Mikaelian v. City of Goleta

Filed 9/20/07 Mikaelian v. City of Goleta 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 Hersel Mikaelian purchased land in Santa Barbara County. He subdivided the land while the property was subject to the authority of the County of Santa Barbara. Before he could complete development of the property, the area was incorporated as part of the new City of Goleta (City). He complains that the City wrongfully denied his various applications for land use permits and imposed building restrictions in violation of state and federal due process and equal protection rights. He contends these actions were motivated by the personal animus of the City's mayor based, in part, on his ethnicity. Finally, he contends that as a result of the City's intentional conduct, he suffered emotional distress.

The trial court sustained the City's demurrer to the constitutional and negligent infliction of emotional distress claims in the second amended complaint without leave to amend. The demurrer to the intentional infliction of emotional distress claim was sustained with leave to amend. We affirm.

FACTUAL AND PROCEDURAL HISTORY

Allegations of the Complaint

The second amended complaint alleges that Mikaelian purchased property in the County of Santa Barbara in 1977. In 1986, the county approved a final subdivision map dividing the property into 13 lots. Mikaelian complied with all conditions of the final map and received all required certificates of completion from the county.

The City was incorporated on February 1, 2002. At the time of incorporation, the City Council adopted all of the county's land use regulations and zoning ordinances. These regulations and ordinances contained no restrictions on the size of homes on Mikaelian's lots, and residential second units were expressly permitted for each of his lots.

In February 2002, Mikaelian applied to the City for a building permit for a single family residence and a second unit on one of his lots. Subsequently, the City imposed a moratorium on the processing of permits for residential second units.

During the moratorium, Mikaelian contacted respondent Jack Hawxhurst, the City's mayor, about his application. In a telephone conversation, Hawxhurst allegedly said: "'I know who you are! You are a greedy developer just like Jeff Bermant! I know how much you are making, and I am going to tell all the neighbors about how much you are going to be making.' . . . 'Get the hell out of here and go back to your own country!'"

In January 2003, the City advised Mikaelian that it was able to process second residential units and that it would consider all applications submitted within one month. Mikaelian submitted a timely application. Before Mikaelian's application was considered, however, the City adopted an ordinance restricting residential second units to one every 300 feet or three houses. This limitation restricted Mikaelian to three second residential units on his property.

Mikaelian submitted his plans to the City's Design Review Board (DRB). In September 2003, the DRB gave conceptual approval to the residence and second unit.

Before the DRB gave final approval to the plans, certain City Council members, including Mayor Hawxhurst, told DRB members that if the DRB approved the plans, the approval would be appealed.

The DRB gave final approval to the plans, and Mayor Hawxhurst appealed the approval. While the appeal was pending, the City began the process of adopting new floor area ratio (FAR) regulations.

Mikaelian submitted applications for residences on two additional lots, but was advised by the City Attorney that the plans would not be approved under the new regulations. On March 12, 2004, the City Attorney told Mikaelian's attorney that "actions by the Planning Agency with respect to Plaintiff's application was [sic] final, there was no appeal to the City Council, and that 'no further administrative proceeding was necessary in order to seek judicial review of this matter.'" During this time, the City permitted three pending remodels to proceed without consideration of the new proposed FAR guidelines. The City also approved a single family residence on a smaller lot with a greater FAR without question or comment. City staff acknowledged that Mikaelian's project had a FAR comparable to others in the neighborhood.

The City then announced that, as part of its new general plan, it would impose a one-story height limitation on Mikaelian's property, even though a high percentage of homes in the immediate vicinity were two-story structures. Under the new general plan, other properties in the vicinity would be zoned to allow two-story structures. "Prospective purchasers of Plaintiff's Property were told that only single story residences would be allowed on the lots, thus discouraging them from proceeding with a purchase of the Property."

At some time during the application process, the City Attorney advised Mikaelian's attorney that Mikaelian would no longer be allowed to enter City Hall or have access to City staff unless accompanied by his attorney.

Due to respondents' conduct, Mikaelian was forced to abandon development of the property, and he has put the land on the market for sale. The City has discouraged all potential purchasers of the property by telling them that the restrictions on the property prohibit any commercially feasible development.

Procedural History

On May 7, 2004, Mikaelian filed a claim against the City for $11,000,000. The City denied the claim on July 8, 2004.

On January 7, 2005, he filed a complaint for damages against the City, Mayor Hawxhurst, two other members of the City Council and the City Manager. The complaint alleged inverse condemnation, denial of substantive and procedural due process and equal protection under the California Constitution and title 42 United States Code section 1983, and intentional and negligent affliction of emotional distress. In response to demurrers filed by the City, Mikaelian filed first and second amended complaints.

The second amended complaint continued to claim violation of Mikaelian's rights to due process and equal protection and negligent and intentional infliction of emotional distress, but did not allege a cause of action for inverse condemnation.

After hearing on November 22, 2005, the trial court sustained the

City's demurrer without leave to amend as to all causes of action except the claim for intentional infliction of emotional distress. The demurrer to that cause of action was sustained with leave to amend.

In a lengthy tentative ruling, the trial court indicated it was sustaining the demurrer on the grounds that Mikaelian failed to obtain a final decision on the level of development that would be allowed on each of his lots, failed to exhaust administrative remedies, and failed to file his action within the applicable statute of limitations.

An order was signed on April 6, 2006, and an order of dismissal was entered on April 24, 2006.

In this appeal, Mikaelian argues the trial court erred in sustaining the demurrer without leave to amend because claims of due process and equal protection violations do not require final administrative action as to development of the property or exhaustion of administrative remedies, and such claims are not subject to the 90-day statute of limitations in Government Code section 65009. He also asserts the claim for intentional infliction of emotional distress states facts sufficient to withstand demurrer.

DISCUSSION

Standard of Review

We independently review the complaint following the sustaining of a demurrer without leave to amend to determine whether it alleges facts sufficient to state a cause of action. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38-39.) We read the complaint as a whole and assume the truth of all well-pleaded facts. (Id. at p. 38.) We do not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts. (Long Beach Equities, Inc. v. County of Ventura (1991) 231 Cal.App.3d 1016, 1024.) If the factual allegations and reasonable inferences drawn from those allegations are adequate to state a cause of action under any theory, the demurrer must be overruled. (Quelimane Co., at p. 38.)

Due Process and Equal Protection Claims

Labels Do Not Determine the Gravamen of a Complaint

The trial court sustained the demurrer to Mikaelian's due process and equal protection claims on the grounds that he failed to obtain a final decision as to the level of development that would be allowed, failed to exhaust his administrative remedies, and failed to file his action within the statute of limitations.

Mikaelian asserts it was error for the trial court to apply these procedural requirements because his second amended complaint does not contain a cause of action for inverse condemnation. The trial court did not err.

The court succinctly summarized the law as follows: "In omitting his cause of action for inverse condemnation, and instead seeking basically the same compensation under 42 U.S.C. 1983 (by merely characterizing it as 'damages' arising from the denial of the development permit rather than 'just compensation' arising from the same alleged injury) plaintiff has attempted to circumvent the stringent prerequisites to a challenge to application of a land use regulation or decision. The damages claimed make clear that plaintiff believes defendant has improperly denied him the ability to develop his property in the manner he wishes, i.e., that through application of its regulations, the City has 'taken' his property and development rights. Regardless of how plaintiff has chosen to denominate his causes of action, and regardless of how he characterizes the 'compensation' he seeks, it is quite clear that compliance with the ripeness, exhaustion, and short statute of limitations for challenges to application of land use regulations and/or denials of permits is required before he can seek compensation in the courts."

In short, it is the gravamen of the complaint, not the labels of the parties, that determines the nature of the action and the procedures for filing the action. (Hensler v. City of Glendale (1994) 8 Cal.4th 1, 22-23.)

Ripeness and Exhaustion of Administrative Remedies

An action for damages under title 42 United States Code section 1983 based on a regulatory taking is premature until the plaintiff has (1) obtained a final determination from the administrative agency charged with enforcing the regulation (Williamson Planning Comm'n v. Hamilton Bank (1985) 473 U.S. 172, 186-187 (Williamson)), and (2) exhausted his state-provided remedies for receiving just compensation for the alleged taking. (Id. at pp. 194-197.)

"While the policies underlying the two concepts often overlap, the finality requirement is concerned with whether the initial decisionmaker has arrived at a definitive position on the issue that inflicts an actual, concrete injury; the exhaustion requirement generally refers to administrative and judicial procedures by which an injured party may seek review of an adverse decision and obtain a remedy if the decision is found to be unlawful or otherwise inappropriate." (Williamson, supra, 473 U.S. 172, 193.)

The second amended complaint contains no allegations that Mikaelian received any final administrative approval for any of his lots. The complaint alleges only that the DRB approved the design for the first lot. There is no allegation that the appeal of the DRBs approval of the first lot was ever heard or decided by the City Council. The complaint also is devoid of allegations that any administrative decision at all was obtained for the development of the two additional lots. (See, e.g., Long Beach Equities, Inc. v. County of Ventura, supra, 231 Cal.App.3d 1016, 1041 [allegations of deprivation of due process and equal protection pursuant to title 42 United States Code sections 1983 and 1988 not ripe because there was no final decision on meaningful applications].)

Mikaelian asserts that no final decision by the City Council was necessary because the City Attorney told Mikaelians attorney that decision on his applications was final and no appeal to the City Council was authorized or required. In support of this assertion, Mikaelian submits a letter written by his attorney to the City Attorney seeking confirmation that no appeal was necessary. The record contains no written response from the City Attorney, and the letter from Mikaelian's attorney is inadmissible hearsay. Moreover, even if the letter were admissible, it would not support Mikaelian's claim. It is well-established that the erroneous advice of a member of a city's staff does not bind the city or waive procedural requirements. (See, e.g., Page v. City of Montebello (1980) 112 Cal.App.3d 658, 669 [unauthorized promise by employee cannot be grounds for an estoppel against the city where the means and limitations upon the entity's power to act are prescribed by statute]; see also Moore v. State Bd. of Control (2003) 112 Cal.App.4th 371, 385 [same].)

Mikaelian also alleges that he was excused from obtaining a final administrative decision because it would have been futile to attempt to do so. "'The futility exception requires that the party invoking the exception "can positively state that the [agency] has declared what its ruling will be on a particular case."'" (CoachellaValley Mosquito & Vector Control Dist. v. California Public Employment Relations Bd. (2005) 35 Cal.4th 1072, 1080-1081.) Mikaelian cannot invoke the futility exception merely by alleging that the City Attorney told his attorney that his project applications would not be approved. Rather, he must show how the City Council, as the final administrative decisionmaker, would rule on his applications. He has made no such showing as to any of the lots. (See, e.g., Tri-County Special Educ. Local Plan Area v. County of Tuolumne (2004) 123 Cal.App.4th 563, 576.)

Exhaustion of administrative remedies requires a property owner to utilize whatever procedures are provided by a public entity to appeal an unfavorable land use decision before he seeks judicial review. In Mola Development Corp. v. City of Seal Beach (1997) 57 Cal.App.4th 405, 410, the Court of Appeal explained: "'[W]here an administrative tribunal has rendered a quasi-judicial decision which could be challenged by administrative mandamus pursuant to Code of Civil Procedure section 1094.5, a party's failure to pursue that remedy may collaterally estop a federal civil rights action. This "is a form of res judicata, of giving collateral estoppel effect to the administrative agency's decision, because that decision has achieved finality due to the aggrieved party's failure to pursue the exclusive judicial remedy for reviewing administrative action."'"

California provides a procedure for an applicant to seek just compensation for alleged injuries from regulatory takings. The aggrieved applicant may file an action for administrative mandamus under Code of Civil Procedure section 1094.5 to determine whether the agency's regulatory restrictions constituted an impermissible taking rather than a valid exercise of its police powers; the applicant can seek damages if a taking is found either under Code of Civil Procedure section 1095 or, if the plaintiff wishes to preserve his right to a jury trial, by an action for inverse condemnation. (Hensler v. City of Glendale, supra, 8 Cal.4th 1, 13-19.)

Mikaelian received no final administrative decision as to development on any of his lots; therefore, his claim is not ripe. He also did not file a petition for writ of administrative mandamus before seeking damages; therefore, he failed to exhaust administrative remedies.

Statute of Limitations

Challenges to the application of land use regulations to a specific property are governed by Government Code section 65009. A judicial challenge to a land use decision must be initiated within 90 days of that decision. (Gov. Code,  65009, subd. (c); Hensler v. City of Glendale, supra, 8 Cal.4th 1, 22.)

Mikaelian asserts his claims are not subject to Government Code section 65009 because he is alleging violations of due process and equal protection. This argument has been made and rejected in numerous cases. As stated in Hensler v. City of Glendale, supra, 8 Cal.4th 1, 23, "'[T]he nature of the right sued upon and not the form of action nor the relief demanded determines the applicability of the statute of limitations under our code.'"

This action concerns the application of zoning and land use regulations restricting development of property. Therefore, Government Code section 65009 applies. The actions about which Mikaelian complained occurred in early to mid-2004. The last wrongful act alleged is the denial of his applications to develop two additional lots. The complaint alleges the City Attorney told Mikaelian's attorney on March 12, 2004, that no appeal to the City Council would be allowed regarding these applications. Under section 65009, Mikaelian had 90 days or until June 12, 2004, to file a complaint. As the complaint was not filed until January 7, 2005, the action is barred.[1]

Conclusory Allegations of Racial Animus and Improper

Motive Are Not Sufficient to State a Claim

Mikaelian's claims of arbitrary or irrational action by the City are based on the allegations that the DRB and City Council members were hostile to Mikaelian because of his race and his development activities in the City. A government official's motive for voting on a land use issue is, subject to exceptions not pertinent here, irrelevant to assessing the validity of the action. (County of Butte v. Bach (1985) 172 Cal.App.3d 848, 862, fn. 1.) Therefore, we disregard the allegations of the motives for the City Council's and DRB's votes.

Our Supreme Court in Landgate, Inc. v. California Coastal Com. (1998) 17 Cal.4th 1006, 1022, stated: "The Court of Appeal erred in its attempt to divine, through the statements of commissioners and Commission staff and through circumstantial evidence, the 'true,' illegitimate, motive for the Commission's decision to deny Landgate's development permit. The proper inquiry is not into the subjective motive of the government agency, but whether there is, objectively, sufficient connection between the land use regulation in question and a legitimate governmental purpose so that the former may be said to substantially advance the latter. [Citations.] This type of objective inquiry is consistent with the principle that courts do not delve into the individual purposes of decisionmakers in a quasi-adjudicative proceeding, but rather look to the findings made by the government agency and determine whether these are based on substantial evidence. [Citations.] Thus, we must determine not whether a sinister purpose lurked behind the Commission's decision, but rather whether the development restrictions imposed on the subject property substantially advanced some legitimate state purposes so as to justify the denial of the development permit."

Similarly, in Stubblefield Construction Co. v. City of San Bernardino (1995) 32 Cal.App.4th 687, 714-715, a developer's equal protection claim alleged the city denied a permit because it intended to discriminate against him. The Stubblefield court concluded the motives of the legislators were irrelevant, but, even assuming a discriminatory motive, an equal protection claim had not been shown. The court noted that because property is unique it would be difficult if not impossible to provide evidence of disparate treatment of similarly situated persons. As this court said in Long Beach Equities, Inc.v.County of Ventura, supra, 231 Cal.App.3d 1016, 1041, "Absent the allegation of the invasion of fundamental rights or the existence of a suspect classification, there is no violation of equal protection unless the classification bears no rational relationship to a legitimate state interest. [Citations.] This is true even if some discrimination is alleged."

The second amended complaint, pruned of allegations regarding the City's alleged wrongful motive and intent, alleges only that development regulations were adopted and applied to Mikaelian's property. The references to the Constitution in the complaint do not cure the insufficiency of the pleading. (Burchett v. City of Newport Beach (1995) 33 Cal.App.4th 1472, 1481.)

Alleged Denial of Access to City Hall

Mikaelian contends his constitutional rights were violated because he was denied access to City Hall. This claim is without merit. He admits that he was permitted access if accompanied by his attorney. Moreover, he cites no relevant authority supporting such a claim, and we need not consider it further. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)

Infliction of Emotional Distress

The trial court granted the City's demurrer to the claim for intentional infliction of emotional distress with leave to amend. Mikaelian chose not to amend this cause of action. The trial court sustained the demurrer, finding that the complaint did not allege "outrageous" conduct sufficient to support a cause of action and the claim was barred by the immunities provided in Government Code section 818.4. We agree.

To the extent Mikaelian bases his claim on alleged wrongful acts taken with respect to the land use approval process, the City and its employees have absolute immunity under Government Code section 818.4. That section states: "A public entity is not liable for an injury caused by the issuance, denial, suspension or revocation of, or by the failure or refusal to issue, deny, suspend or revoke, any permit, license . . . or similar authorization where the public entity . . . is authorized by enactment to determine whether or not such authorization should be issued, denied, suspended or revoked."

This statute provides total immunity to a city for alleged wrongful acts within the context of the land use permitting process. (See, e.g., Selby Realty Co. v. City of San Buenaventura (1973) 10 Cal.3d 110, 127 ["The denial of a building permit by a governmental body authorized to do so does not amount to a tort, much less a scheme to extort"].) Section 821.2 provides a similar immunity to public officials and employees. (Ibid.)

To the extent, the complaint asserts wrongful conduct outside the land use permitting process, the complaint must allege conduct that is "so extreme as to exceed all bounds of that usually tolerated in a civilized community." (Davidson v. City of Westminster (1982) 32 Cal.3d 197, 209.) No recovery is permitted for mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. (Agarwal v. Johnson (1979) 25 Cal.3d 932, 946, overruled on another ground in White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 574, fn. 4.) The most egregious conduct alleged in the complaint is the comment allegedly made by Mayor Hawxhurst that Mikaelian was a greedy developer who should go back to his own country. This statement falls far short of allegations required to support a claim for intentional infliction of emotional distress. (Ibid.)[2]

The judgment is affirmed. Respondents are to recover costs.

NOT TO BE PUBLISHED.

PERREN, J.

We concur:

GILBERT, P.J.

YEGAN, J.

Thomas P. Anderle, Judge

Superior Court County of Santa Barbara

______________________________

Hersel Mikaelian, in pro. per., for Plaintiff and Appellant.

Kutak Rock LLP, Edwin J. Richards, Paul. F. Donsbach, Jennifer L. Andrews for Defendants and Respondents City of Goleta, City Council of the City of Goleta, Jack Hawxhurst, Jonny D. Wallis, Cynthia Brock, Frederick C. Stouder.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line Lawyers.

[1] Mikaelian's argument that the complaint is not barred by the statute of limitations because it does not allege a date certain with respect to decisions regarding his applications is without merit. (Hege v. Worthington, Park & Worthington (1962) 209 Cal.App.2d 670, 682.)

[2] Mikaelian does not pursue his claim for negligent infliction of emotional distress in this appeal.