San Remo Hotel v. San Francisco City, 03-15853.

• Decision Date: 14 April 2004
• Docket Number: No. 03-15853.,03-15853.
• Citation: 364 F.3d 1088
• Parties: The SAN REMO HOTEL L.P.; Thomas Field; Robert Field; T & R Investment Corp., Plaintiffs-Appellants, v. SAN FRANCISCO CITY AND COUNTY, a Municipal Corporation; Department of City Planning; City Planning Commission; Opinion Board of Permit Appeals; Board of Supervisors of the City and County of San Francisco, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

364 F.3d 1088

The SAN REMO HOTEL L.P.; Thomas Field; Robert Field; T & R Investment Corp., Plaintiffs-Appellants, v. SAN FRANCISCO CITY AND COUNTY, a Municipal Corporation; Department of City Planning; City Planning Commission; Opinion Board of Permit Appeals; Board of Supervisors of the City and County of San Francisco,

Defendants-Appellees.

No. 03-15853.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 8, 2004.

Filed April 14, 2004.

Paul F. Utrecht (argued), San Francisco, California, for the plaintiffs-appellants.

Andrew W. Schwartz (argued), Office of the City Attorney, San Francisco, California, for defendant-appellee City and County of San Francisco.

Meriem L. Hubbard, Sacramento, California, for Amicus Curiae Pacific Legal Foundation in support of the plaintiffs-appellants. Timothy J. Dowling, Washington, D.C., for amici curiae California State Association of Counties, League of California Cities, and International Municipal Lawyers Association, in support of the defendants-appellees.

Appeal from the United States District Court for the Northern District of California, D. Lowell Jensen, District Judge, Presiding.

Before: FERNANDEZ, HAWKINS, and THOMAS, Circuit Judges.

HAWKINS, Circuit Judge:

In the second appeal before this court, the owners of the San Remo Hotel challenge the constitutionality of a San Francisco ordinance which restricts an owner's ability to convert "residential" hotel rooms to tourist use. A prior panel ordered Pullman abstention at plaintiffs' request, and also declared some claims unripe, deferring a decision until after the claim had been litigated in the California courts. San Remo Hotel v. City and County of San Francisco, 145 F.3d 1095 (9th Cir.1998) ("San Remo I").

After losing their state takings claims in the California courts, San Remo Hotel v. City and County of San Francisco, 27 Cal.4th 643, 117 Cal.Rptr.2d 269, 41 P.3d 87 (2002) ("San Remo II"), the plaintiffs now seek to assert their federal takings claims in federal court. However, we agree with the district court that the California Supreme Court's adjudication of the state takings claims was an "equivalent determination" of the federal takings claims, and that plaintiffs are therefore barred from relitigating the takings issues by the doctrine of issue preclusion, pursuant to this circuit's precedent in Dodd v. Hood River County, 59 F.3d 852 (9th Cir.1995) ("Dodd I"), and Dodd v. Hood River County, 136 F.3d 1219 (9th Cir.1998) ("Dodd II").

FACTS AND PROCEDURAL HISTORY

Most of the relevant factual background was recounted in our prior published decision; we repeat it here as necessary to set the stage for this appeal:

I. The Statutory Framework

San Francisco has enacted several hotel conversion ordinances in order to stop the depletion of housing for the poor, elderly and disabled. The City conducted a study that revealed that between 1975 and 1979, almost 20 percent of the residential hotel units in the City were lost due to demolition and conversion, and that most of the conversion was from residential to tourist use. [Hotel Conversion Ordinance (HCO)] § 41.3(d). In 1979, the City enacted its first HCO as a temporary measure, which it later codified as a permanent ordinance in 1981.

Under the 1981 HCO, hotel units could be converted to non-residential use only if the owner obtained a permit to convert. The City granted a permit only if the property owner provided relocation assistance to hotel residents and replaced the residential hotel units being converted through one of the following methods: (1) construction of an equal number of replacement units; (2) rehabilitation of an equal number of residential hotel units; or (3) contribution of a fee to the City's Residential Hotel Preservation Fund Account in the amount of 40 percent of the construction costs of the number of units converted (the "in lieu payment"). HCO §§ 41.12 & 41.13.

The 1981 HCO defined a "residential unit" as a hotel room occupied by a permanent resident as of September 23, 1979, i.e., the 1981 HCO was an extension of the 1979 moratorium. To determine whether a unit was residential as of September 23, 1979, the City sent surveys to the operators of hotels.

In May 1990, the City repealed the 1981 HCO and enacted the 1990 HCO. This new ordinance made four changes from the old law: (1) it prohibited the summer tourist use of residential rooms; (2) it increased the in lieu payment from 40 percent to 80 percent; (3) it added the requirement that any hotel that rents rooms to tourists during the summer must rent the rooms at least 50 percent of the time to permanent residents during the winter; and (4) the new law did not provide for relief on the ground of economic hardship. To ease the effect of the new ordinance, the 1990 HCO allowed hotel owners who applied before May 12, 1990, to pay a 40 percent in lieu fee, instead of the otherwise-required 80 percent fee.

Entirely distinct from the HCOs are the City's zoning ordinances. In 1987, the City enacted the North Beach Neighborhood Commercial District zoning ordinance ("zoning law"), which requires conditional use authorization to establish a tourist hotel. Owners who establish a prior non-conforming commercial use are exempt from this requirement of obtaining a conditional use permit. The zoning law borrows the September 23, 1979, classification from the HCO in order to determine what is a residential unit. In other words, a hotel unit that had been mistakenly characterized as residential under the HCO but that in fact was operating commercially as a tourist unit in 1987 would not be said to have a prior non-conforming use under the zoning law, despite the actual use of the unit.

II. The Facts

The plaintiffs are the owners of the San Remo Hotel, as well as the hotel itself.... [Plaintiffs] bought the San Remo Hotel in 1971, when it was zoned for commercial use and was subject to no restrictions on tourist use. [They] leased the hotel to Jean Irribarren (not a party) from 1977 to 1983. Irribarren spoke English badly, and when the 1979 survey arrived and asked him to indicate the nature of the hotel units for the new HCO, Irribarren mistakenly indicated that every single one of the hotel's 62 units was residential. [Plaintiffs] had no notice or knowledge of this survey, or of Irribarren's responses.

In 1984, after the lease to Irribarren expired, [plaintiffs] again began operating the hotel. In [their] 1984 Annual Unit Usage Report, [plaintiffs] stated that the actual use of the hotel on September 30, 1984, was still as 62 residential units and zero tourist units. [They] explain this usage report by arguing that the 1981 HCO was not burdensome to comply with, even with the residential designation. In particular, the 1981 HCO allowed for unlimited tourist use of residential rooms from May to October, which are the most profitable months for a tourist hotel.

On May 11, 1990, [plaintiffs] applied under the 1990 HCO to convert the 62 residential rooms to tourist use. The City Zoning Administrator objected on the ground that if such a conversion were granted, the hotel would then be operating in violation of the zoning laws. After all, the 1987 zoning law looked back to the September 23, 1979, survey and characterized the hotel as entirely residential. Therefore, even though the hotel had arguably been operating as a tourist hotel when the zoning law was enacted in 1987, it was not considered a prior non-conforming use. In order to satisfy the zoning law, [plaintiffs] had to obtain a conditional use permit, which [they have] never gotten.

[Plaintiffs] then filed an application for a conditional use permit, so the hotel would no longer be operating in violation of the zoning law. The Planning Department scheduled a hearing for August 20, 1992, before the City Planning Commission to decide the merits of this application. On August 19, 1992, the Planning Department concluded that the Commission lacked jurisdiction to decide what the hotel's prior zoning status had been, and the parties agreed to continue the hearing until the Zoning Administrator could make such a determination. On September 9, 1992, the Zoning Administrator formally declared that the hotel had not been zoned for commercial use. Therefore, a conditional use permit would be required.

[Plaintiffs] appealed to the Board of Permit Appeals ("BPA"), arguing that the hotel was already a permitted conditional use or a prior non-conforming use. [Plaintiffs] also argued that using the HCO to convert the hotel into a truly residential hotel would be an unconstitutional taking and a denial of equal protection. The BPA rejected this argument and held the hotel bound by the 1979 classification. It concluded that the prior disobedience to the 1987 zoning law was not a prior non-conforming use but a special exception allowed (but no longer) by the Zoning Administrator. Thus, the BPA held that [plaintiffs were] required to get a conditional use permit.

The case then went back to the Planning Commission, which on January 21, 1993, approved [plaintiffs'] application for a conditional use permit, provided: (1) [plaintiffs] paid 40 percent of the cost of replacement housing to make up for the loss of the 62 residential units; (2) [plaintiffs] offered lifetime leases to existing long-term tenants; and (3)[plaintiffs] fulfilled other minor conditions. The BPA affirmed.

On March 12, 1993, [plaintiffs] filed a petition for administrative mandamus in state court, challenging the BPA's decision that classified the hotel as residential. This mandamus action has been stayed by stipulation of the parties.

On April 19, 1993, the City's Board of Supervisors rejected [plaintiffs'] appeal of the Planning Commission's decision and upheld the conditions for the conditional use permit.

On May 4, 1993, [plaintiffs] filed this action against the City under 42 U.S.C. § 1983.

San Remo I, 145 F.3d at 1098-1100 (internal...