Nightlife Partners v. City of Beverly Hills

• Decision Date: 24 April 2003
• Docket Number: No. B161436.,B161436.
• Citation: 108 Cal.App.4th 81,133 Cal.Rptr.2d 234
• Court: California Court of Appeals Court of Appeals
• Parties: NIGHTLIFE PARTNERS, LTD., et al., Plaintiffs and Respondents, v. CITY OF BEVERLY HILLS, Defendant and Appellant.

133 Cal.Rptr.2d 234

108 Cal.App.4th 81

NIGHTLIFE PARTNERS, LTD., et al., Plaintiffs and Respondents, v. CITY OF BEVERLY HILLS, Defendant and Appellant.

No. B161436.

Court of Appeal, Second District, Division 3.

April 24, 2003.

Laurence S. Wiener, City Attorney; Richards, Watson & Gershon, Mitchell E. Abbott and Patrick L. Bobko, Los Angeles, for Defendant and Appellant.

Roger Jon Diamond, Santa Monica, for Plaintiffs and Respondents.

CROSKEY, J.

The City of Beverly Hills (City) appeals from an order granting Nightlife Partners, Ltd.; Entertainment Associates of L.A., Inc.; Déjà Vu Showgirls of Beverly Hills, LLC and Deja Vu Consulting, Inc. (collectively, Petitioners) a new administrative hearing. There is substantial evidence to support the trial court's determination that Petitioners are entitled to a new hearing, and we therefore affirm.

FACTUAL AND PROCEDURAL BACKGROUND¹

Petitioners operate a cabaret in the City of Beverly Hills, pursuant to the adult entertainment regulatory permit (permit) required by City's municipal code. At all times relevant to this appeal, Petitioners and City were engaged in federal litigation, Nightlife Partners, Ltd., et al. v. City of Beverly Hills, U.S. District Court Case No. CV 98-10266 RAP, related to City's regulation of adult entertainment. Assistant City Attorney Terence Boga (Boga) was one of the city attorneys litigating the federal lawsuit.²

City's municipal code required Petitioners to renew their permit every two years, and also required that a renewal application be submitted at least 30 days before the initial permit was to expire. In early 2001, Petitioners attempted to obtain from City an application form for renewal of their permit, but ran into difficulties obtaining the applicable form. City finally gave Petitioners an application form used for renewal of permits for "private clubs/public dancing"; City did not have a separate application form for renewal of adult entertainment permits.

On February 22, 2001, Petitioners submitted an application for renewal of their permit. Petitioners and City then engaged in a debate over whether, in fact, the application was complete. City, through Assistant City Attorney Boga, took the position in letters to Petitioners that, for a renewal, Petitioners were required to submit exactly the same documents required for an application for a new permit (e.g., site plans and letters of justification). Petitioners took the position that neither the municipal code nor the application form required them to submit new copies of the same documents required by the initial application.

City refused to consider the application for renewal to be complete, and, on April 26, 2001, Donald Oblander, City's Finance Director, sent Petitioners a letter denying their renewal application, assertedly because the application was incomplete because of missing documents. The letter also advised Petitioners that, even if the application had been complete, it would have been denied because the cabaret did not comply with certain design and performance standards set by the municipal code. Therefore, as provided for by the municipal code, Petitioners filed an administrative appeal of the denial of their renewal application.

On June 28, 2001, Petitioners' administrative appeal was heard by David R. Holmquist (Holmquist), an attorney and City's Risk Manager. At the beginning of the hearing, Holmquist stated that he had never presided over such a hearing before, and then announced that "Seated next to me is Assistant City Attorney, Terence Boga, [who] will be advising me and assisting me as necessary in these proceedings." Boga being otherwise occupied as Holmquist's advisor, City's advocate at the hearing was William Litvak, an attorney hired for that purpose.

Boga sat next to Holmquist throughout the hearing, and the two men conferred from time to time, apparently in connection with evidentiary rulings and legal issues. Such communications were not transcribed by the reporter. Petitioners unsuccessfully objected both to the fact that the hearing officer was a city employee, and to Boga's role as the hearing officer's advisor.

During the hearing, Holmquist ruled, among other things, that (1) it was irrelevant that the form City provided to Petitioners did not require the documents that City subsequently held were required so as to conclude that their absence rendered the application incomplete, and (2) Petitioners were not allowed to present evidence of deliberate discrimination against adult entertainment businesses by showing that, of all the permitted businesses in City, only such adult entertainment businesses (of which Petitioner's cabaret was allegedly the only one) were required to go through the same process to renew a permit as to obtain an initial permit.

Holmquist rendered a decision denying Petitioners' appeal on September 5, 2001. Under City's municipal code, Petitioners could not appeal Holmquist's decision to any further administrative body. Therefore, on November 21, 2001, Petitioners filed a petition in the superior court for a writ of administrative mandate directing City to set aside the denial of the permit and to issue the required permit. The petition alleged, in relevant part, that the hearing was unfair, the hearing officer made improper evidentiary rulings, and that the procedures followed were unfair and violated Petitioners' rights to procedural due process.

In a declaration submitted in opposition to the petition, Holmquist declared that the opinion he rendered was his alone, and had been made without consulting with any other city employee. He also denied that he was prejudiced or biased because of his status as a City employee. Notably, however, his declaration entirely failed to respond to Petitioners' claim that Boga had advised and assisted him during the hearing in connection with making evidentiary rulings or determining legal issues.³

After reviewing the administrative record and listening to argument, the trial court granted the petition, concluding that Petitioners' due process rights had been violated. It found that Boga had taken an "active and significant" part in Petitioners' unsuccessful application renewal process, and that when Petitioners sought administrative review of that process, Boga also appeared and participated in the administrative hearing by advising and assisting Holmquist, the hearing officer. It concluded that Boga's participation as the hearing officer's advisor during the administrative review process constituted "actual bias." Rather than ordering City to issue a renewal permit, as prayed for in the petition, it simply ordered City to provide Petitioners with a new hearing.

City filed a timely notice of appeal.

CONTENTIONS ON APPEAL

City contends the trial court erred by setting aside its administrative decision because there were no "concrete facts" showing actual bias. It contends Boga's "advisory role" was legally permissible, and that Petitioners received a fair hearing that met due process requirements. Petitioners contend that there were "concrete facts" showing a risk of bias, that Boga's participation rendered the proceedings unfair, and that, in fact, they did not receive a fair hearing. We conclude that the issue is not whether there was actual bias, but whether the hearing met minimum constitutional standards of due process, and further conclude that it did not.

DISCUSSION

1. Standard of Review

In the trial court, the standard of review depends on the nature of the right affected by the administrative decision. (See Code Civ. Proc., § 1094.5, subd. (c).)⁴ In the appellate court, the appropriate standard of review is substantial evidence, regardless of the nature of the right involved. Thus, even in those cases where the trial court was required to review an administrative decision under the independent judgment standard of review, the standard of review on appeal of the trial court's determination is the substantial evidence test. (Fukuda v. City of Angels (1999) 20 Cal.4th 805, 824, 85 Cal.Rptr.2d 696, 977 P.2d 693.)

Here, the trial court did not review the facts and findings that supported Holmquist's decision to uphold City's denial of Petitioners' permit renewal application. Instead, it reviewed the facts related to how the hearing before Holmquist was conducted. Thus, on appeal it is the trial court's findings of fact related to that issue which we review. We apply the substantial evidence test to the evidence and findings that support the trial court's determination that the hearing process was fundamentally unfair.

The trial court's determination involves a mixed question of fact and law. To the extent there are conflicts in the evidence of what occurred at the hearing before Holmquist, we view the evidence in the light most favorable to the trial court's decision. We then apply a de novo review as to whether such facts support the trial court's conclusion of law that the hearing was unfair. (Rosenblit v. Superior Court (1991) 231 Cal.App.3d 1434, 1442, 282 Cal. Rptr. 819; Lewin v. St. Joseph Hospital of Orange (1978) 82 Cal.App.3d 368, 387, 146 Cal.Rptr. 892.)

2. There Is the Record Demonstrated That Substantial Evidence Supported the TC's Conclusion that Boga Had Acted as Holmquist's Advisor During the Hearing

As noted above, we view any conflicts in the evidence in the light most favorable to the trial court's factual determinations. The only factual dispute here was whether, in fact, Boga actually advised and assisted Holmquist during the hearing. City points out that the administrative record does not show that Boga actually gave Holmquist any advice or assistance during the hearing. However, we take judicial notice of the fact (Evid.Code, § 452, subd. (g)) that communications between bench officers and their staff on matters of law and procedure are normally not reported. Thus, the absence of any reported communications is not conclusive...