Traweek v. City and County of San Francisco

• Decision Date: 30 December 1986
• Docket Number: No. C 83-5640 TEH.,C 83-5640 TEH.
• Citation: 659 F. Supp. 1012
• Court: U.S. District Court — Northern District of California
• Parties: Richard W. TRAWEEK, an individual; Traweek Investment Co., Inc., a California corporation; and Traweek Investment Fund Number 10, Ltd., a California limited partnership, Plaintiffs, v. CITY AND COUNTY OF SAN FRANCISCO, a municipal corporation; San Francisco Department of Public Works; Dianne Feinstein, an individual; Roger Boas, an individual; John L. Molinari, an individual; Harry Britt, an individual; Wendy Nelder, an individual; Louise Renne, an individual; Carol Ruth Silver, an individual; Nancy Walker, an individual; Doris M. Ward, an individual; Willie B. Kennedy, an individual; Evans-Pacific Realty, Inc., a California corporation; Bernstein, Morris, an individual, Defendants.

659 F. Supp. 1012

Richard W. TRAWEEK, an individual; Traweek Investment Co., Inc., a California corporation; and Traweek Investment Fund Number 10, Ltd., a California limited partnership, Plaintiffs, v. CITY AND COUNTY OF SAN FRANCISCO, a municipal corporation; San Francisco Department of Public Works; Dianne Feinstein, an individual; Roger Boas, an individual; John L. Molinari, an individual; Harry Britt, an individual; Wendy Nelder, an individual; Louise Renne, an individual; Carol Ruth Silver, an individual; Nancy Walker, an individual; Doris M. Ward, an individual; Willie B. Kennedy, an individual; Evans-Pacific Realty, Inc., a California corporation; Bernstein, Morris, an individual, Defendants.

No. C 83-5640 TEH.

United States District Court, N.D. California.

April 4, 1984.

Special Master's Findings December 31, 1985.

Order Adopting Special Master's Findings December 30, 1986.

COPYRIGHT MATERIAL OMITTED

Alioto & Alioto, Joseph L. Alioto, Joseph M. Alioto, John I. Alioto, Patricia E. Henle, Gary D. Elion, San Francisco, Cal., for plaintiffs; Knickerbocker & Fichter, Richard L. Knickerbocker, Santa Monica, Cal., Pass & Fainsbert, Stephen B. Fainsbert, Torrance, Cal., of counsel.

George Agnost, City Atty., San Francisco, Cal., Blecher & Collins, Maxwell M. Blecher, Howard F. Daniels, Los Angeles, Cal., Howard, Rice, Nemerovski, Canady, Robertson & Falk, Jerome B. Falk, Jr., Robert E. Gooding, Jr., Steven E. Schon, Sarah K. Hofstadter, Therese M. Stewart, Law Offices of Harold S. Dobbs, Godfrey L. Munter, Jr., Robert S. Tandler, Marc Warsowe, San Francisco, Cal., for defendants.

MEMORANDUM DECISION, ORDER AND ORDER OF REFERENCE TO SPECIAL MASTER

THELTON E. HENDERSON, District Judge.

I. INTRODUCTION

This antitrust and civil rights action is before the Court on the defendants' motion to dismiss. The suit arises out of the enactment of a San Francisco municipal ordinance which sharply limits the number and kind of apartments which may be converted to condominiums in the city. Under the ordinance, the plaintiffs,¹ the individual and corporate owners of a large apartment complex ?€” Richard W. Traweek, Traweek Investment Company, Inc., and Traweek Investment Fund No. 10, Ltd. ?€” are barred from converting any portion of their property to condominiums. Challenging the facial validity of the ordinance as well as the conduct and motives of the municipal officials who favored its enactment, the plaintiffs bring suit against the municipality and selected city officials alleging violations of federal antitrust and civil rights laws, and breaches of state tort and contract law. Named as defendants are the City and County of San Francisco, the San Francisco Department of Public Works, Dianne Feinstein, Mayor of San Francisco, Roger Boas, Chief Administrative Officer of San Francisco, John L. Molinari, Harry Britt, Wendy Nelder, Louise Renne, Carol Ruth Silver, Nancy Walker, Doris Ward, and Willie Kennedy, members of the San Francisco Board of Supervisors. The individual defendants are sued in their individual and official capacities.

The Court has carefully considered the well-argued briefs and oral presentations of counsel. For the reasons stated below, we conclude that (1) the defendant officials' participation in an alleged conspiracy to eliminate the plaintiffs' ability to compete in the market for sale of condominiums supports a colorable claim under the Sherman Act, (2) no viable constitutional claims are presented by the plaintiffs' complaint,^1a and (3) the individual defendants are shielded from personal liability by the federal and state doctrines of absolute legislative immunity and must be dismissed as parties to this action. Accordingly, the defendants' motion to dismiss will be denied in part and granted in part. Additionally, because of the difficult and sensitive discovery issues raised by the plaintiffs' antitrust claims, a Special Master will be appointed to help formulate and monitor an appropriate discovery scheme. The order of reference is set forth at the conclusion of this decision.

II. FACTS²

The plaintiffs purchased the 720-unit John Muir apartment complex in June 1980. In the spring and summer of 1982, they began to take steps to convert a portion of the property to condominiums. The municipal ordinance then in effect, Ordinance No. 337-79 (1979),³ limited to 1000 the number of conversions permitted in the city annually. Ord. No. 337-79, enacting Subdiv. Code ? 1396 (hereafter referred to as the "1979 Ordinance").⁴ Property owners interested in reserving a portion of the units allotted for conversion did so on a first come, first serve basis. No property owner was permitted to reserve more than 250 spots annually. Under this system, the plaintiffs successfully registered to submit applications to convert to condominiums 187 John Muir apartments. Although the registration process occurred in 1982, the anticipated development was scheduled for 1983 and thus, in the words of the Ordinance's implementing regulations, the plaintiffs had gained 187 spots on the "1983 Priority List." To reserve these spots, the plaintiffs paid the City $1,870. Thereafter, they spent $400,000 dollars to prepare conversion applications for the 187 units.⁵

In December 1982, the San Francisco Board of Supervisors amended the 1979 Ordinance to restrict the number of conversions permitted annually to 200 and to prohibit all conversion in buildings housing more than six units. Ord. No. 598-82 (1982) (hereafter referred to as the "1983 Ordinance").⁶ The 1983 Ordinance, which went into effect January 1, 1983, makes some provision for applicants in midstream, like the plaintiffs, but expressly prohibits conversions by any 1983 registrant whose property contains more than twenty-five units. Under the terms of the 1983 Ordinance, the owners of the John Muir are unable to convert to condominiums any portion of their large complex. The 1983 Ordinance expires December 31, 1985.

The plaintiffs filed suit in federal court on August 15, 1983 to challenge the facial validity of the 1983 Ordinance as well as the conduct and motives of the municipal officials who favored its enactment.⁷ Liberally construed, the plaintiffs' complaint lists ten causes of action, ranging from violations of the federal antitrust laws, Sherman Act, 15 U.S.C. ?? 1, 2, to a myriad of constitutional challenges under the federal civil rights statutes, 42 U.S.C. ?? 1982, 1985(3), 1986, and pendant state claims for breach of contract and tortious interference with both contract and prospective business advantage. For our purposes on this motion to dismiss, it is sufficient to describe the five major federal claims presented by the complaint. First, it is alleged that the defendants violated the Sherman Act by engaging in a conspiracy with unnamed developers and other private citizens to eliminate the plaintiffs' ability to compete in the market for sale of condominiums through enactment of the 1983 Ordinance and issuance of its precursive administrative directive. 15 U.S.C. ?? 1, 2. Second, four constitutional claims are stated. Plaintiffs aver that the 1983 Ordinance (1) exceeds the defendant municipality's authority under its police powers, (2) constitutes a taking, (3) offends the Equal Protection Clause by irrationally distinguishing between different categories of property and by impinging on the fundamental rights of third parties, and (4) violates the plaintiffs' procedural due process rights.

A. The Factual Allegations of the Plaintiffs' Complaint

The factual allegations which the plaintiffs make in support of their claims may be summarized as follows:⁸ The plaintiffs bought the John Muir for $20 million in June 1980, hoping to convert its 720 moderately priced apartments to affordable condominiums. Constrained by the 1979 Ordinance, the plaintiffs planned to proceed in stages. The first stage commenced successfully when they reserved 187 spots on the 1983 Priority List.

The condominium market which the plaintiffs hoped to enter was allegedly dominated by expensive, luxury condominiums. The plaintiffs aver that they intended to compete in this purportedly slow and saturated market by offering an alternative "affordable, quality condominium."⁹ They further allege that unnamed real estate developers and other interested private citizens,¹⁰ alarmed by the threat of the plaintiffs' price competition, "approached" the defendant officials to solicit their aid. During the meetings alleged with some or all of the defendant officials, the unnamed private citizens purportedly convinced the officials that governmental action barring conversion of the John Muir was needed to maintain the high price of condominiums in the city.

As a result of this lobbying, the defendant officials allegedly agreed to stop, by governmental action, the conversion of the John Muir. First, the City's Chief Administrative Officer, defendant Boaz, ordered the Director of the Department of Public Works¹¹ to stop processing conversion applications. His informal administrative directive was issued in early December 1982, and was promulgated "in anticipation of the passage" of the 1983 Ordinance.¹² Second, on December 20, 1982, the Board of Supervisors passed the 1983 Ordinance. Ord. No. 598-82 (1982).¹³ Under the 1983 Ordinance's expansive grandfather clause ?€” which permitted 1983 registrants with buildings containing less than twenty-five units to vie for the remaining spots on the 1982 Priority List¹⁴ ?€” allegedly only the plaintiffs and one other registrant were flatly precluded from converting their registered property.

The other 1983 registrant barred from converting his property allegedly petitioned the Board of Supervisors for relief. Although sympathetic to his situation, members of the Board of Supervisors denied his request, allegedly explaining that his fate was linked to that of the plaintiffs, and that the Board of Supervisors was unwilling to allow the...