Grand Ave. Enterprises v. City of Los Angeles

Filed 1/29/07 Grand Ave. Enterprises v. City of Los Angeles CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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 THREE

Appeal from a judgment of the Superior Court of Los Angeles County, David P. Yaffe and David L. Mining, Judges. Reversed.

Roger Jon Diamond for Plaintiffs and Appellants

Rockard J. Delgadillo, City Attorney, Jeri L. Burge, Assistant City Attorney, Michael L. Klekner and Steven N. Blau, Deputy City Attorneys for Defendants and Respondents.

______________________________

INTRODUCTION

Los Angeles Municipal Code (LAMC) section 12.70 forbids the location of an adult entertainment business within 500 feet of a school. Grand Avenue Enterprises, Inc. (GAE)[1] sought to open an adult entertainment concern in central Los Angeles. After issuing building permits to GAE, the Los Angeles Department of Building and Safety learned that the Los Angeles Unified School District had already obtained approval from the Division of State Architect to construct a middle school 150 feet from GAEs lap dancing cabaret. The Department of Building and Safety revoked GAEs permits prompting GAE to file a petition for writ of mandamus seeking to overturn the Departments action. The trial court denied the writ petition and granted the motion for judgment on the pleadings brought by defendant City of Los Angeles (the City) concerning GAEs claim for damages. GAE appeals. We hold that the Department of Building and Safety abused its discretion in relying on LAMC sections 12.70 B(11) and hence 12.70C as the basis for revoking GAEs permits. Accordingly, we reverse the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

a. The underlying events.

On January 17, 2001, the Los Angeles Unified School District (LAUSD) authorized a feasibility study for a new middle school for 1,512 students, referred to as Central Los Angeles Area New Middle School #4, to be located on Grand Avenue between 35th and 37th Streets in downtown Los Angeles. Beginning in February 2001, LAUSD held three public meetings to discuss the new school, and notified property owners of its decision to conduct a feasibility study of the school site and determine whether the property should be taken by eminent domain. Notice that the environmental impact report for the project was available for public inspection was published in three newspapers. On December 13, 2001, LAUSD applied to the Division of the State Architect for approval to construct Central Los Angeles Area New Middle School #4. The State Architect gave its approval on June 13, 2002, for the construction of the foundation system, anchor the overhead nonstructural elements, and conduct site work for the new school. Soon thereafter, in June 2002, LAUSD placed a six by ten foot sign on the property, about two hundred feet from 3700 South Grand Avenue, announcing the planned opening of the new middle school at the site in the fall of 2005.

Meanwhile, around October 19, 2001, after LAUSDs public notices and meetings, GAE, a limited partnership, was formed to open and operate an adult cabaret near downtown Los Angeles. It closed escrow on the property located at 3700 South Grand Avenue -- less than 150 feet from the proposed school site -- and submitted to the Citys Department of Building and Safety its plans to alter the existing warehouse at that location and to construct a lap dancing concern (an adult cabaret or a sexual encounter establishment). The Department of Building and Safety approved the plans and issued a building permit (permit 1) on September 6, 2002.

On October 23, 2002, the Department of Building and Safety issued a notice of intent to revoke permit 1 on the ground it had discovered that the cabaret was located within 500 feet of a residential zonein violation of LAMC section 12.70C. The notice stated that the permit was issued in error and would be rescinded within 10 days unless GAE submitted evidence showing why the permit should not be revoked. GAE did not respond and on November 15, 2002, that permit was revoked under the authority of LAMC section 98.0601 allowing for revocation of permits issued in error. GAE filed no appeal from that revocation.

Instead, GAE submitted revised plans and applied for a new building permit in January 2003, about six months after LAUSD received State approval for construction of its school. At the time GAE was pursuing its building permits, its architect was aware that LAUSDs schools obtain their permits from the State Architect, not the Department of Building and Safety. GAEs architect also knew to inquire with the State Architect whether it had approved school construction. Nonetheless, despite the presence since June 2002, of a large sign on the school site, GAE made no inquiry of the State Architects office whether it had given approval for a school within 500 feet of the adult cabarets site.

On February 19, 2003, the Department of Building and Safety issued GAE permit 2 based on GAEs revised plans. Permit 3 (Permit No. 03016-20001-00537), which clarified the work description in permit 2, was issued in July 2003.

On June 3, 2003, LAUSD began asbestos abatement and demolition of existing buildings in connection with construction of the Central Los Angeles Area New Middle School #4.

Three weeks later, around June 20, 2003, the Department of Building and Safety learned that the cabaret might be located within 500 feet of a school site. By then, renovation of the warehouse into a cabaret was nearly complete.

On July 23, 2003, the Los Angeles City Council decided to look into, among other things, why the permit was issued to the strip club, what options are available for the City including possible revocation of permits and possible reimbursement of fees which might have already been paid.

At a special meeting on August 5, 2003, the City Councils Planning and Land Use Management Committee considered the issue. The Department of Building and Safety staff reported that the cabaret was directly across the street from the proposed school and was 92 to 95 percent complete. At the close of the hearing, the City Councils committee recommended that the Department of Building and Safety be instructed to initiate proceedings to revoke GAEs building permit. The City Council unanimously adopted the committees report on August 13, 2003.

On August 20, 2003, the Department of Building and Safety issued a notice to GAE of its intent to revoke permits 2 and 3. The notice informed GAE of the City Councils committee recommendation based on the adult cabarets proximity to the school being constructed by LAUSD (italics added) and that GAE had 10 days to present evidence why the permits should not be revoked.

GAE filed its appeal with the Board of Building and Safety Commissioners (the Board). The Boards staff report indicated -- based on a list of dates LAUSD had provided the Department of Building and Safety -- that the school use had been established before the cabaret use. The State Architect had accepted plans for the school before GAE submitted its plans to the Department of Building and Safety for any of the three permits issued. LAUSD obtained plan approval from the State Architect before the Department of Building and Safety issued GAE any of its permits. The staff concluded that the Department of Building and Safety neither erred nor abused its discretion in its notice of intent to revoke permits 2 and 3 because the adult entertainment use would lie within 500 feet of a school in violation of LAMC section 12.70C, and so the permits were issued in error. (LAMC,  98.0601.)

At the October 7, 2003, appeal hearing before the Board, Department of Building and Safety staff member Peter Kim testified that the timing of the permit is highly sensitive . . . . According to Kim, the chronology and timing of permit issuance date is of most significance for the matter thats before you today. A GAE principal testified that GAE had spent $1.5 million for the site and asked the City to buy out the enterprise. He expressed GAEs need to open the cabaret to recoup some of its costs. GAEs attorney offered as a solution, that GAE be issued a temporary certificate of occupancy and revisit the question if and when the school is built, and GAE (1) would agree not to force the Department of Building and Safety to be bound by the occupancy certificate, and (2) would not assert its grandfathered rights. At the close of the appeal hearing, the Board voted unanimously that it did not err or abuse its discretion in its notice of intent to revoke building permits 2 and 3. GAE was given written notice of this ruling.

In September 2003, while its appeal was working through the Board, GAE filed a complaint in the trial court seeking injunctive relief, damages, and a writ of mandate.

After the Board issued its ruling, the trial court held a hearing on GAEs petition for writ of mandate. GAE argued, because it was not given a copy of the State Architects letter requiring that construction commence within one year of the State Architects approval, that GAE had been prevented from arguing to the Board that LAUSD did not have a valid permit because construction had not commenced within a year. The trial court ordered an interlocutory remand to the Board to clarify whether . . . it stands by its decision to revoke the permits issued to plaintiffs after considering the contents of the State Architects letter approving the construction of the school.

Returning from the trial court, the Board learned that LAUSDs project was approved on June 13, 2002, demolition and toxics abatement work started on June 3, 2003, and construction started in February 2004. The Board voted unanimously to uphold its decision to deny GAEs appeal.[2]

b. The instant proceedings.

GAE amended its complaint to allege one cause of action challenging the revocation of permits 2 and 3 as unlawful. Therein, GAE sought a writ of administrative mandate (Code Civ. Proc.,  1094.5) to overturn the Department of Building and Safetys decision to revoke building permits 2 and 3, and a writ of traditional mandate (Code Civ. Proc.,  1085) to compel the Department of Building and Safety to issue a certificate of occupancy. Alleging it suffered injury because it relied on the permits but was precluded from operating the cabaret, GAE sought damages, an injunction, and requested attorney fees pursuant to title 42 of the United States Code section 1983.

The trial court denied GAEs writ petition. In a nine-page statement of decision, the court resolved the legal claims against GAE. The court made its decision an interlocutory order and transferred the matter for reassignment to the trial department to try GAEs damages claim.

After reassignment, the City moved for judgment on the pleadings as to the damages GAE sought in its complaint. The City argued that the complaint alleged only one set of facts and the violation of one primary right, namely, the Citys revocation of the building permit. This alleged violation gave rise to alternative theories of recovery, according to the complaint. As all of the legal issues GAE raised in its complaint were resolved in favor of the City and against GAE in the mandate proceeding, the City argued that GAE was not entitled to damages on any of its claims. The court granted the Citys motion and denied GAE leave to amend. Judgment was entered and GAE filed its timely appeal. We are told that after GAE filed its appeal, it sold its building.

CONTENTIONS

Despite this convoluted factual scenario, GAE posits four general contentions: (1) the Department of Building and Safety unlawfully revoked permits 2 and 3; (2) the City is estopped from revoking the permits; (3) the Department of Building and Safetys interpretation of LAMC section 12.70C is unconstitutional; and (4) GAE is entitled to damages.

DISCUSSION

1. The Department of Building and Safety abused its discretion in revoking GAEs permits 2 and 3.

a. Standard of review.

The parties do not agree on the standard of review of the Boards decision to revoke GAEs permits 2 and 3. The proper method of obtaining judicial review of most public agency decisions is by instituting a proceeding for a writ of mandate. [Citation.] Statutes provide for two types of review by mandate: ordinary mandate and administrative mandate. (Code Civ. Proc.,  1085, 1094.5.) (Bunnett v. Regents of University of California (1995) 35 Cal.App.4th 843, 848.) Administrative mandamus under section 1094.5 is appropriate to inquire into the validity of any final administrative order or decision made as the result of a proceeding in which by law a hearing is required to be given, evidence is required to be taken, and discretion in the determination of facts is vested in the inferior tribunal. . . . [Citation.] (Conlan v. Bonta΄ (2002) 102 Cal.App.4th 745, 751-752, quoting from Code Civ. Proc.,  1094.5, subd. (a).) The trial court here properly reviewed this issue according to the rules of administrative mandamus.

On appeal from the grant or denial of a petition for administrative mandate, the appellate court reviews the record to determine whether substantial evidence supports the trial courts findings. (Intercommunity Medical Center v. Belsh (1995) 32 Cal.App.4th 1708, 1711.) Insofar as facts are not in dispute, the appellate court need only determine whether the Departments ruling was so arbitrary and capricious as to amount to an abuse of discretion. [Citations.] (Simi Valley Adventist Hospital v. Bonta΄ (2000) 81 Cal.App.4th 346, 352; Intercommunity Medical Center v. Belsh, supra, at p. 1711.) However, we are not bound by the trial courts findings to the extent they constitute conclusions of law. (Family Planning Associates Medical Group, Inc. v. Belsh (1998) 62 Cal.App.4th 999, 1004.) The issue presented here is one of law because it involves solely a question of statutory construction. (Matera v. McLeod (2006) 145 Cal.App.4th 44, 66.)

b. The Department of Building and Safetys interpretation of LAMC section 12.70B(11) was unreasonable and arbitrary.

GAEs central, albeit extremely loquacious, contention is that the Department of Building and Safety wrongfully revoked its permits 2 and 3.

Municipalities have limited authority to revoke a permit once granted. A permit may not be revoked arbitrarily and without cause.  [A]ny alleged agreement to permit development without application of land use regulations would be invalid and unenforceable as contrary to public policy. [Citation.] (Burchett v. City of Newport Beach (1995) 33 Cal.App.4th 1472, 1480, quoting from Smith v. City and County of San Francisco (1990) 225 Cal.App.3d 38, 55.)

LAMC section 98.0601(a)(2) authorizes the Department of Building and Safety to revoke any permit, slight modification or determination whenever such action was granted in error or in violation of other provisions of the Code and conditions are such that the action should not have been allowed. (See also LAMC  11.02 [unlawful for City to issue permit in violation of any code provision], 12.26A(2) [permit issued in violation of code is null and void].)

GAE does not challenge the general right of the Department of Building and Safety to revoke a permit that was improperly granted. Indeed, GAE did not challenge the Departments revocation of permit 1. Nor does GAE insist that its cabaret would be located beyond the 500-foot buffer zone, or that it would have received a building permit if a school were open and operating at 37th and Grand Avenues. Rather, GAE argues that the plain language of LAMC section 12.70B(11) applies only to existing or open schools, not to schools under construction or planned for the future, with the result that permits 2 and 3 did not violate LAMC section 12.70C and should not have been revoked.

LAMC section 12.70B(11) defines school as an institution of learning for minors . . . which offers instruction in those courses of study required by the California Education Code. (Italics added.) In determining whether the approval to construct a school from the State Architect coupled with demolition and toxics abatement on the site constitutes a school within the meaning of LAMC section 12.70B(11), we apply the usual rules of statutory construction.[3]

[W]e must ascertain the intent of the drafters so as to effectuate the purpose of the law. [Citation.] Because the statutory language is generally the most reliable indicator of legislative intent, we first examine the words themselves, giving them their usual and ordinary meaning and construing them in context. [Citation.] (Mejia v. Reed (2003) 31 Cal.4th 657, 663.) If the language of a statute is unambiguous, the plain meaning governs and it is unnecessary to resort to extrinsic sources to determine the legislative intent. (Kavanaugh v. WestSonomaCountyUnionHigh School Dist. (2003) 29 Cal.4th 911, 919.) If the statutory language does not yield a plain meaning, we may consider extrinsic evidence of intent, including the legislative history. (Mejia v. Reed, supra, at p. 663.)

Applying these rules, we conclude that the language of LAMC section 12.70B(11) is clear on its face. LAUSDs Central Los Angeles Area New Middle School #4 was not a school as contemplated by the LAMC at the time GAE applied for its permits 2 and 3. We reach this conclusion because the words of the ordinance are unambiguous: the definition of school is stated in the present tense as an institution that offers instruction, not one that will offer instruction in the future. Manifestly, an institution that offers instruction under LAMC section 12.70B(11) is one that is open and operating. We disagree with the Citys argument that our interpretation of the Municipal Code would mean that a school forfeits its charter as a school over the summer and winter recesses, or over the weekend. During those periods of time, the school continues to offer instruction. By contrast, no building can offer classes to children while it is being constructed. Our interpretation serves the purpose behind LAMC section 12.70, namely, to prevent the concentration and localization of adult entertainment near where impressionable youngsters are congregating because they are attending school. It also prevents the Department of Building and Safety from excluding adult entertainment on the off chance that a school might be constructed in the area.[4] At the time GAE received its permits, Central Los Angeles Area New Middle School #4 was not offering instruction. Indeed, as the City admits, the LAUSD had only received approval and had commenced demolition and abatement.

Because we conclude that Central Los Angeles Area New Middle School #4 was not a school as defined in LAMC section 12.70B(11), permits 2 and 3 did not violate LAMC section 12.70C and were not granted in error.[5] Therefore, the Department of Building and Safety abused its discretion when it relied on LAMC sections 12.70B(11) and hence 12.70C to revoke those permits. Given our conclusion here, we need not address GAEs further contentions that the Department of Building and Safety is estopped from revoking the permits.[6]

2. This case does not present any constitutional issues.

GAE makes several scattershot contentions under this rubric, none of which is availing. GAE first argues that the City Council denied it due process by failing to notify it of the City Councils hearing and thus denying GAE an opportunity to be heard at those hearings. Due process principles require reasonable notice and opportunity to be heard before governmental deprivation of a significant property interest. [Citations.] [] It is equally well settled, however, that only those governmental decisions which are adjudicative in nature are subject to procedural due process principles. Legislative action is not burdened by such requirements. [Citations.] (Horn v. County of Ventura (1979) 24 Cal.3d 605, 612.) The City Council merely recommended that the Department of Building and Safety initiate proceedings to revoke the permits. Its conduct was not adjudicatory. The adjudicative body in this case was the Department of Building and Safety and the Board. GAE does not, and indeed cannot, contend it was denied notice and an opportunity to be heard in the two hearings held by the Board to determine whether the Department of Building and Safety abused its discretion in revoking the permits.

GAE also cites Young v. City of Simi Valley (9th Cir. 2000) 216 F.3d 807.[7] There, after Young, an adult business, applied for a permit, a third party who knew of Youngs plans, sought permission to open an adult bible study school within Youngs buffer zone, thus trumping Youngs use and preventing Young from receiving its permit. The Ninth Circuit held that an ordinance which allowed a religious organization, a school, or other sensitive use to file a permit application with the City at any time before the adult entertainment use received approval of its project effectively nullified the few areas in the City set aside for adult uses. (Id. at pp. 817-818.) Such an unfettered power of the sensitive third party constituted an unconstitutional veto. (Id. at p. 818.)

Young is inapposite. There, the bible study group knew full well of the adult business prior complete application and yet had the power to file a subsequent application to thwart the adult business. By contrast, here, the LAUSD project predated that of GAE. LAUSD had already notified the neighborhood and local property owners of its plans and held three public hearings into the proposed Central Los Angeles Area New Middle School #4 before GAE even purchased its property. Indeed, GAE conceded to the trial court that this is not a case where the school district is running in and putting a school there just to prevent GAE from opening an adult enterprise.[8](Italics added.)

Finally, GAE makes general contentions that the Citys interpretation of LAMC section 12.70C unconstitutionally violates GAEs rights protected by the First Amendment of the United States Constitution. GAE commences its appellate brief by reciting hornbook law involving the First Amendment. GAE cites numerous cases to make constitutional arguments based on the assumption that because its adult cabaret is adult entertainment, ipso facto the City has violated its constitutional rights. However, GAE has provided us with no analysis or discussion to explain how the legal authority it cites is relevant or applies to the facts of this case. Nor, for that matter, has GAE cited us to anywhere in the record where the First Amendment was raised before the trial court. Therefore, the contentions are not properly raised. (Associated Builders & Contractors, Inc. v. San Francisco Airports Com. (1999) 21 Cal.4th 352, 366, fn. 2.)

3. The trial court erred in granting judgment on the pleadings.

California courts employ the primary rights theory to determine the scope of causes of action. [Citation.] Under this theory, there is only a single cause of action for the invasion of one primary right. In determining the primary right, the significant factor is the harm suffered. [Citation.] (Swartzendruber v. City of San Diego (1992) 3 Cal.App.4th 896, 904, disapproved on other grounds in Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 72.)

GAEs complaint pleads one set of operative facts violating one primary right, namely, the Citys alleged wrongful revocation of building permits 2 and 3. GAE sought writs of mandate to overturn the Department of Building and Safetys decision to revoke the permits. GAE alleged that the City should be estopped from prohibiting operation of GAEs establishment. GAE also prayed for damages. The trial court granted the Citys motion for judgment on the pleadings because all of the legal issues raised in GAEs complaint were resolved in favor of the City in the mandate proceeding with the result that GAE was not entitled to damages. For the reasons explained in the earlier portion of this opinion, supra, we reverse the trial courts ruling denying the writ petition. As GAE concedes in its brief, all that remains is for GAE to recover damages. Of course, the City is entitled to adduce all relevant evidence in mitigation.[9] Accordingly, the order granting the City its motion for judgment on the pleadings must be reversed.

DISPOSITION

The judgment is reversed. Each party is to bear its own costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ALDRICH, J.

We concur:

CROSKEY, Acting P. J.

KITCHING, J.

Publication Courtesy of California attorney referral.

Analysis and review provided by Vista Property line Lawyers.

[1] Petitioners are GAE, Luh Bochner, LLC, Derek Luh, David Chew, Won Kim, and Bing Luh.

[2] GAE filed petitions for writ of mandate and supersedeas in this Court to challenge the trial courts denial of its preliminary injunction application. We summarily denied those petitions on December 10, 2003.

[3] We asked the parties for the legislative history and for additional briefing on the question of the meaning of the definition of school in LAMC section 12.70B.

[4] We are only addressing the facts that are presented in this case. It would be inappropriate for us to address the parade of possible scenarios concerning application of LAMC sections 12.70B(11) and 12.70C.

[5] Among the bases for revoking the permit was LAMC section 91.6205.16. The Department of Building and Safety considers which permit was issued first. However, as GAE observes, LAMC section 91.6205.16 pertains to signage and is not relevant to the issue of permits to construct buildings.

[6] We note, because GAE sold its building, that its contention that the City is estopped from denying it an occupancy permit is moot.

[7] In support of its constitutional arguments, GAE cites generally, and without pin-point citation or analysis, to both Young v. City of Simi Valley, supra, 216 F.3d 807, and Tollis, Inc. v. San Bernardino County (9th Cir. 1987) 827 F.2d 1329, 1333. GAE fails to explain how these cases aid in its analysis or otherwise help its contentions. Merely alluding to a constitutional argument without application to the facts does not provide this court with sufficient discussion to consider the arguments. (Berger v. California Ins. Guarantee Assn. (2005) 128 Cal.App.4th 989, 1007.)

[8] Because Young v. City of Simi Valley, supra, 216 F.3d 807 is distinguished, we deny GAEs request for judicial notice, filed February 3, 2006, as irrelevant. We further reject GAEs contention that the Citys application of the ordinance in this case is unconstitutionally overbroad or vague.

[9] By this ruling we are not limiting the trial courts determination about what facts are relevant to damages and mitigation.