526 F.3d 478 (9th Cir. 2008), 05-16069, North Pacifica LLC v. City of Pacifica

Docket Nº:05-16069, 05-16146, 06-15102, 06-15131, 06-15631, 06-15772
Citation:526 F.3d 478
Party Name:NORTH PACIFICA LLC, Plaintiff-Appellee, v. CITY OF PACIFICA; Pacifica Planning Commission; Pacifica City Council, Defendants-Appellants. North Pacifica LLC, Plaintiff-Appellant, v. City of Pacifica; Pacifica Planning Commission; Pacifica City Council, Defendants-Appellees. North Pacifica LLC, Plaintiff-Appellee, v. City of Pacifica; Pacifica Planni
Case Date:May 13, 2008
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 478

526 F.3d 478 (9th Cir. 2008)

NORTH PACIFICA LLC, Plaintiff-Appellee,

v.

CITY OF PACIFICA; Pacifica Planning Commission; Pacifica City Council, Defendants-Appellants.

North Pacifica LLC, Plaintiff-Appellant,

v.

City of Pacifica; Pacifica Planning Commission; Pacifica City Council, Defendants-Appellees.

North Pacifica LLC, Plaintiff-Appellee,

v.

City of Pacifica; Pacifica Planning Commission; Pacifica City Council, Defendants-Appellants.

North Pacifica LLC, Plaintiff-Appellant,

v.

City of Pacifica; Pacifica Planning Commission; Pacifica City Council, Defendants-Appellees.

North Pacifica LLC, Plaintiff-Appellee,

v.

City of Pacifica; Pacifica Planning Commission; Pacifica City Council, Defendants-Appellants.

North Pacifica LLC, Plaintiff-Appellant,

v.

City of Pacifica; Pacifica Planning Commission; Pacifica City Council, Defendants-Appellees.

Nos. 05-16069, 05-16146, 06-15102, 06-15131, 06-15631, 06-15772

United States Court of Appeals, Ninth Circuit.

May 13, 2008

Argued and Submitted Jan. 14, 2008.

Page 479

[Copyrighted Material Omitted]

Page 480

Jacquelynn Pope, Hermosa Beach, California, for plaintiff-appellee-appellant North Pacifica, LLC.

Lee Rosenthal, Oakland, California for defendants-appellants-appellees City of Pacifica, et al.

Appeal from the United States District Court for the Northern District of California; Edward M. Chen, Magistrate Judge, Presiding. D.C. No. CV-01-04823-EMC.

Before: J. CLIFFORD WALLACE, PROCTER HUG, JR., and MARY M. SCHROEDER, Circuit Judges.

SCHROEDER, Circuit Judge

These appeals arise out of a convoluted series of events illustrating the friction that can grow between a developer trying to secure approval of a condominium project as quickly as possible, and a city trying to use development permit procedures to avoid all foreseeable future problems. The plaintiff-developer is North Pacifica LLC and the defendant is the City of Pacifica. The conduct on the part of both sides has led to moving targets for litigation activity, and the entire project is still tied up in proceedings before the California Coastal Commission.

The case presents a remarkable series of ironic twists. The developer originally sued the City for delays in approving its application for development permits, but because of a citizen's appeal to the Coastal Commission, the development is still on hold, long after City approval. The district court awarded damages to the developer, not on the basis of any harm alleged in its original complaint, but because of a condition in the permit to which the developer never voiced any objection in the hearing before the City Council. The condition in question was inserted by outside counsel the City hired in order to avoid litigation, and the condition has, of course, had the opposite result. Finally, the district court correctly dismissed the substantive due process claim in the original complaint, but for the wrong reason, incorrectly treating it as a takings claim that required exhaustion of state court remedies, rather than as a substantive due process claim for delays that, contrary to the complaint's allegations, were not unreasonable. See N. Pacifica, LLC v. City of Pacifica, 234 F.Supp.2d 1053, 1064-66 (N.D. Cal. 2002).

The disputes before us boil down to first, the developer's contentions that we

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should resurrect its substantive due process claim and that we should remand for the award of additional damages on the equal protection claim, and second, to the City's arguments that the developer was not entitled to judgment, damages, or attorneys' fees in the first place. The City is correct.

We agree with the City that the developer was not entitled to judgment on the equal protection claim that is before us, because the City did not intentionally treat this developer differently from any other developer. Outside counsel inserted the now -controversial provision in the recommended permit and the developer raised no opposition at the hearing during which the City Council considered the permit application. There can be no compensatory damages attributable to the provision in any event, because the developer still has not obtained the requisite approval from the Coastal Commission. We also agree with the City that the due process claim should not be resurrected because the developer has not alleged any irrational delay in the City's approval of its permits. Accordingly, we vacate the district court's award of attorneys' fees and costs to North Pacifica and remand for entry of judgment in favor of the City.

I. Background

This litigation concerns the efforts of plaintiff North Pacifica ("NP"), a limited liability company, to develop a 4.3-acre parcel of real estate, known as the "Bowl" property, located in the City of Pacifica, California. NP submitted its application to the City for permits to develop its proposed condominium project on August 1, 1999. During the course of the next two years, the City made a number of requests to NP for additional information that the City determined was necessary to assess and evaluate the application. The City deemed the application complete on June 5, 2001. NP filed this action approximately six months later, in December 2001, claiming that the City unreasonably imposed the processing delays in violation of substantive due process and equal protection.

NP also filed one other suit that is relevant to the claims in these appeals. That was a suit in state court against the City to require it to maintain Edgemar Road, an abandoned road abutting the Bowl property. NP eventually lost that suit on the City's appeal to the California Court of Appeal in March 2005, but the action was pending throughout most of this litigation. The suit is one reason the City was anxious to avoid further litigation with NP.

The district court initially dismissed NP's substantive due process claim in this case, but did not dismiss the claim that the delays violated equal protection. On the developer's motion for reconsideration, the district court, in a published decision, ruled that the due process claim was not ripe because the plaintiff had not yet finished seeking compensation in state court. N. Pacifica, LLC, 234 F.Supp.2d at 1064-66.

That left the delay -based equal protection claim for the parties to argue about. This they did in the form of cross -motions for summary judgment. In its motion, the developer for the first time argued that the City inserted a particular provision, known as condition 13(b), as a condition of the City's approval of NP's development permit. Condition 13(b) required NP to make condominium purchasers "jointly and severally" liable for the maintenance of common areas.

The district court granted summary judgment to the City on NP's delay -based equal protection claim but granted NP leave to file a supplemental complaint alleging that condition 13(b) was imposed in violation of equal protection. It is on that

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supplemental complaint that the district court eventually entered judgment in favor of the developer in the amount of $156,741.19, plus a hefty award of attorney's fees of $453,810.75, and costs of $55,322.40.

In these appeals, the developer challenges the denial of the substantive due process claim. It does not pursue its original delay -based equal protection claim, but does defend the district court's award of damages on its condition 13(b) equal protection claim, the award that the City, of course, challenges in its appeal.

It is therefore important to understand the factual background of condition 13(b). The condition was inspired by the City's experience litigating against the developer in the Edgemar Road action in state court. The City retained outside counsel to handle all of the City's litigation with NP, and to advise the City on the processing of NP's application for development of the Bowl. An attorney in the retained firm inserted the joint and several liability language of 13(b) into the proposed permit. It was apparently an attempt to ensure that the City never again had to litigate about the road either with the developer or a homeowners' association influenced by the developer. Condition 13(b) requires the development's Conditions, Covenants, and Restrictions ("CC&Rs") to

specify that the owners of each of the residential units shall be responsible jointly and severally, for the repair, maintenance and replacement of the building exteriors, common areas, parking, landscaping, building sign age and improvement and maintenance of Edgemar Road to the satisfaction of the City.

N. Pacifica, LLC v. City of Pacifica, No. 01-4823, slip op. at 14 (N.D. Cal. Oct. 23, 2003) (emphasis added).

NP received a copy of the proposed permit containing condition 13(b) the day preceding the hearing before the City Planning Commission to consider NP's permit application. On the day of the hearing, NP sent a letter to the City Attorney and to outside counsel objecting to nine of the thirty-nine conditions of approval in the proposed permit, including condition 13(b). Because there was no evidence that any city official provided the letter to the Planning Commission, however, the district court, after a bench trial, expressly declined to find that the Commission ever received the letter. The Planning Commission approved NP's application for development permits, subject to the thirty-nine conditions of approval, including condition 13(b).

The Commission's approval of the permits was appealed to the City Council by a local citizen who opposed the development. Five days before the Council hearing, NP received notice that a member of the Planning Commission recommended that the City approve the permits subject to all thirty-nine conditions. NP promptly sent a letter to the City Attorney and outside counsel again objecting to the nine conditions, including condition 13(b),...

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