Fabricante Development v. City of Oxnard

Filed 12/30/09 Fabricante Development v. City of Oxnard CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

Appellant Fabricante purchased residential property in the City of Oxnard's business district. The residential use predated a change in zoning, thus the city allowed the residential use to continue, subject to the terms of the city's nonconforming use ordinance. Appellant applied for permits to repair the property. The city did not act on the permits and Fabricante filed a petition for writ of mandate and a complaint for declaratory relief and inverse condemnation. The city issued a letter denying the permits and informing Fabricante that the property no longer had nonconforming use status. Fabricante subsequently lost the property through foreclosure. It dismissed its writ petition, but proceeded against the city on the remaining causes of action. The city moved for summary judgment and demurred to a recently added cause of action under 42 United States Code section 1983 (hereafter 42 U.S.C. 1983). The trial court granted the city's motion for summary judgment and sustained its demurrer without leave to amend. We affirm.

FACTS

The operative pleading is the second amended complaint. Appellants Marvin Kapelus and Audrey Kapelus are the sole shareholders in Fabricante Development, Inc. (Fabricante). In August 2006, Fabricante purchased real property commonly known as 217-235 East 6th Street (property) in Oxnard, California. The property, located in the city's central business district, had legal nonconforming use status. Its residential use predated the change in zoning and could continue, subject to the terms of the city's nonconforming use ordinance. Fabricante planned to repair the structures and lease the property to residential tenants.

In November 2006, Fabricante filed a permit application with the city, requesting permission to replace 14 windows, paint four duplex units and demolish one building. According to Fabricante's pleadings, the city refused to process his permits. The city planner indicated to Fabricante that it could not process its applications and Fabricante would be required to seek a special use permit (SUP). The property had been vacant for longer than six months, and as specified by the city code, it had lost its nonconforming use status. The city planner subsequently informed Fabricante that she had instructed all departments, including utility services, not to issue permits, licensing or services for the site. As a result, Fabricante was unable to connect utility services to the property.

On March 12, 2007, Fabricante filed a petition for a writ of mandate and a complaint for declaratory relief, seeking to compel the city to process the permit applications. Fabricante also sought damages for inverse condemnation. The city demurred on April 27. The court sustained the demurrer with leave to amend on the ground that Fabricante had failed to allege facts showing that it had exhausted its administrative remedies.

First Amended Complaint

Fabricante filed its first amended complaint on July 27, 2007. On August 13, the city notified Fabricante by letter that its nonconforming use had been lost and denied its permit request. The city reiterated in its letter that the property had lost its nonconforming use status because it had not been used for residential purposes for six months or more, as required by section 16-508(D) of the City Code.

In its letter, the city stated that there had been no water service to three of the four units since October 2003 and no water service to a fourth unit since December 2005. In April 2006, the code compliance division boarded up all the units. We note that these events preceded the filing of Fabricante's permit applications in November 2006. The city's letter made reference to its unsuccessful attempts to meet with Fabricante to discuss the nonconforming use, and stated that Fabricante could appeal the city's final decision to the development services director within 10 days. Fabricante did not appeal.

On August 31, 2007 the city demurred. The trial court took the matter under submission and issued a written ruling on October 25. The court overruled the demurrer to the first amended complaint as to all three causes of action (writ of mandate, declaratory relief and inverse condemnation). The court concluded that there was no administrative review procedure by which Fabricante could challenge the city's determination that the nonconforming residential use of the property had been lost, or that Fabricante would require an SUP to use the property for residential purposes. The court gave the city 20 days to file its responsive pleading. On November 14, the city filed an answer to the first amended complaint, denying Fabricante's allegations.

The course of the litigation changed abruptly when Fabricante lost the property to foreclosure. It was sold at a public auction on November 27, 2007, for $781,770.63. In January 2008, Fabricante dismissed as moot its cause of action for a writ of mandate. In a letter to the city, Fabricante indicated it would nevertheless proceed on the causes of action for declaratory relief and inverse condemnation.

City's Motion for Summary Judgment

In May 2008, the city moved for summary judgment, or in the alternative, summary adjudication. The city noted that Fabricante had dismissed its writ petition. As to the cause of action for declaratory relief, the city contended that Fabricante lacked standing to bring the action and that declaratory relief was not appropriate for seeking review of an administrative decision. The city alleged that Fabricante no longer owned the property, and thus could not maintain a claim for inverse condemnation.

Second Amended Complaint

Before the hearing on the motion for summary judgment, Fabricante requested leave to file a second amended complaint. It sought to add Marvin Kapelus and Audrey Kapelus as plaintiffs and add a cause of action for violation of their civil rights under 42 U.S.C. 1983. Fabricante admitted that the cause of action for a writ of mandate had been mooted by the sale of the property. The parties stipulated that the proposed second amended complaint would be deemed filed, without a need for a hearing.

In its cause of action for declaratory relief, Fabricante alleged that it was entitled to a judicial determination concerning the propriety of the city's delay in processing the permit application and its termination of Fabricante's legal nonconforming use. In its cause of action for inverse condemnation, Fabricante alleged that the city's conduct prevented Fabricante from renting the property, causing its loss by foreclosure. This allegedly constituted a taking, entitling Fabricante to compensation of $720,000. Fabricante further alleged that the city's conduct constituted a violation of the Kapelus's rights to substantive and procedural due process under 42 U.S.C. 1983. The city demurred to the section 1983 cause of action.

Fabricante's Opposition to Motion for Summary Judgment

Eight days after it filed its second amended complaint, Fabricante filed opposition to the city's motion for summary judgment. Fabricante acknowledged that it lacked standing to pursue its declaratory relief claim because it no longer owned the property. Nonetheless, it argued that it had standing to seek damages for inverse condemnation. It asserted that it was not required to exhaust its administrative remedies before filing a lawsuit because the city had no administrative review procedure by which to adjudicate its claim.

Trial Court's Ruling

The trial court heard the motion for summary judgment and the demurrer on the section 1983 cause of action together. On November 13, 2008, it issued an order (1) granting summary adjudication on the causes of action for declaratory relief and inverse condemnation, and (2) sustaining the demurrer without leave to amend the cause of action for violation of 42 U.S.C. 1983.

In its written ruling, the court stated that an action against a public entity for either inverse condemnation or a claim under 42 U.S.C. 1983 cannot be maintained unless the plaintiff first exhausts its administrative remedies. The court noted that Fabricante had dismissed the cause of action for a traditional writ of mandate. (Code Civ. Proc.,  1085.)[1] It concluded that, because Fabricante no longer owned the property, it lacked standing to seek judicial review of the city's decision through administrative mandamus. ( 1094.5.) The court granted summary adjudication based on Fabricante's lack of ownership and because it had not obtained a writ compelling the city to issue a permit. Fabricante appeals the orders granting summary adjudication and sustaining the demurrer without leave to amend.

DISCUSSION

A ruling on a summary judgment motion is reviewed de novo to determine whether there exist any triable issues of material fact. ( 437c, subd. (c); Artiglio v. Corning Inc. (1998) 18 Cal.4th 604, 612.) We independently review an order sustaining a general demurrer to determine whether the complaint pleads facts sufficient to state a cause of action. (See Kendrick v. City of Eureka (2000) 82 Cal.App.4th 364, 368.) Here, we are asked to review the two surviving causes of action: Fabricante's inverse condemnation and civil rights claims. We do not consider its cause of action for declaratory relief because Fabricante (in its opposition to the motion for summary judgment), admitted that it lacked standing to pursue such a claim because it no longer owned the property.

On appeal, Fabricante argues that (1) the city's refusal to process its permit applications and blocking of utility access constituted a regulatory taking, to which it is entitled to compensation; (2) it was entitled to a hearing before it was deprived of its nonconforming use status and denied permits; and (3) the city violated the Kapelus's substantive and procedural due process rights by instructing various city agencies to withhold permits and utility services.

A writ of mandate may be issued by a court to compel the performance of a ministerial duty. ( 1085; 8 Witkin, California Procedure (5th ed. 2008) Extraordinary Writs,  23, pp. 902-903;  74, p. 954.) Administrative mandamus refers to issuance of a writ for judicial review of an administrative body's decision. ( 1094.5; 8 Witkin, California Procedure (5th ed. 2008) Extraordinary Writs,  263, p. 1171.) A takings claim must first be brought before an administrative body for adjudication. Once a decision has been rendered, the claim may be brought for judicial review by way of administrative mandamus. (Hensler v. City of Glendale (1994) 8 Cal.4th 1, 10-11;  1094.5.)

In the case of a regulatory taking, compensation is only required where the regulation has deprived the owner of the economic use of his property. (Hensler v. City of Glendale, supra, 8 Cal.4th at p. 10.) Whether imposition of a regulation constitutes a compensable taking requires an individualized assessment of the regulation and its effect on the property. (Ibid.)

Fabricante acknowledges that administrative mandamus is a prerequisite to a claim for inverse condemnation. It argues, however, that it is not a prerequisite to a claim for violation of substantive and procedural due process "where the violation is independent from the takings claim." Fabricante adds that it would not have been possible to exhaust its administrative remedies, because the city lacked an administrative hearing procedure to consider its claim.

Fabricante's takings claim fails because it did not lose use of the property due to imposition of a governmental regulation; rather, it lost it through foreclosure. We have previously addressed this issue in County of San Luis Obispo v. Superior Court (Munari) (2001) 90 Cal.App.4th 288. There, the plaintiff, Munari, owned over 800 acres of land that he wished to develop. He applied to the county planning department for certificates of compliance, to reflect that the property complied with the Subdivision Map Act. The planning commission rejected his request and he appealed to the board of supervisors, which upheld the decision of the planning department.

Munari filed an action for damages, declaratory relief, violation of his civil rights, inverse condemnation, and a writ of administrative mandate, challenging the denial of his application for certificates of compliance. He claimed that the county had unreasonably delayed its decision, interfered with his property rights and devalued the property. Shortly thereafter, Munari filed for bankruptcy and lost the property by foreclosure.

We concluded that Munari lacked standing to proceed. The foreclosure divested him of all interest in the property, thus it was impossible for him to receive relief. (County of San Luis Obispo v. Superior Court (Munari), supra, 90 Cal.App.4th at pp. 292, 295.) We stated, "Munari presently has no beneficial interest in the property. He has no more rights than any other stranger to the title. What Munari apparently seeks is a hypothetical determination that he would be entitled to the certificates if he were the owner or vendee of the property." (Id. at p. 293.)

The same analysis applies here. Fabricante filed a writ petition to compel the city to issue permits and determine whether the property had nonconforming use status. On October 25, 2007, the trial court overruled the city's demurrer to the first amended complaint on the ground that the city lacked an administrative hearing procedure to allow Fabricante to adjudicate its claim. Shortly thereafter, Fabricante lost the property and dismissed the writ petition as moot. It had become a stranger to the title.

Nevertheless, Fabricante argues that it can proceed with its inverse condemnation cause of action without having obtained administrative mandamus. It relies on the trial court's October 25, 2007, ruling to support this assertion. Fabricante overlooks the fact that the ruling was issued while it still held title to the property. Once the property was foreclosed upon, the city's administrative procedures, or lack thereof, became irrelevant because Fabricante was divested of its interest. Moreover, the October 25, 2007, ruling on the demurrer to the first amended complaint has no bearing on the matter before us. The instant appeal is taken from the trial court's 2008 ruling sustaining a demurrer without leave to amend to the second amended complaint. This ruling was issued after the property was foreclosed upon. We conclude that Fabricante no longer has standing to proceed against the city.

We reject Fabricante's contention that it is entitled to a judicial declaration or monetary compensation for the city's alleged delay in processing its permit request. Fabricante proceeded correctly by filing a petition for a writ of ordinary mandate to compel the city to issue the requested permits. ( 1085; See County of San Luis Obispo v. Superior Court (Munari), supra, 90 Cal.App.4th at p. 295 [ordinary mandate may not compel exercise of discretion in a particular manner, but may compel public officer to act].) Fabricante, however, dismissed its writ petition as moot, abandoning that remedy.

For the reasons stated, there is no basis for the Kapelus's civil rights claim. There can be no violation of due process in the denial of permits, loss of nonconforming use and/or cessation of utility services to parties who have no beneficial interest in the property. Fabricante has not succeeded in raising a triable issue of fact that it has a property interest entitling it to relief. There is no reasonable probability that its complaint can be successfully amended to state a cause of action under any legal theory.

DISPOSITION

The judgment (order granting summary adjudication and sustaining demurrer without leave to amend) is affirmed. Costs on appeal are awarded to respondent City of Oxnard.

NOT TO BE PUBLISHED.

COFFEE, J.

We concur:

YEGAN, Acting P.J.

PERREN, J.

Henry J. Walsh, Judge

Superior Court County of Ventura

______________________________

Ryan Kerbow for Plaintiffs and Appellants Fabricante Development, Inc., Marvin Kapelus and Audrey Kapelus.

Price Postel & Parma, Timothy E. Metzinger, Mark S. Manion for Defendant and Respondent City of Oxnard.

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[1]All statutory references are to the Code of Civil Procedure unless unless otherwise stated.