), the agreement “does not bind 1080 Delaware, 

a successor to an institutional lender who took title by deed in lieu of foreclosure.”

City eventually moved for summary adjudication and the court granted the motion 

as to the first cause of action but, as to the second cause of action, found triable issues 

and denied the motion. In granting the motion as to the first cause of action, the trial court 

reasoned as follows: “All parties appear to agree that Berkeley Municipal Code § 23C.12, 

which sets forth inclusionary housing requirements for rental units, is preempted by the 

Costa-Hawkins Rental Housing Act, as held in Palmer/Sixth Street Properties LP v. City 

of Los Angeles (2009) 175 Cal.App.4th 1396. The City is precluded from enforcing a 

void ordinance. [¶] The City’s First Cause of Action, however, does not seek to enforce 

Municipal Code § 23C.12. Rather, it seeks to enforce compliance with Condition of 

Approval No. 10 in a Use Permit issued in 2004. A writ for administrative mandamus is a 

landowners’ excusive remedy for challenging the propriety of permit conditions, and the 

owner’s failure to pursue that remedy in a timely manner bars the owner (or subsequent 
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owner) from challenging the condition nine years later. (See, e.g., City of Santee v. 

Superior Court (1991) 228 Cal.App.3d 713 and Pfeiffer v. City of La Mesa (1977) 69 

Cal.App.3d 74, 78.) Once issued, a conditional use permit runs with the land and binds 

successor owners. (See Anza Parking Corp. v. City of Burling[ame] (1987) 195 

Cal.App.3d 855, 858.) It is undisputed that no action seeking administrative mandamus 

concerning the subject use permit has been brought at any time since its issuance in 

2004.”

Following the entry of the summary adjudication order, the City dismissed the 

second cause of action with prejudice and the court entered judgment directing 1080 

Delaware to “comply with Condition No. 10 of City of Berkeley Use Permit 

No. 02-10000081 forthwith by ‘submit[ting] floor plans and schedules, acceptable to the 

Zoning Officer, showing the location of each inclusionary unit and the sales or rental 

prices. Said plans and schedules must adequately demonstrate that the unit types are 

reasonably dispersed throughout the project, are of the same size and contain, on average, 

the same number of bedrooms as the market-rate units and that the unit rent or sales price 

complies with Chapter 23C.12 of the Zoning Ordinance.’ The requirement to comply 

with Condition #10 includes full compliance with Chapter 23C.12 of the Zoning 

Ordinance.”

Notice of appeal was timely filed by 1080 Delaware.

Discussion

As the parties agree, we review the issues in this case de novo, but we conclude 

that the trial court properly analyzed the legal issues presented. Although some of the 

wording in the City’s complaint misleadingly suggests that the City is seeking to enforce 

the Inclusionary Housing Ordinance, neither the City’s position nor the trial court’s 

decision rests on the continuing enforceability of the ordinance. The parties agree, and 

the trial court explicitly acknowledged, that under Palmer, supra, 175 Cal.App.4th 1396,

the City’s Inclusionary Housing Ordinance has been preempted by the Costa-Hawkins 

Act. Thus, there is no dispute with the contention that the ordinance itself is now 

unenforceable. The issue, however, is whether the City may enforce condition 10 of the
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use permit, which requires compliance with the ordinance, even though subsequent to 

issuance of the use permit the ordinance was held to have been preempted.

As the authorities cited by the trial court hold, the answer is that such a use 

condition may be enforced if not challenged by a writ of administrative mandate within 

the 90-day time period prescribed by statute. (Code Civ. Proc., § 1094.6.) In City of 

Santee v. Superior Court (1991) 228 Cal.App.3d 713, the City of Santee contended, as 

does the City here, that “the exclusive remedy for challenging allegedly improper 

conditions on a special permit is administrative mandamus, which [the permit holder] 

conceded it failed to timely seek. . . . [T]he law is firmly established in this state that 

under these circumstances administrative mandamus constituted [the permit holder’s] 

exclusive remedy to challenge the propriety of the conditions the City [of Santee]

imposed upon the approval of the . . . permit.” (Id. at p. 718.) Because the permit holder 

failed to pursue the exclusive remedy of administrative mandamus, he was estopped from 

challenging the validity of the permit condition in subsequent proceedings. (Id. at p. 719.) 

In Pfeiffer v. City of La Mesa (1977) 69 Cal.App.3d 74, 78, the court deemed it 

“fundamental that a landowner who accepts a building permit and complies with its 

conditions waives the right to assert the invalidity of the conditions.” The court there also 

pointed out that the proper method for challenging the validity of permit conditions is by 

writ of mandate pursuant to Code of Civil Procedure section 1094.5, and that the 

recipient of a permit could not “convert” the right to institute such proceedings into a 

cause of action for other relief (in that case, a cause of action for inverse condemnation). 

“ ‘A landowner cannot challenge a condition imposed upon the granting of a permit after 

acquiescence in the condition by either specifically agreeing to the condition or failing to 

challenge its validity, and accepting the benefits afforded by the permit.’ [Citation.]” 

(Ojavan Investors, Inc. v. California Coastal Com. (1994) 26 Cal.App.4th 516, 527.)

In the trial court, 1080 Delaware disputed this conclusion by reliance on the more 

recent decision of the California Supreme Court in Travis v. County of Santa Cruz (2004) 

33 Cal.4th 757 (Travis). However, the trial court correctly pointed out that 1080 

Delaware misread Travis, and that this decision “clearly held that an action seeking to 
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invalidate a permit condition based on an ordinance preempted by state law, filed by 

property owners (the Sokolows) who failed to timely challenge permit conditions through 

a petition for a writ of mandate, was in fact barred by their failure to do so. [Citation.]

Second, to the extent that Travis contemplates that a party could file a separate action 

(other than a petition for writ of mandate) challenging a preempted or unconstitutional 

zoning ordinance, such an action would have to be filed within three years of the 

enactment of the statute that preempts the ordinance. [Citation.] Here, it is undisputed 

that [1080 Delaware] did not file any action challenging [Berkeley] Municipal Code 

§ 23C.12 within three years of the enactment of the Costa-Hawkins Rental Housing Act 

in 1996.” In Travis, different property owners petitioned for writs of mandate to enjoin 

enforcement of permit conditions imposing restrictions on second dwelling units on the 

ground that the ordinance authorizing those restrictions had been preempted by state 

statutes, including the Costa-Hawkins Act. Travis, whose petition was filed within 90 

days of final administrative action on his permit, was entitled to pursue his challenge; but 

the Sokolows, who had not challenged the condition until almost 11 months after 

approval of their permit application, were not. (Travis, at p. 767.) Travis thus provides 

controlling authority for the conclusion that because of the failure to timely challenge the 

use permit, condition 10 of the permit remains enforceable despite the subsequent 

determination that the ordinance has been preempted.3

Moreover, the conditions of the permit remain enforceable against a subsequent 

owner of the property. “Since [1080 Delaware’s] predecessors in interest waived their 

right to challenge the permit’s . . . condition because they specifically agreed to and 

complied with the condition and accepted the benefits afforded by the permits and such 

predecessors in interest could not transfer or assign to [1080 Delaware] any legal rights 

greater than they themselves possessed [citation], [1080 Delaware] obtained the property 

 

3 And, refuting another of 1080 Delaware’s arguments, the Supreme Court also rejected 

the suggestion “that preemption by state law renders a local ordinance not only 

unenforceable but also ‘null and void’ . . . . A preempted ordinance, while it may lack any 

legal effect or force, does not cease to exist; . . . .” (Travis, supra, 33 Cal.4th at p. 775.)
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in question with the same limitations and restrictions which bound [its] predecessors in 

interest. . . . [1080 Delaware has] waived, by [its] purchase of deed-restricted lots, any 

right to a property interest greater than that conveyed by their predecessors in interest. As 

with the analogous situation of covenants which run with the land (Civ. Code, § 1457 et. 

seq.), [1080 Delaware] can take ‘only the title [the prior owner] had and subject to prior 

recorded instruments. [Citation.]” (Ojavan Investors, Inc. v. California Coastal Comm., 

supra, 26 Cal.App.4th at pp. 527-528; see, e.g., Anza Parking Corp. v. City of 

Burlingame (1987) 195 Cal.App.3d 855, 858.)

None of the cases cited by 1080 Delaware casts any doubt on these conclusions. In 

Bright Development v. City of Tracy (1993) 20 Cal.App.4th 783, 797, the Court of 

Appeal held that a developer was not required to comply with the City of Tracy’s policy 

to require the undergrounding of offsite utilities because the City of Tracy could not show 

that “a written ordinance, policy or standard . . . was in effect” when the developer’s 

vesting tentative map application was deemed complete. In the present case, in contrast, 

the City of Berkeley adopted its inclusionary housing ordinance in 1986, long before the 

contested use permit was issued in 2004. In Palazzolo v. Rhode Island (2001) 533 U.S. 

606, the United States Supreme Court held that a property owner whose permit 

applications were denied could assert an inverse condemnation claim even though the 

denials were based on regulations that had been adopted before the current owner 

acquired title to the property. The court based its decision on the fact that the takings 

claim was not ripe when the regulation was adopted and did not become viable until the 

permit applications were denied. “A blanket rule that purchasers with notice have no 

compensation right when a claim becomes ripe is too blunt an instrument to accord with 

the duty to compensate for what is taken.” (Id. at p. 628.) “A challenge to the application 

of a land-use regulation . . . does not mature until ripeness requirements have been 

satisfied . . . ; until this point an inverse condemnation claim alleging a regulatory taking 

cannot be maintained. It would be illogical, and unfair, to bar a regulatory takings claim 

because of the post-enactment transfer of ownership where the steps necessary to make 

the claim ripe were not taken, or could not have been taken, by a previous owner.” (Ibid.) 
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In the present case, in contrast, a challenge to the validity of condition 10 was ripe, and 

indeed required to be asserted, when the use permit was issued. Unlike the situation in 

Palazzolo, denying the current owner the right to assert the challenge does not mean that 

the challenge never could have been asserted.4

Finally, there is no merit to 1080 Delaware’s assertion that the trial court erred in 

granting summary judgment because of the triable issues the court found to exist as to the 

meaning and continuing effectiveness of the Regulatory Agreement. As the City argues, 

the Regulatory Agreement is subordinate to both the ordinance and the use permit. It was 

entered to implement condition 10 of the use permit, as explicitly required by the 

provisions of the Inclusionary Housing Ordinance. Even if, as 1080 Delaware contends, 

the Regulatory Agreement does not survive the deed in lieu of foreclosure by which FirstCitizens acquired title, condition 10 persists. If the Regulatory Agreement entered by 

Adeli is no longer in effect, then under the terms of the ordinance and the trial court’s 

judgment, 1080 Delaware must itself specify the units that it will lease at below market 

rates. With the dismissal of the second cause of action alleging a breach of the Regulatory 

Agreement, there was no impediment to the entry of final judgment determining that 

1080 Delaware is bound by and must comply with condition 10 of the use permit.

Disposition

The judgment is affirmed.

 

4 Although not dispositive, we point out the additional fact that the Costa-Hawkins Act 

was adopted in 1995 and was in effect when the challenged use permit was issued in 

2004. Thus, although Palmer was not decided until 2009, the preemption challenge could 

have been asserted promptly after issuance of the use permit. In all events, by accepting 

the benefits of the use permit, Adeli agreed to comply with the provisions of the 

inclusionary housing ordinance, whether or not subsequently invalidated.
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_________________________

Pollak, Acting P. J.

We concur:

_________________________

Siggins, J.

_________________________

Jenkins, J.
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Filed 2/26/15

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

CITY OF BERKELEY,

Plaintiff and Respondent,

v.

1080 DELAWARE, LLC,

Defendant and Appellant.

A142162

(Alameda County

Super. Ct. No. RG13672597)

ORDER MODIFYING OPINION

AND CERTIFYING OPINION

FOR PUBLICATION; 

NO CHANGE IN JUDGMENT

THE COURT:

It is ordered that the opinion filed herein on January 30, 2015, be modified as follows:

On page 1, line 6, the words “held to have been” are to be inserted between the words 

“been” and “preempted” so that the sentence reads:

Defendant contends the City may not enforce the condition, included in the use 

permit obtained by former owners of the property, because the ordinance has 

subsequently been held to have been preempted by the Costa-Hawkins Rental 

Housing Act (Civ. Code, § 1954.50 et seq.; the Costa-Hawkins Act).

There is no change in judgment.

The opinion in the above-entitled matter filed on January 30, 2015, was not certified for 

publication in the Official Reports. For good cause it now appears that the opinion 

should be published in the Official Reports and it is so ordered.

Date: _____________________________ 

Pollak, Acting P.J.
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Trial court: Alameda County Superior Court

Trial judge: Honorable Ioana Petrou

Counsel for plaintiff and respondent: BAIRD HOLM LLP

David C. Levy

Counsel for defendant and appellant: BERKELEY CITY ATTORNEY’S OFFICE

Zach Cowan, City Attorney

Laura McKinney, Deputy City Attorney