City of West Hollywood v. 1112 Investment Co.

Filed 7/11/06 City of West Hollywood v. 1112 Investment Co. CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Cesar C. Sarmiento, Judge. Affirmed.

Overton, Lyman & Prince and Stephen L. Jones for Defendants and Appellants.

Michael Jenkins, City Attorney; Richards, Watson & Gershon and T. Peter Pierce for Plaintiff and Respondent.

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This is an appeal from the judgment entered after the trial court granted a motion for summary adjudication brought by the City of West Hollywood (the City) against the owners of two residential buildings, the 1112 Investment Company, LLC (1112 Co.), Melvin J. Remba (Remba), trustee of the Melvin J. Remba Family Trust (Remba Trust), and E. D. Flores Corporation (Flores) (all collectively referred to as the Owners). We affirm the judgment (order granting summary adjudication).[1]

FACTUAL & PROCEDURAL BACKGROUND

At issue are two apartment buildings in West Hollywood, one located at 1112 North Olive Drive, owned by the 1112 Co. and the Remba Trust, and the other at 625 N. Flores Street, owned by Flores, and the Owners' attempts to convert these apartments into condominiums. The order granting summary adjudication, which is the subject of this appeal, provided that: 1) the Owners must obtain development permits from the City in order to complete the conversion, and 2) the Owners are committing a continuing nuisance by not filing applications for development permits.

At the outset, to avoid further confusion, we distinguish between three different types of documents issued by various governmental entities which are involved here. The first is a public report issued by the state Department of Real Estate pursuant to Business and Professions Code sections 11000 to 11200 (hereinafter referred to as a DRE report). The second is a conditional use permit (CUP), formerly required when converting an apartment building into a condominium and issued by the City pursuant to its ordinance No. 114U. This ordinance was enacted in 1985 and was repealed in 2001. Simultaneously with the repeal of ordinance No. 114U, the City enacted a new ordinance (No. 01-594) which required the third type of permit discussed here, a development permit (development permit).

This appeal also has a very complex procedural background. In the early 1980s, the buildings' Owners applied for and were issued DRE reports in order to convert their buildings into condominiums. For unknown reasons, the Owners continued to maintain the buildings as apartments. In the interim, in 1984, the City became incorporated. The City then adopted regulations governing condominium conversions, one of which (ordinance No. 114U) required that a building owner first obtain a CUP from the City.

The Beverly Towers Opinion

In 1986, the City brought a lawsuit against various apartment owners (presumably including the Owners of this case). Prior to the incorporation of the City in 1984, apartment building owners who wished to convert their buildings into condominiums were required to obtain approval or record a subdivision map with the governing local entity (Gov. Code, §§ 66410 et seq., the Subdivision Map Act) and obtain a DRE report. The defendant owners in this case had obtained the approval of their maps and obtained the DRE reports granting the right to subdivide. They had not yet sold a single unit as a condominium when the City enacted ordinance No. 114U, which added comprehensive regulations governing condominium conversions, including the requirement that the City must issue a CUP for conversion after making certain findings of fact. The City sued for declaratory and injunctive relief, seeking to impose its CUP requirement on the defendants. The court sustained the defendants' demurrers without leave to amend and entered an order of dismissal. On appeal, the Supreme Court held in City of West Hollywood v. Beverly Towers, Inc. (1991) 52 Cal.3d 1184 (Beverly Towers), that although the defendants had not sold a single unit as a condominium, they had received all the necessary approvals granted under the state regulatory scheme and thus the City could not retroactively impose new regulations, such as the CUP requirement.

The First Opinion

Following the Beverly Towers opinion, the Owners in this case let their DRE reports, which were valid for a five-year period, lapse, and thereafter requested numerous renewals. The buildings continued to be maintained as apartments. In 2000, the City filed suit against the Owners for charging rents in violation of the City's rent control ordinance (the Complaint). The Owners' defense was that the buildings were exempt from the City's rent control requirements, pursuant to a recently-enacted Civil Code section (Civ. Code, § 1954.52), effective on January 1, 1996, which exempted three types of units from local rent control. One of those exemptions is for a dwelling or unit if it is alienable separate from the title to any other dwelling unit or is a subdivided interest in a subdivision. (Civ. Code, § 1954.52, subd. (a)(3)(A).)

The City and the Owners each filed motions for summary judgment. By that time, one unit in each of the buildings had been sold as a condominium. In July 2001, the trial court granted the Owners' motion, holding, inter alia, that because the Owners had obtained the DRE reports before the rent control ordinances were enacted, they did not have to comply with rent control laws. The City then appealed, and in an opinion filed January 30, 2003 (City of West Hollywood v. 1112 Investment Co. (2003) 105 Cal.App.4th 1134 (hereinafter referred to as West Hollywood I), the order granting summary judgment was reversed. West Hollywood I held, inter alia, that the exemption in Civil Code section 1954.52, subdivision (a)(3)(A) did not apply to Owners since the initial DRE public reports expired prior to renewal. At the time the reports expired, any rights the Owners had to convert the buildings were lost. (West Hollywood I, at pp. 1148, 1149, 1151-52.) Because the rent control ordinances were in effect when the reports expired, the Owners were bound by those ordinances. The court remanded the matter for further proceedings. (Id. at p. 1153.)

The Second Appeal

Before West Hollywood I was filed, the City repealed its CUP requirement and simultaneously instituted the new ordinance requiring a development permit. When the matter was remanded, the City amended its Complaint to add causes of action relating to the ability of Owners to sell their units without development permits.[2] The Owners repaid all the rent overcharges and the City dismissed the rent control cause of action (the first cause of action).

Both the Owners and the City filed cross-motions for summary adjudication on the second, third and fourth causes of action. The superior court entered an order on May 23, 2005, granting the City's motion for summary adjudication and denying the owner's cross-motion. Judgment was entered in the City's favor and against E. D. Flores. For some reason the judgment did not include 1112 Co. and Remba. This appeal (the second appeal), brought in the name of 1112 Co., Remba, and Flores followed.

DISCUSSION

Mootness

The City contends in its respondent's brief, and in a separately filed motion to dismiss, that the appeal is moot because owner Flores has since received the development permits deemed necessary in the judgment. It also argues that with respect to 1112 Co. and Remba, the appeal is moot because they are not named in the judgment.

Owners contend the issue is not moot because the City required them to pay a fee and recorded a â€