Aiuto v. City of S.F.

• Decision Date: 21 March 2012
• Docket Number: Nos. A131279,A132908.,s. A131279
• Citation: 135 Cal.Rptr.3d 617,201 Cal.App.4th 1347,2011 Daily Journal D.A.R. 17932,11 Cal. Daily Op. Serv. 15016
• Court: California Court of Appeals Court of Appeals
• Parties: Victor AIUTO et al., Plaintiffs and Respondents, v. CITY AND COUNTY OF SAN FRANCISCO, Defendants and Appellants. City and County of San Francisco, Petitioner, v. The Superior Court for the City and County of San Francisco, Respondent; Victor Aiuto et al., Real Parties in Interest.

201 Cal.App.4th 1347

135 Cal.Rptr.3d 617

11 Cal. Daily Op. Serv. 15,016

2011 Daily Journal D.A.R. 17,932

Victor AIUTO et al., Plaintiffs and Respondents,

v.CITY AND COUNTY OF SAN FRANCISCO, Defendants and Appellants.

City and County of San Francisco, Petitioner,

v.The Superior Court for the City and County of San Francisco, Respondent;

Victor Aiuto et al., Real Parties in Interest.

Nos. A131279, A132908.

Court of Appeal, First District, Division 4, California.

Dec. 15, 2011.

Review Denied March 21, 2012.

Dennis J. Herrera, San Francisco City Attorney, Kristen A. Jensen, Thomas S. Kalritz, Victoria Wong, Assistant City Attorneys, for Appellants and Petitioner.

Timken Johnson Hwang LLP, Heidi A. Timken, Leslie A. Johnson, Abram P. Petersen, for Respondents and Plaintiffs.

RUVOLO, P.J.

I.INTRODUCTION

Plaintiffs are owners of condominium units that are designated “Below Market Rate” (BMR units), and thus subject to restrictions imposed by the Below Market Rate Condominium Conversion Program (BMR Program) created by the City and County of San Francisco (the City), under authority of the state Subdivision Map Act (Gov.Code, §§ 66410 et seq.) (SMA).¹ Plaintiffs filed this lawsuit against the City ² challenging Ordinance No. 320–08 (the Ordinance) adopted by the City in December 2008 as part of its BMR Program. In their facial challenge, plaintiffs claim the Ordinance, which amended existing ordinances governing the BMR Program and added new provisions, constituted a regulatory taking, was preempted by state law, and violated their civil rights under 42 U.S.C. section 1983.

In this interlocutory appeal, the City claims the court erred in issuing a preliminary injunction to maintain the status quo while plaintiffs' claims were being litigated. Among other arguments, the City claims that plaintiffs did not have a reasonable probability of prevailing at the trial—one of the requirements for issuing a preliminary injunction—because all of plaintiffs' causes of action were time-barred. We agree with the City that section 66499.37, the statute of limitations governing any subdivision-related decision under the SMA, required plaintiffs' facial challenge to the Ordinance to be filed within 90 days of the enactment of the Ordinance. Because plaintiffs' claims were not filed within the 90–day timeframe, plaintiffs have not shown a likelihood of success on the merits. For this reason, we reverse the preliminary injunction, and remand the case to the trial court for further proceedings.

II.FACTS AND PROCEDURAL HISTORY

The SMA is “the primary regulatory control” governing the subdivision of real property in California. ( Hill v. City of Clovis (2000) 80 Cal.App.4th 438, 445, 94 Cal.Rptr.2d 901.) Condominium projects are expressly defined as subdivisions within the meaning of the SMA. (§ 66424.) The SMA vests the “[r]egulation and control of the design and improvement of subdivisions” in the legislative bodies of local governments which must promulgate ordinances on the subject. (§ 66411.) Under the SMA, local governments possess the powers necessary to set condominium conversion restrictions. (See Soderling v. City of Santa Monica (1983) 142 Cal.App.3d 501, 507–508, 191 Cal.Rptr. 140.)

Pursuant to the City's authority under the SMA, the City established its BMR Program in 1979 to expand “opportunities for homeownership while preserving and expanding the supply of low- and moderate-income housing.” (S.F. Subd.Code, § 1344(b)(3).) The City created the BMR Program by adopting sections 1341 and 1385 of the City's Subdivision Code, which, among other things, required property owners seeking to convert their apartments into condominiums to set aside a certain number of their units for the BMR program. The purpose of conditioning approval of subdivision maps in this way was to restrict the sales and rental prices of each affected unit to ensure the affected units would remain available for purchase by low- to moderate-income households. The affordable housing restrictions were then reflected as conditions set forth in the San Francisco Planning Commission's subdivision map approvals. The program restrictions were, in turn, reflected on each property's subdivision map.

In 2008, a dispute arose between the City and several owners of BMR units regarding the terms of the BMR Program, including whether the Program's restrictions lasted in perpetuity, or for only 20 years. In response, on December 19, 2008, the City adopted the Ordinance at the center of this controversy, which amended sections 1341 and 1385 and added a new section 1344 to the City's Subdivision Code.

New section 1344 of the City's Subdivision Code states that it applies to “BMR Units purchased or acquired on or after the effective date of this ordinance,” and retroactively to “BMR Units purchased or acquired before the effective date of this ordinance.” (S.F. Subd.Code, § 1344(a)(1), (a)(2).) The amendment clarifies the City's intent that the requirements of the BMR Program apply in perpetuity.

In addition, the Ordinance: (1) sets out procedures for calculating the sale price for BMR units and the procedures unit owners must follow to sell their units (S.F. Subd.Code, § 1344(c), (e)); (2) specifies how the City adds costs for capital improvements to the base resale price of the units ( id. at (d)); (3) establishes rental restrictions ( id. at (f)); and (4) allows certain unit owners to pay a fee to have their units released from the BMR Program, so long as they make such election “24 months from the effective date of this legislation” ( id. at (i)). Section 1344(i)(a) of the City's Subdivision Code also requires that in order to have a unit released from the BMR Program, “the BMR Unit Owner must waive all claims against the City for damages or other alleged injury arising from the Owner's participation in the Program.”

Throughout this litigation, the parties have taken vastly different views of the purpose and effect of the Ordinance. The City claims the Ordinance “was enacted to further the planning goals of the SMA by clarifying conditions placed on the subdivision of [plaintiffs'] properties and by creating new options for Program participants who wish to exit the program or sell their units....” In plaintiffs' view, “[i]n 2008, after years of the City's mismanagement and the exit of nearly half of the BMR Units from the Program, the City ... attempted to unilaterally rewrite the terms of the program and subject Plaintiffs to permanent resale, rental and inheritance restrictions.”

On May 13, 2009, five months after the City adopted the Ordinance, plaintiffs filed a complaint in federal district court challenging both the City's adoption of the Ordinance, and the City's alleged mismanagement of the BMR Program. ( Victor Aiuto et al. v. San Francisco's Mayor's [ sic ] Office of Housing et al., N.D.Cal. No. C 09–2093 CW). In the federal case, plaintiffs asserted claims for the unlawful taking of their property, preemption under state law, declaratory relief, injunctive relief, and violations of their due process, equal protection, and civil rights.

On October 22, 2009, the City filed a motion to dismiss the federal action. Ultimately, the federal court dismissed all of plaintiffs' claims, but granted leave to amend their claim under 42 U.S.C. section 1983. Plaintiffs did not attempt to amend their federal pleadings. Instead, on August 6, 2010, three months after their federal case was dismissed, plaintiffs filed the underlying complaint in the San Francisco Superior Court alleging three causes of action for (1) regulatory taking, (2) state law preemption by the Costa–Hawkins Rental Housing Act legislation (Civ.Code, §§ 1954.50 et seq.) and unspecified sections of the SMA and the Probate Code, and (3) a claim for violation of plaintiffs' civil rights under 42 U.S.C. section 1983. As described by plaintiffs, the “crux” of their complaint is that the City has “unilaterally rewritten the terms and operation of an affordable housing program in such a way as to unlawfully strip homeowners' [ sic ] of their constitutionally protected property rights.” The complaint's prayer for relief seeks “a permanent injunction preventing the enforcement of the Ordinance,” and declaratory relief adjudging the Ordinance unconstitutional “on its face and/or as applied to Plaintiffs.” ³

On September 10, 2010, plaintiffs filed a motion for preliminary injunction. In their motion, plaintiffs sought an injunction in case their challenge to the Ordinance failed, and in order to preserve their option of having their units released from the BMR Program in exchange for a fee and a waiver of rights. Specifically, plaintiffs requested the court “to extend the deadline referenced in the San Francisco Subdivision Code, Section 1344(i), as added by Ordinance No. 320–08, from '24 months from the effective date of [Ordinance No. 320–08]' to ninety (90) days after final judgment in this case.”

Ordinarily, trial courts “evaluate two interrelated factors when deciding whether or not to issue a preliminary injunction. The first is the likelihood that the plaintiff will prevail on the merits at trial. The second is the interim harm that the plaintiff is likely to sustain if the injunction were denied as compared to the harm that the defendant is likely to suffer if the preliminary injunction were issued. [Citations.]” ( IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69–70, 196 Cal.Rptr. 715, 672 P.2d 121.)

In claiming there was no likelihood plaintiffs could prevail at trial, the City contended that plaintiffs' claims were all barred by the 90–day statute of limitations period provided by section 66499.37 [actions challenging the decision of a legislative body “concerning a subdivision”] and section 65009, subdivision (c)(1) [actions challenging either the adoption or amendment of a zoning ordinance or the validity of conditions attached to variances, conditional use permits, or other permits]. The...