Tze v. City of Palo Alto

• Decision Date: 20 October 2021
• Docket Number: G060401
• Court: California Court of Appeals Court of Appeals
• Parties: JOHN TZE et al., Plaintiffs and Appellants, v. CITY OF PALO ALTO et al., Defendants and Appellants.

JOHN TZE et al., Plaintiffs and Appellants, v. CITY OF PALO ALTO et al., Defendants and Appellants.

G060401

California Court of Appeals, Fourth District, Third Division

October 20, 2021

NOT TO BE PUBLISHED

Order Filed Date 11/18/21

Appeal from a judgment of the Superior Court of Santa Clara County No. 17CV309030 Peter H. Kirwan, Judge. Affirmed.

Jarvis, Fay & Gibson, Rick W. Jarvis and Christina A Lawrence; City of Palo Alto, Molly Stump, City Attorney, and Terence Howzell for Defendants and Appellants.

Rutan & Tucker and David P. Lanferman for Plaintiffs and Appellants.

ORDER MODIFYING OPINION AND DENYING PETITION FOR REHEARING;

It is ordered that the opinion filed October 20, 2021, be modified as follows:

1. On page 6, add the following sentence to the last full paragraph before the last sentence that begins with "Edgewood paid…":

Likewise section 1.12.060(a) of the PAMC provided that "[a]ny recipient of an administrative citation may contest that there was a violation of the code . . . by completing a request for hearing form and returning it . . . within thirty calendar days from the date of service of the administrative citation."

2. On page 16, add and modify the first full paragraph after the sentence, "We agree.," as following:

The record shows Edgewood did not timely challenge citations nos. 1 through 56, and it did not complete the administrative review process for citation nos. 71 and 72 prior to filing suit. These failures are not excused by any exception to the exhaustion doctrine.

3. On page on page 16, add the following footnote at the end of the second full paragraph:

^FN Recent opinions have clarified the exhaustion doctrine does not implicate subject matter jurisdiction. But the requirement is still jurisdictional because, absent certain exceptions, a party must pursue its administrative remedies before resorting to the courts. (Kim v. Konad USA Distribution, Inc. (2014) 226 Cal.App.4th 1336, 1347; Tesoro Refining & Marketing Co. LLC v. Los Angeles Regional Water Quality Control Bd. (2019) 42 Cal.App.5th 453, 469.)

4. On page on page 16, add a new sentence at the end of the second full paragraph as follows:

On appeal, Edgewood has the burden of showing the trial court erred in denying its writ petition under the exhaustion doctrine. (Starcevic v. Pentech Financial Services, Inc. (2021) 66 Cal.App.5th 365, 374.)

5. On page 17, add a new paragraph after the first full paragraph as follows:

In its petition for rehearing, Edgewood also appears to suggest that only a court can provide a legal interpretation of an ordinance. Not so. An administrative hearing officer can provide such an interpretation. (See Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 6-7; MHC Operating Limited Partnership v. City of San Jose (2003) 106 Cal.App.4th 204, 219.) Edgewood could have obtained a legal interpretation of the relevant ordinances through the administrative process. Consequently, the process provided Edgewood with an adequate remedy.

6. On page 22, delete the last paragraph (starting with, "Edgewood heavily relies …") and replace it with the following:

Edgewood heavily relies on the trial court's issuance of the preliminary injunction, which was based on due process grounds. But this ruling does not support Edgewood's contention. Among other things, the trial court's ruling was not as broad as Edgewood suggests. The court enjoined the City from enforcing any recently issued citations, assessing any further fines, and requiring Edgewood to prepay penalties prior to administrative review. This ruling was prospective. It was based on the court's determination that continuing to engage in these activities at that point in the parties' dispute would interfere with Edgewood's due process rights. But it did not address whether the prepayment scheme violated Edgewood's due process rights as to the citations at issue in this appeal (citation nos. 1 through 56, 71, and 72). This is evident from the fact that the trial court rejected Edgewood's due process argument when ruling it had failed to exhaust its administrative remedies as to these citations. Moreover, the trial court found the prepayment requirement violated due process as applied. As discussed above, however, Edgewood did not make an as applied challenge. And even if it intended to do so, it did not support its argument with any relevant citations to the record or authority.

This modification does not effect a change in the judgment. The petition for rehearing is DENIED.

OPINION

MOORE, ACTING P. J.

Plaintiff Edgewood S.C. LLC sought approval from defendants City of Palo Alto et al. (the City) to redevelop a shopping plaza.^[1] The City approved the plan and passed a zoning ordinance creating guidelines for the redevelopment project. Among other things, the ordinance required Edgewood to "ensure the continued use" of a certain building on the plaza as a grocery store. Edgewood entered into a 10-year lease for the building with a grocer. But, through no fault of Edgewood, the grocer ceased operating after two years. The City claimed Edgewood had a duty under the ordinance to ensure a grocery store was operating in the building. It alleged Edgewood was in violation of the ordinance and began assessing daily fines. In contrast, Edgewood believed the ordinance only restricted the building from being used for any purpose other than a grocery store. Because it intended to fill the vacancy with a grocery store, Edgewood maintained no violation had occurred. Still, Edgewood paid the City's fines for over a year before filing any administrative appeal. Since it had waited so long to appeal, however, Edgewood could only timely challenge 14 of the 70 citations that had been issued by that time. The assigned hearing officer ultimately found in favor of the City and upheld the 14 citations challenged.

Edgewood then filed a petition for writs of administrative and traditional mandamus. The former sought to reverse the hearing officer's decision on the 14 citations, while the latter requested invalidation of all the citations issued by the City against Edgewood. On the writ of administrative mandamus, the trial court agreed with Edgewood, finding the ordinance only prevented the building from being used for anything other than a grocery store. As to the writ of traditional mandamus, the court found in favor of the City. It ruled the remaining citations were valid because Edgewood had not exhausted its administrative remedies. The City appeals the court's administrative mandamus ruling, while Edgewood cross-appeals the traditional mandamus ruling.

We find no error. For the administrative writ, both sides agree the correct interpretation of the ordinance turns on the meaning of "continued use." Under both its common definition and specialized meaning within land use and zoning, requiring the "continued use" of the building as a grocery store only prevented Edgewood from allowing the building to be used for a nongrocery store purpose. It did not require Edgewood to ensure a grocery store was continually operating in the building. As to the traditional writ, it is undisputed Edgewood failed to exhaust available administrative remedies for the remaining citations. Edgewood has not shown it should be excused for failing to pursue those remedies.

For these reasons, we affirm the judgment.

I FACTS AND PROCEDURAL HISTORY

A. The Redevelopment Project

Edgewood Plaza (the plaza) is a shopping center in the City that was developed in the 1950s. It was initially zoned as a "Planned Community" (PC), to be used primarily for retail. The original construction consisted of a building for a market (the grocery building) and two smaller one-story retail buildings. Over time, the plaza became a commercial failure and an area of blight. Edgewood eventually purchased the plaza and submitted a redevelopment proposal and application to the City in 2010.^[2] Its proposal retained all the buildings in the plaza. But it suggested moving one of the retail buildings, which were deemed historically significant, to clear space for construction of 10 single-family homes and a public park.

In the redevelopment planning phase, there was some discussion among City staff as to whether the plaza should be redeveloped as a PC zone or a Commercial Neighborhood (CN) zone. Edgewood supported PC zoning for the plaza. Among other things, Edgewood believed it was desirable for the plaza "to have a grocery store use so that [the plaza] is a successful grocery anchored neighborhood center and not just another retail district." Edgewood also asserted that "[u]nder a CN zone a grocery user cannot be compelled whether for initial occupancy or long term occupancy. Only a PC zone can compel a grocery store." In April 2012, the City approved Edgewood's proposal for developing the plaza as a PC zone, which they memorialized in a zoning ordinance labeled Ordinance No. 5150 (PC 5150).

Like Edgewood, the City wanted a grocery store in the plaza. This is clear from various sections of PC 5150. For example, PC 5150 identifies one of the components of the project as "renovation of the [grocery] building in place for use as a grocery store." It also contains another section entitled "Special limitations on land uses," which provides "[t]he [grocery] building shall be primarily used for grocery uses only." Likewise, PC 5150 contains a list of public benefits arising from the redevelopment project, which includes the "[p]rovision of a grocery store in the [grocery] building." It further specified that no building permits would be approved for construction of the homes "prior to submittal to the Director [of Planning and Community Environment] of a lease...