Court Opinion

ID: 3051979
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:38:27.501387+00
Date Added: 2024-06-11T12:44:52.872430
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

NORTH PACIFICA LLC,                     
                  Plaintiff-Appellee,
                                              No. 05-16069
                 v.
CITY OF PACIFICA; PACIFICA                     D.C. No.
                                            CV-01-04823-EMC
PLANNING COMMISSION; PACIFICA
CITY COUNCIL,
            Defendants-Appellants.
                                        

NORTH PACIFICA LLC,                     
                Plaintiff-Appellant,
                                              No. 05-16146
                 v.
CITY OF PACIFICA; PACIFICA                     D.C. No.
                                            CV-01-04823-EMC
PLANNING COMMISSION; PACIFICA
CITY COUNCIL,
             Defendants-Appellees.
                                        

NORTH PACIFICA LLC,                     
                  Plaintiff-Appellee,
                                              No. 06-15102
                 v.
CITY OF PACIFICA; PACIFICA                     D.C. No.
                                            CV-01-04823-EMC
PLANNING COMMISSION; PACIFICA
CITY COUNCIL,
            Defendants-Appellants.
                                        

                             5355
5356        NORTH PACIFICA LLC v. CITY OF PACIFICA

NORTH PACIFICA LLC,                     
                Plaintiff-Appellant,
                                              No. 06-15131
                 v.
CITY OF PACIFICA; PACIFICA                     D.C. No.
                                            CV-01-04823-EMC
PLANNING COMMISSION; PACIFICA
CITY COUNCIL,
             Defendants-Appellees.
                                        

NORTH PACIFICA LLC,                     
                  Plaintiff-Appellee,
                                              No. 06-15631
                 v.
CITY OF PACIFICA; PACIFICA                     D.C. No.
                                            CV-01-04823-EMC
PLANNING COMMISSION; PACIFICA
CITY COUNCIL,
            Defendants-Appellants.
                                        

NORTH PACIFICA LLC,                     
                Plaintiff-Appellant,
                                              No. 06-15772
                 v.
CITY OF PACIFICA; PACIFICA                     D.C. No.
                                            CV-01-04823-EMC
PLANNING COMMISSION; PACIFICA
                                                OPINION
CITY COUNCIL,
             Defendants-Appellees.
                                        
       Appeal from the United States District Court
          for the Northern District of California
       Edward M. Chen, Magistrate Judge, Presiding

                   Argued and Submitted
        January 14, 2008—San Francisco, California
     NORTH PACIFICA LLC v. CITY OF PACIFICA          5357
              Filed May 13, 2008

Before: J. Clifford Wallace, Procter Hug, Jr., and
      Mary M. Schroeder, Circuit Judges.

          Opinion by Judge Schroeder
           NORTH PACIFICA LLC v. CITY OF PACIFICA       5359

                        COUNSEL

Jacquelynn Pope, Hermosa Beach, California, for plaintiff-
appellee-appellant North Pacifica, LLC.

Lee Rosenthal, Oakland, California for defendants-appellants-
appellees City of Pacifica, et al.
5360        NORTH PACIFICA LLC v. CITY OF PACIFICA
                           OPINION

SCHROEDER, Circuit Judge:

   These appeals arise out of a convoluted series of events
illustrating the friction that can grow between a developer try-
ing to secure approval of a condominium project as quickly
as possible, and a city trying to use development permit pro-
cedures to avoid all foreseeable future problems. The
plaintiff-developer is North Pacifica LLC and the defendant
is the City of Pacifica. The conduct on the part of both sides
has led to moving targets for litigation activity, and the entire
project is still tied up in proceedings before the California
Coastal Commission.

   The case presents a remarkable series of ironic twists. The
developer originally sued the City for delays in approving its
application for development permits, but because of a citi-
zen’s appeal to the Coastal Commission, the development is
still on hold, long after City approval. The district court
awarded damages to the developer, not on the basis of any
harm alleged in its original complaint, but because of a condi-
tion in the permit to which the developer never voiced any
objection in the hearing before the City Council. The condi-
tion in question was inserted by outside counsel the City hired
in order to avoid litigation, and the condition has, of course,
had the opposite result. Finally, the district court correctly dis-
missed the substantive due process claim in the original com-
plaint, but for the wrong reason, incorrectly treating it as a
takings claim that required exhaustion of state court remedies,
rather than as a substantive due process claim for delays that,
contrary to the complaint’s allegations, were not unreason-
able. See N. Pacifica, LLC v. City of Pacifica, 234 F. Supp.
2d 1053, 1064-66 (N.D. Cal. 2002).

  The disputes before us boil down to first, the developer’s
contentions that we should resurrect its substantive due pro-
cess claim and that we should remand for the award of addi-
            NORTH PACIFICA LLC v. CITY OF PACIFICA          5361
tional damages on the equal protection claim, and second, to
the City’s arguments that the developer was not entitled to
judgment, damages, or attorneys’ fees in the first place. The
City is correct.

   We agree with the City that the developer was not entitled
to judgment on the equal protection claim that is before us,
because the City did not intentionally treat this developer dif-
ferently from any other developer. Outside counsel inserted
the now-controversial provision in the recommended permit
and the developer raised no opposition at the hearing during
which the City Council considered the permit application.
There can be no compensatory damages attributable to the
provision in any event, because the developer still has not
obtained the requisite approval from the Coastal Commission.
We also agree with the City that the due process claim should
not be resurrected because the developer has not alleged any
irrational delay in the City’s approval of its permits. Accord-
ingly, we vacate the district court’s award of attorneys’ fees
and costs to North Pacifica and remand for entry of judgment
in favor of the City.

I.   Background

   This litigation concerns the efforts of plaintiff North Pacif-
ica (“NP”), a limited liability company, to develop a 4.3-acre
parcel of real estate, known as the “Bowl” property, located
in the City of Pacifica, California. NP submitted its applica-
tion to the City for permits to develop its proposed condomin-
ium project on August 1, 1999. During the course of the next
two years, the City made a number of requests to NP for addi-
tional information that the City determined was necessary to
assess and evaluate the application. The City deemed the
application complete on June 5, 2001. NP filed this action
approximately six months later, in December 2001, claiming
that the City unreasonably imposed the processing delays in
violation of substantive due process and equal protection.
5362        NORTH PACIFICA LLC v. CITY OF PACIFICA
   NP also filed one other suit that is relevant to the claims in
these appeals. That was a suit in state court against the City
to require it to maintain Edgemar Road, an abandoned road
abutting the Bowl property. NP eventually lost that suit on the
City’s appeal to the California Court of Appeal in March
2005, but the action was pending throughout most of this liti-
gation. The suit is one reason the City was anxious to avoid
further litigation with NP.

   The district court initially dismissed NP’s substantive due
process claim in this case, but did not dismiss the claim that
the delays violated equal protection. On the developer’s
motion for reconsideration, the district court, in a published
decision, ruled that the due process claim was not ripe
because the plaintiff had not yet finished seeking compensa-
tion in state court. N. Pacifica, LLC, 234 F. Supp. 2d at 1064-
66.

   That left the delay-based equal protection claim for the par-
ties to argue about. This they did in the form of cross-motions
for summary judgment. In its motion, the developer for the
first time argued that the City inserted a particular provision,
known as condition 13(b), as a condition of the City’s
approval of NP’s development permit. Condition 13(b)
required NP to make condominium purchasers “jointly and
severally” liable for the maintenance of common areas.

   The district court granted summary judgment to the City on
NP’s delay-based equal protection claim but granted NP leave
to file a supplemental complaint alleging that condition 13(b)
was imposed in violation of equal protection. It is on that sup-
plemental complaint that the district court eventually entered
judgment in favor of the developer in the amount of
$156,741.19, plus a hefty award of attorney’s fees of
$453,810.75, and costs of $55,322.40.

  In these appeals, the developer challenges the denial of the
substantive due process claim. It does not pursue its original
            NORTH PACIFICA LLC v. CITY OF PACIFICA          5363
delay-based equal protection claim, but does defend the dis-
trict court’s award of damages on its condition 13(b) equal
protection claim, the award that the City, of course, chal-
lenges in its appeal.

   It is therefore important to understand the factual back-
ground of condition 13(b). The condition was inspired by the
City’s experience litigating against the developer in the Edge-
mar Road action in state court. The City retained outside
counsel to handle all of the City’s litigation with NP, and to
advise the City on the processing of NP’s application for
development of the Bowl. An attorney in the retained firm
inserted the joint and several liability language of 13(b) into
the proposed permit. It was apparently an attempt to ensure
that the City never again had to litigate about the road either
with the developer or a homeowners’ association influenced
by the developer. Condition 13(b) requires the development’s
Conditions, Covenants, and Restrictions (“CC&Rs”) to

    specify that the owners of each of the residential
    units shall be responsible jointly and severally, for
    the repair, maintenance and replacement of the
    building exteriors, common areas, parking, landscap-
    ing, building signage and improvement and mainte-
    nance of Edgemar Road to the satisfaction of the
    City.

N. Pacifica, LLC v. City of Pacifica, No. 01-4823, slip op. at
14 (N.D. Cal. Oct. 23, 2003) (emphasis added).

   NP received a copy of the proposed permit containing con-
dition 13(b) the day preceding the hearing before the City
Planning Commission to consider NP’s permit application.
On the day of the hearing, NP sent a letter to the City Attor-
ney and to outside counsel objecting to nine of the thirty-nine
conditions of approval in the proposed permit, including con-
dition 13(b). Because there was no evidence that any city offi-
cial provided the letter to the Planning Commission, however,
5364        NORTH PACIFICA LLC v. CITY OF PACIFICA
the district court, after a bench trial, expressly declined to find
that the Commission ever received the letter. The Planning
Commission approved NP’s application for development per-
mits, subject to the thirty-nine conditions of approval, includ-
ing condition 13(b).

   The Commission’s approval of the permits was appealed to
the City Council by a local citizen who opposed the develop-
ment. Five days before the Council hearing, NP received
notice that a member of the Planning Commission recom-
mended that the City approve the permits subject to all thirty-
nine conditions. NP promptly sent a letter to the City Attorney
and outside counsel again objecting to the nine conditions,
including condition 13(b), and asking that the letter be circu-
lated to the City Council. The letter was not circulated to the
City Council until just before the commencement of the hear-
ing on August 12, 2002. This was eight months after this
action was filed in district court alleging discriminatory
delays in processing the permit application.

   During the hearing itself, NP did not specifically object to
condition 13(b). It did object to condition 38, which required
NP to replace and upgrade a sewer. The City Council
amended the sewer condition, but did not modify condition
13(b). One of the City Council members later testified that he
was unaware of condition 13(b) at the time of the hearing. No
member of the City Council had discussed condition 13(b)
with any other member, staff, NP, or any citizen prior to the
hearing. The district court eventually found that the City
Council was not aware of the objections to condition 13(b) at
the time of the hearing.

  After the hearing, the City Council approved the develop-
ment permits subject to all the conditions. NP received notice
of the approval by a letter dated September 11, 2002.

  On November 6, 2002, NP sent an eighteen-page letter of
objections to the City Attorney, outside counsel, a member of
            NORTH PACIFICA LLC v. CITY OF PACIFICA           5365
the Planning Department, and the City Clerk for distribution
to the City Council. The letter objected to twelve of the thirty-
nine conditions of approval, including condition 13(b). The
letter protested that condition 13(b) “would render the project
unsaleable” because it would prevent NP from obtaining a
public report from the California Department of Real Estate,
a prerequisite to sales of condominiums. The letter also
argued that by imposing condition 13(b), the City was “treat[-
ing] NP differently from all other condominium developers in
the State of California.”

   Although two City Council members testified that they had
no recollection of the November 6 letter, the district court
found that each City Council member received and read the
letter. On November 18, Lee Diaz, a member of the City’s
Planning Department, responded to NP by letter, but did not
refer to condition 13(b).

   On November 20, 2002, three months after approval of the
permits, and almost a year after this litigation was filed, NP
sent a letter to the City’s outside counsel threatening more liti-
gation if the City did not resolve NP’s objections to the vari-
ous conditions of approval. Copies of this letter were sent to
the City Clerk. The district court entered its decision the fol-
lowing week dismissing the delay-based due process claim for
failure to pursue state remedies. N. Pacifica, LLC, 234 F.
Supp. 2d at 1064-66. A delay-based equal protection claim
remained. Id. at 1056. A challenge to 13(b) had not yet been
filed.

   The district court litigation proceeded to motions for sum-
mary judgment. NP raised condition 13(b) for the first time in
its cross-motion for summary judgment, filed on May 7, 2003.
On June 11, the district court held a hearing on the motions,
where the condition was discussed. Six days after the hearing,
the City Planner sent a letter to NP stating that the City would
not require NP to include 13(b)’s joint and several liability
requirement in its CC&Rs.
5366        NORTH PACIFICA LLC v. CITY OF PACIFICA
   The district court viewed the City Planner’s letter as insuf-
ficient to bind the City, absent City Council action. On July
15, 2003, the district court, over the City’s objections, gave
NP leave to file the supplemental complaint raising the claim
that the City’s imposition of condition 13(b) on NP violated
equal protection. The court also later denied the City’s motion
for summary judgment on that claim. After a bench trial, the
court in October 2003 concluded that the City violated NP’s
equal protection rights. The court reserved the issue of dam-
ages for a later proceeding.

   The City Council then went into action. On November 10,
2003, the City Council held a hearing during which it directed
its staff to interpret condition 13(b) so as to impose no joint
and several liability. On January 20, 2004, the Planning Com-
mission passed Resolution No. 799, which provided that con-
dition 13(b) “never required and does not now require that
each individual homeowner be jointly and severally liable.”
On January 26, 2004, the City Council adopted Resolution
No. 08-04, which endorsed Planning Commission Resolution
No. 799.

   The district court held a bench trial on damages and in May
2005 awarded NP compensatory damages of $156,741.19 on
the 13(b) claim of equal protection violation. The damages
represented interest on the reduction in value of the project
during the period the condition was in effect. The district
court later awarded attorney fees and costs. The City’s
appeals and NP’s cross-appeals followed.

   Meanwhile, NP’s application for development permits had
moved on to another forum. On September 5, 2002, a local
citizen appealed to the Coastal Commission the City’s
approval of a Coastal Development Permit. One week later,
the Coastal Commission informed the City by letter that until
the appeal was resolved, the Commission considered the per-
mits to be ineffective and that any development would violate
the Coastal Act and subject NP to enforcement.
             NORTH PACIFICA LLC v. CITY OF PACIFICA         5367
   On May 11, 2006, after protracted proceedings, the Coastal
Commission denied the Coastal Development Permit because
the development plan failed to protect wetlands located on the
Bowl property. NP has filed two petitions for writs in the
Superior Court seeking to overturn the Coastal Commission’s
order, and they remain pending.

   As things stand now, condition 13(b) is long gone, and the
project is still on hold for reasons unrelated to any action by
the City. Nevertheless the City remains subject to a substan-
tial judgment making it responsible for damages for delays.
The City wants the award of damages overturned and the
developer wants more damages and more fees.

II.    Discussion

  A.    Substantive Due Process

   The Plaintiffs allege that the delays in the City’s processing
of their application resulted in a denial of substantive due pro-
cess. In recent years, substantive due process law in the con-
text of land-use regulation has taken a winding path. See, e.g.,
Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 542 (2005);
Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996). In
Armendariz, we said “[w]e are all painfully aware that the
area of substantive due process ‘has at times been a treacher-
ous field’ for the courts.” 75 F.3d at 1318 (quoting Moore v.
East Cleveland, 431 U.S. 494, 502 (1977) (Powell, J., for plu-
rality)). Armendariz considered a claim that city officials’ vig-
orous enforcement of housing code violations in order to shut
down places of drug activity violated substantive due process.
Id. at 1313. We held that any challenge to land use regulation
on substantive due process grounds was precluded by the
Takings Clause. Id. at 1324.

   [1] In Lingle, however, the Supreme Court concluded that
a challenge to land use regulation may state a substantive due
process claim, so long as the regulation serves no legitimate
5368        NORTH PACIFICA LLC v. CITY OF PACIFICA
governmental purpose. See Lingle, 544 U.S. at 542 (“[A] reg-
ulation that fails to serve any legitimate governmental objec-
tive may be so arbitrary or irrational that it runs afoul of the
Due Process Clause.”). In a recent decision we said that
“Lingle pull[ed] the rug out from under” Armendariz and we
recognized possible bases for a substantive due process claim.
Crown Point Dev., Inc. v. City of Sun Valley, 506 F.3d 851,
855-56 (9th Cir. 2007). The irreducible minimum of a sub-
stantive due process claim challenging land use regulation is
failure to advance any governmental purpose. Id. at 856. We
said there is a due process claim where a “land use action
lacks any substantial relation to the public health, safety, or
general welfare.” Id. Such a claim cannot be remedied under
the Takings Clause. Id.

   In a takings claim, the plaintiff must affirmatively establish
that it has been denied just compensation. Williamson County
Reg’l Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 195
(1985). This is essentially because the Takings Clause itself
prohibits only takings without just compensation. See id. at
194. Nevertheless, the government may not harm others with-
out any legitimate purpose. See Crown Point Dev., Inc., 506
F.3d at 856. Takings that involve violations of due process
may therefore be unconstitutional, “notwithstanding any
available compensation.” S. Pac. Transp. Co. v. City of Los
Angeles, 922 F.2d 498, 507 n.11 (9th Cir. 1990).

   The district court in this case dismissed the due process
claim on the ground that NP had not shown that it had sought
and had been denied just compensation through state reme-
dies. N. Pacifica, LLC, 234 F. Supp. 2d at 1066. The district
court erred, because NP did not attempt to plead a takings
claim, but instead attempted to plead a substantive due pro-
cess claim.

   [2] The district court’s conclusion, that the claim should be
dismissed, may nevertheless be upheld if the complaint failed
adequately to allege a denial of substantive due process. To
            NORTH PACIFICA LLC v. CITY OF PACIFICA          5369
maintain a substantive due process claim, NP must show that
the City’s delays in processing its application lacked a ratio-
nal relationship to a government interest. See Crown Point
Dev., Inc., 506 F.3d at 856; Christensen v. Yolo County Bd.
of Supervisors, 995 F.2d 161, 165 (9th Cir. 1993) (“The ratio-
nal relationship test . . . applies to substantive due process
challenges to property zoning ordinances.”).

   [3] NP alleges that the City violated its substantive due pro-
cess rights by repeatedly sending requests for more informa-
tion that delayed the processing of NP’s application. Yet the
complaint demonstrates that, each time the City sent a request
for more information, it explained that it was requesting rele-
vant information it did not have or information that would
allow it to conduct a thorough review. For example, the com-
plaint alleges that on May 23, 2000, ten months after NP filed
an application for a development permit, the City sent NP a
letter requesting eight items the City had not previously
requested. The complaint itself states, however, that these
items were needed because, on May 2, NP had revised its
development plan to comply with the City’s density guide-
lines. The complaint also alleges that in August the City sent
NP another request for information, explaining that NP had
failed fully to comply with the May 2000 request. There is a
reasonable explanation on the face of the complaint for every
delay in the City’s eventual approval of the application. The
City’s repeated information requests thus did not violate NP’s
substantive due process rights by making unreasonable
requests that delayed the project.

   In addition to the information requests, NP’s complaint also
alleges that the City violated its substantive due process rights
by terminating its original application and requiring a new
one. Yet the complaint alleges that the new application was
required after NP’s agent, Trumark, wrote to the City and
stated that Trumark had “ended its interest in the project.”
The complaint alleges no facts that suggest the termination
5370        NORTH PACIFICA LLC v. CITY OF PACIFICA
was an arbitrary or capricious act, or unreasonable, in light of
the absence of an agent who could pursue the development.

   [4] NP also alleges that the City required “two environmen-
tal impact reports for the same project.” The City terminated
the first environmental impact report on the basis of NP’s
argument that NP was exempt from the requirement to pre-
pare a report. Later, when the City deemed NP’s application
complete and concluded that NP was not exempt from the
report requirement, it commissioned a new report. On the
basis of the facts alleged, there was no arbitrary or irrational
conduct by the City.

  B.   Equal Protection

   [5] The district court awarded damages on condition 13(b),
a condition which applied only to NP’s permit. When an
equal protection claim is premised on unique treatment rather
than on a classification, the Supreme Court has described it as
a “class of one” claim. Vill. of Willowbrook v. Olech, 528
U.S. 562, 564 (2000) (per curiam). In order to claim a viola-
tion of equal protection in a class of one case, the plaintiff
must establish that the City intentionally, and without rational
basis, treated the plaintiff differently from others similarly sit-
uated. See id.; accord Squaw Valley Dev. Co. v. Goldberg,
375 F.3d 936, 944 (9th Cir. 2004), overruled on other
grounds, Action Apt. Ass’n v. Santa Monica Rent Control
Opinion Bd., 509 F.3d 1020, 1025 (9th Cir. 2007). A class of
one plaintiff must show that the discriminatory treatment
“was intentionally directed just at him, as opposed . . . to
being an accident or a random act.” Jackson v. Burke, 256
F.3d 93, 96 (2d Cir. 2001).

   [6] On the basis of the facts developed at trial, the City in
this case did not intentionally single out NP for discriminatory
treatment. When the City Council approved NP’s develop-
ment permit, the Council did not know condition 13(b) had
never been imposed on another development project.
            NORTH PACIFICA LLC v. CITY OF PACIFICA         5371
Although NP sent two letters complaining of condition 13(b)
before it was approved, the district court found that one letter
was not delivered to the City Council, and the other was not
delivered in time for the Council to review it before the hear-
ing on the permits. Furthermore, NP did not orally complain
about the condition at the hearing. Because NP did not bring
its objection to the Council’s attention before the Council
approved the condition, the Council did not know it was
imposing a condition to which NP objected and which the
City had not imposed on other developers. That the City, after
approving the condition, eventually learned of NP’s objection
does not make its actions in imposing condition 13(b) inten-
tionally discriminatory. Furthermore, the City ultimately
removed the objectionable condition, though, embroiled
already in litigation over the development, this took some
time. The district court thus erred when it granted judgment
to NP on the equal protection claim and awarded it damages
and attorneys’ fees.

   [7] There is an additional flaw in the district court’s award
of substantial compensatory damages. The Supreme Court has
held that “no compensatory damages may be awarded in a
§ 1983 suit absent proof of actual injury.” Farrar v. Hobby,
506 U.S. 103, 112 (1992). The measure of damages for an
equal protection claim alleging that a discriminatory zoning
decision temporarily deprived the plaintiff’s land of its devel-
opment potential is reasonable interest on the reduction in
value to the project created by the zoning decision, but only
for the period of time the condition actually delayed the
development of the project. See Herrington v. County of
Sonoma, 12 F.3d 901, 905 (9th Cir. 1993).

   [8] The district court awarded NP compensatory damages
on its theory that when condition 13(b) was in effect, i.e.,
from August 2002 to November 2003, the development was
worth less than it would have otherwise been, and that NP
was entitled to interest on the reduction in value for that lim-
ited period. The problem with this theory is that there was no
5372       NORTH PACIFICA LLC v. CITY OF PACIFICA
reduction in value attributable to condition 13(b) because
development could not go forward until NP obtained a devel-
opment permit from the Coastal Commission. The condition
did not cause any actual delay. Even if we were to agree that
NP should have prevailed on its equal protection claim, it
would have been entitled only to nominal damages. See Far-
rar, 506 U.S. at 112.

III.   Conclusion

   The district court’s dismissal of NP’s substantive due pro-
cess claim is AFFIRMED. The order holding the City liable
for an equal protection violation is REVERSED. The awards
of damages, attorneys’ fees, and costs are VACATED. We
REMAND for entry of judgment in favor of the City.