Childhelp, Inc. v. City of Los Aageles

• Decision Date: 17 April 2023
• Docket Number: B311945
• Parties: CHILDHELP, INC., Plaintiff and Appellant, v. CITY OF LOS ANGELES, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

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CHILDHELP, INC., Plaintiff and Appellant, v. CITY OF LOS ANGELES, Defendant and Respondent.

B311945

California Court of Appeals, Second District, Seventh Division

April 17, 2023

Modified and Certified for Pub. 5/5/23

APPEAL from judgment of the Los Angeles County No. BC711998 Superior Court, Teresa A. Beaudet, Judge. Affirmed.

Beitchman & Zekian, David P. Beitchman and Paul Tokar for Plaintiff and Appellant.

Michael N. Feuer and Hydee Feldstein Soto, City Attorneys Timothy McWilliams and Peter Walford, Deputy City Attorneys, for Defendant and Respondent.

SEGAL J.

INTRODUCTION

In 1986 Childhelp, Inc., a nonprofit corporation that provides services to victims of child abuse, leased real property from the City of Los Angeles. The lease provided that, in lieu of paying rent, Childhelp would provide treatment for child abuse victims and that after 20 years the City would consider conveying the property to Childhelp.

In 2014 the Los Angeles City Council passed a resolution directing various City departments and officials to prepare and execute the necessary approvals and agreements to convey the property to Childhelp, in exchange for Childhelp's agreement to continue using the property to provide services for victims of child abuse. Ultimately, however, the City decided not to transfer the property to Childhelp.

Childhelp filed this action against the City for, among other things, declaratory relief, writ of mandate, and promissory estoppel, and the City filed an unlawful detainer action against Childhelp. After the trial court consolidated the two actions, the court granted the City's motion for summary adjudication on Childhelp's cause of action for promissory estoppel, sustained without leave to amend the City's demurrer to Childhelp's causes of action for declaratory relief and writ of mandate, and granted the City's motion for summary judgment on its unlawful detainer complaint. Childhelp appeals from the ensuing judgment. We affirm.

FACTUAL AND PROCEDURAL SUMMARY

A. Childhelp Leases Property from the City

Childhelp began leasing property from the City in March 1986. Three years later, the parties entered into a three-year lease with "the intent" that the City would "renew the lease in increments of three (3) years for a maximum of twenty (20) years." The parties agreed that, instead of paying rent, Childhelp would "use the premises for the provision of services to abused and/or neglected children and their families and purposes incidental thereto." The lease also stated that, after 20 years, the City Council would "consider conveying its interest in the property" to Childhelp if it "satisfactorily complied with the terms and conditions of" the lease. For the next 20 years, Childhelp provided services as required by the lease and, after the lease expired in 2009, continued to occupy the premises as a month-to-month holdover tenant "upon the same terms, consideration, covenants and conditions" in the lease.

The City Council, as required by the lease, considered conveying the property and in July 2014 passed a resolution adopting recommendations by two committees to convey the property to Childhelp. Among other things, the resolution asked "the City Attorney to work with the Los Angeles Housing and Community Investment Department (HCIDLA) and the Department of General Services (GSD) to prepare and execute the necessary agreements to convey the property" to Childhelp and to "record a covenant to ensure the continuation of services for victims of child abuse"; authorized "HCIDLA and GSD, with the assistance of the City Attorney, to execute all necessary approvals, documents, and amendments to transfer ownership of" the property to Childhelp; directed "GSD, City Attorney and any other necessary departments to commence the process for a direct sale of" the property to Childhelp; declared the property was "a surplus asset"; directed "GSD to immediately initiate the Surplus Property Process and conduct a Class 'A' appraisal"; directed "the City Administrative Officer (CAO) to prepare a report on the direct sale to Childhelp"; and directed "GSD, with the assistance of the City Attorney, to take all necessary steps and prepare all required documents to effectuate the direct sale of the Property to Childhelp." The resolution did not provide a timeline for the sale or include instructions on how the various municipal entities and officials were to complete these tasks.

Pursuant to the resolution, GSD sent notices to City departments informing them of the proposed sale of the City-owned property and asking if there were any objections to the sale.^[1] Some of the letters included language stating the City "intends to offer for possible sale the property" Childhelp was occupying. The City obtained an appraisal, which valued the property at $2.2 million as of January 9, 2015. In analyzing the request to convey City-owned property at below market value, the CAO performed a "Community Benefits Analysis," which compared the fair market value of the property to the value of services Childhelp would provide to the community. After completing this analysis the CAO recommended the City require Childhelp to continue providing services at the location for 20 years. Childhelp initially objected to any such requirement and took the position there should not be any covenant, but eventually offered to continue providing services at the location for "a minimum of an additional 10 years." The parties negotiated but never reached an agreement on the duration of a covenant that would require Childhelp to continue providing services to child abuse victims on the property.

In the spring of 2016 HCIDLA became concerned about low client enrollment at Childhelp's facility on the property. After the parties met in March and August 2016, HCIDLA sent Childhelp a letter in January 2017 stating that the City had determined Childhelp was providing minimal services at the facility on the property and that the types of programs and services Childhelp was providing did not comply with the terms of the lease. In particular, HCIDLA found that Childhelp was not putting "the City-owned leased facility to its highest and best use in the delivery of contracted services to the low- and moderate-income children and families of Los Angeles"; that Childhelp was providing foster services to children in a residential program in Beaumont, California, a Childhelp facility in Riverside County; and that Childhelp was not conducting foster parent training programs at the facility. HCIDLA recommended that the City reconsider transferring the property to Childhelp pending the outcome of the CAO's community benefits analysis or, in the alternative, that the City not transfer the property because doing so "would not inure a benefit to the community and the city of Los Angeles." Childhelp disputed HCIDLA's findings Childhelp was violating the lease, and in June 2018 the City served Childhelp with a 30-day notice terminating the tenancy.

B. Childhelp Sues the City

Four years after the City Council passed the July 2014 resolution, the City had still not conveyed the property to Childhelp. In July 2018 Childhelp sued the City, alleging in its second amended complaint two causes of action for declaratory relief (one relating to the City Council's resolution and one relating to the 1989 lease), one cause of action for quiet title, and a cause of action for promissory estoppel. In its promissory estoppel cause of action Childhelp alleged that the City made "promises and representations [that] are contained within the [lease] whereby the City agrees to consider transferring title to the Property after twenty years to Childhelp" and that, "[i]n furtherance of its promises as set forth in the [lease], on or around July 2, 2014 the City Council determined that the Property should be transferred and directed the City of Los Angeles to transfer title to the Property to Childhelp." Childhelp alleged it reasonably relied on the City's promises to its detriment because for over 30 years it continued to occupy and maintain the property. In addition, Childhelp alleged that it refrained from looking for an alternative property "when the real estate market in Los Angeles was not at its peak" and that, "[b]y comparison, real estate prices have increased an average of 25% between 2014 and 2018 in and around Los Angeles."

The City and Childhelp filed cross-motions for summary judgment or in the alternative for summary adjudication on all four causes of action in the second amended complaint. The trial court denied Childhelp's motion in its entirety and denied the City's motion for summary adjudication on Childhelp's first and second causes of action for declaratory relief. The court granted the City's motion for summary adjudication on Childhelp's third cause of action for quiet title (a ruling Childhelp does not challenge) and fourth cause of action for promissory estoppel. On the promissory estoppel cause of action, the court identified two alleged promises by the City: the promise in the lease "to consider" transferring the property to Childhelp and the promise in the resolution to actually transfer the property to Childhelp. The court ruled that it was undisputed the City made these promises (and actually considered transferring the property), but that there were triable issues of material fact regarding Childhelp's reasonable reliance on the promises and its resulting detriment. The court nevertheless granted the City's motion for summary adjudication on the promissory estoppel cause of action because the court concluded that applying promissory estoppel would contravene requirements in the Los Angeles City Charter for the sale of real property owned by the City.

A...