Sullivan Equity Partners, LLC v. City of Los Angeles

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

AL.

Present: The Honorable CHRISTINA A. SNYDER

Catherine Jeang Not Present N/A

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

Not Present Not Present

Proceedings: (IN CHAMBERS) - MOTION FOR JUDGMENT ON THE

PLEADINGS (Dkt. 96, filed on JULY 7, 2023)

I. INTRODUCTION

On September 22, 2016, plaintiff Sullivan Equity Partners, LLC filed the instant

action against defendants City of Los Angeles (the “City’”) and Does 1—S0, inclusive.

Dkt. 1 (‘Compl.”). Plaintiff asserted six claims against defendants: (1) denial of

procedural and substantive due process, pursuant to 42 U.S.C. § 1983; (2) violation of the

Excessive Fines Clause of the Eighth Amendment, pursuant to 42 U.S.C. § 1983: (3)

violation of the Equal Protection Clause, pursuant to 42 U.S.C. § 1983; (4) slander of

title; (5) petition for a writ of mandate, pursuant to California Code of Civil Procedure §

1094.5: and (6) declaratory relief. Id. On January 9, 2017, the Court granted in part and

denied in part the City’s motion to dismiss plaintiff's complaint. Dkt. 24. Specifically,

the Court dismissed without prejudice plaintiffs excessive fines, equal protection, and

slander of title claims, but denied the City’s motion as to plaintiff’s due process, writ of

mandate, and declaratory relief claims. Id. On February 8, 2017, plaintiff filed a notice

of its intent to stand on its pleadings. Dkt. 25.

Plaintiff, a real estate development company, concedes that it improperly removed

three trees from a property that it was developing, in violation of Los Angeles Municipal

Code (“LAMC’”’) §§ 46.00 et seq. FAC 9 34-41. After a public hearing, the City’s

Bureau of Street Services (“Bureau”) revoked plaintiff's building and grading permits

and imposed a five-year moratorium on the issuance of future building permits as a

penalty for plaintiffs violation of the municipal code. Id. §{ 93-94. The Board of Public

Works (“Board”) upheld this decision on appeal. Id. §{ 104. The gravamen of plaintiffs

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

AL.

complaint is that the two administrative hearings were shams—and therefore violated

plaintiff's due process rights—because members of the Bureau and the Board were

biased against plaintiff.

On March 3, 2017, the City filed a motion requesting that the Court abstain from

hearing the case pursuant to Railroad Commission v. Pullman Co., 312 U.S. 496 (1941).

Dkt. 27. On April 12, 2017, the Court granted the City’s motion and stayed this action

pending resolution of plaintiff's writ of mandate claim in state court, finding that

abstention was appropriate under Pullman because plaintiff's complaint concerned a

sensitive area of social policy—land use, plaintiffs writ of mandate claims could obviate

its federal claims, and the outcome of plaintiffs writ petition in state court was uncertain.

Dkts. 36, 37. In its order, the Court stated that it would retain jurisdiction to address

plaintiff's federal claims so long as plaintiff makes a reservation in the state court

proceeding under England v. Louisiana State Board of Medical Examiners, 375 U.S. 411

(1964), and such claims are not mooted in the state court proceeding. Dkt. 36.

On May 12, 2017, plaintiff filed a petition and complaint for writ of mandate and

for inverse condemnation in Los Angeles Superior Court. Dkt. 96, RJN, Exh. A.

Plaintiff included an England reservation stating that it “expressly reserves its rights to

return to the federal court in the Central District of California for adjudication of the

federal claims previously alleged . . . , including claims for Procedural Due Process

1 The City filed a request for judicial notice in connection with its motion, requesting

that the Court take notice of five exhibits. Dkt. 96-1 (“RJN”). These include (1) the First

Amended Verified Petition For Writ Of Mandate And Complaint filed in Los Angeles

Superior Court Case No. BS169541 on or about May 12, 2017; (2) the minute order

entitled “Nature of Proceedings: Hearing On Petition For Writ Of Mandate Ruling On

Submitted Matter” filed in Los Angeles Superior Court Case No. BS169541 on or about

August 12, 2019: (3) the Status Report Re State Court Appeal filed in Central District

Court Case No. 2:16-cv-07148-CAS-AGR on September 2, 2022: (4) the signed

judgment in favor of City, dated April 24, 2023, in the matter of Sullivan Equity Partners

LLC vs City of Los Angeles, Los Angeles Superior Court Case No. BS169541; and (5)

LAMC § 46.00, et seq., amended by Ordinance Number 177404, entitled “Preservation

of Protected Trees.” Id. The Court finds that judicial notice of these exhibits is

appropriate pursuant to Federal Rule of Evidence 201(b).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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Violations; Substantive Due Process Violations; Civil Rights Violations, 42 U.S.C. §

1983; and Declaratory Relief.” Id. § 110. The petition brought causes of action for: (1)

an administrative writ pursuant to California Code of Civil Procedure § 1094.5, alleging

that the City failed to provide plaintiff with a fair hearing and that the City’s decision was

not supported by the evidence; (2) an administrative writ pursuant to California Code of

Civil Procedure § 1085, alleging that the City acted outside of its authority when it

revoked plaintiff's grading permits; and (3) inverse condemnation. Id. 4 111-129. On

December 12, 2017, the Superior Court stayed the inverse condemnation claim pending

resolution of the writ claims. Dkt. 96, RJN, Exh. B.

On August 12, 2019, following a hearing on the matter, the Superior Court granted

plaintiff's writ petition on the first cause of action, after concluding that certain ex parte

communications created an unacceptable probability of bias in the administrative

proceedings. Id. The Superior Court denied plaintiff's second cause of action as moot.

Dkt. 96, RJN, Exh. C at 6.

On September 4, 2019, plaintiff notified this Court of the Superior Court’s ruling

on plaintiff's state court petition for writ of mandate. Dkt. 42. On October 2, 2019, the

parties filed a joint stipulation to file an amended complaint. Dkt. 44. Plaintiff filed a

First Amended Complaint (the “FAC”) on October 2, 2019. Dkt. 45. Plaintiff's FAC

asserts three claims against the City: (1) denial of procedural and substantive due process,

pursuant to 42 U.S.C. § 1983; (2) inverse condemnation in violation of the Fifth and

Fourteenth Amendments, pursuant to 42 U.S.C. § 1983; and (3) a claim for declaratory

judgment that plaintiff has a right to have its permits reinstated on account of numerous

constitutional violations. Id.

On November 25, 2019, the City filed a motion to dismiss the FAC’s claim for

inverse condemnation. Dkt. 49. On January 22, 2020, the Court granted the City’s

motion to dismiss without prejudice, finding that plaintiff's inverse condemnation claim

was not ripe because the Superior Court had not yet issued a final writ that would allow

the Court to determine the extent of the alleged taking. Dkt. 54. The City filed its

answer to the FAC on February 14, 2020. Dkt. 55.

On July 20, 2020, the City filed a motion to stay this action pending resolution of

its state court appeal of the Superior Court’s writ order. Dkt. 63. On October 5, 2020,

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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the Court issued an order reinstating the stay under Pullman pending final resolution of

plaintiff's writ of mandate claim in state court. Dkt. 72.

On July 19, 2022, the Second District Court of Appeal (the “appeals court’)

reversed the Superior Court’s finding on the first cause of action, holding that plaintiff

had failed to demonstrate that the City’s administrative proceedings were unfair. Dkt. 96,

RJN, Exh. C.? The appeals court specifically concluded that “there is insufficient

evidence of bias to establish a violation of due process.” Id. at 29. Subsequently, the

Superior Court set a writ trial date to hear the remaining issue of whether there were

sufficient findings and substantial evidence to support the administrative findings. Dkt.

96, RJN, Exh. D. On April 10, 2023, following the trial, the Superior Court issued a final

order ruling against plaintiff and denying the petition. Id.

On July 7, 2023, the City filed the instant motion for judgment on the pleadings on

the two remaining claims in the FAC. Dkt. 96 (“Mot.”). On July 14, 2023, plaintiff filed

an opposition to the City’s motion and requested leave to amend the FAC to replead its

inverse condemnation claim. Dkt. 99 (“Opp.”). On July 21, 2023, the City filed a reply

in support of its motion. Dkt. 100 (“Reply”).

On July 31, 2023, the Court held a hearing on the City’s motion for judgment on

the pleadings. On August 1, 2023, the Court issued an order requesting that plaintiff

submit a supplemental brief addressing whether it had a full and fair opportunity to

litigate its claims in state court. Dkt. 102. On August 10, 2023, plaintiff filed its

supplemental brief in opposition to the City’s motion for judgment on the pleadings. Dkt.

103. On August 14, 2023, plaintiff filed a declaration in support of its supplemental

brief. Dkt. 104. Even though the Court did not request any briefing from the City, the

City filed a supplemental brief in support of its motion for judgment on the pleadings on

August 14, 2023. Dkt. 105.

The Court has reviewed the City’s motion for judgment on the pleadings,

plaintiff's opposition to the City’s motion, and the City’s reply in support of its motion,

as well as the supplemental brief filed by plaintiff and the supplemental brief filed by the

City in response.

2 The appeals court affirmed the Superior Court’s dismissal of the second cause of

action. Id. at 43.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

AL.

Having carefully considered the parties’ arguments and submissions, the Court

finds and concludes as follows.

I. BACKGROUND

A. Plaintiff’s Factual Allegations

Plaintiff alleges the following facts in the FAC.

Plaintiff is a real estate development company that owns two vacant lots

(“Properties’’) in the Sullivan Canyon area of the City of Los Angeles. FAC 10-12.

According to plaintiff, the development of the Properties has been the subject of

considerable acrimony in the community. Id. 4 13. On July 24, 2014, plaintiff obtained

building, grading, and retaining wall permits to construct a single-family home on one of

the Properties. Id. ¥ 14.

Plaintiff also sought and obtained a tree permit, which allowed the removal of 56

protected trees. Id. 9 32. LAMC §§ 46.00 et seq. (the “Protected Tree Ordinance’’)

regulates the removal and relocation of protected trees. Id, 4 17. Section 46.01 defines

protected trees as any Oak, Southern California Black Walnut, Western Sycamore, or

California Bay tree of a certain size. Id. No protected tree may be removed or relocated

absent a permit from the Board or its designated officer or employee. Id. 4/18. Ifa

protected tree has been removed or relocated in violation of LAMC § 46.00, LAMC

§ 46.06 authorizes the Bureau to request that the Superintendent of Building withhold

issuance of building permits and revoke existing building permits issued for construction

that has not commenced following quasi-judicial administrative hearings. Id. ff] 20-21.

LAMC § 46.06 is known as the “Scorched Earth Ordinance.” Id. | 20. Prior to such

action, the Bureau must notify the property owner in writing of its intent to act under

LAMC § 46.06 and provide the owner a hearing and an opportunity to submit written

evidence. Id. 22. In determining whether to revoke or withhold permits, LAMC

§ 46.06(c) provides that the Bureau shall consider the following factors: the number of

trees removed or relocated, the size and age of those trees, the knowledge and intent of

the property owners with respect to removal or relocation, and prior violations of the law

with respect to removal and relocation of protected trees. Id. { 23. A property owner

may appeal the decision of the Bureau to the Board, pursuant to LAMC § 46.06(d). Id.

§| 24. A final determination by the Bureau or Board is recorded with the County Recorder

within ten days of that determination. Id.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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Before the Board issued a tree permit to plaintiff, Ron Lorenzen, then the City

Assistant’s Chief Forester, issued a memorandum to the City’s Environmental Review

Unit stating that the tree removals that plaintiff sought were necessary to allow for

reasonable development of the site. Id. § 28.

After receiving the tree permit, plaintiff hired Ricardo Gonzalez to remove the 56

protected trees covered by the permit. Id. 34. On September 9, 2014, Gonzalez and his

employees removed trees from the property that he had identified as permitted for

removal. Id. §{ 35-36. However, Gonzalez incorrectly removed three trees that were not

covered by plaintiff's permit. Id. § 37.

After the removal of the trees, neighbors opposed to plaintiff's development of the

Properties were upset that plaintiffs tree permit had been issued without notice to them.

Id. § 39. One individual submitted a complaint to his City Councilmember, Mike Bonin,

suggesting that the removals were not permitted or improperly permitted. Id. | 42. After

a series of emails between Bonin and City officials, Board President Kevin James

confirmed that a tree removal permit had been granted. Id. According to plaintiff,

political pressure mounted from a neighborhood opposition group and from prominent

politicians. Id. 48, 55. Opponents from the neighborhood, former and current public

officials, and a famous actor submitted letters and emails to, among others, Bonin and a

member of his staff, Mayor Eric Garcetti and members of his staff, the City Attorney, and

a City Project Planner. Id. 56—65.

On September 22, 2015, Gideon Kracov—counsel for the Sullivan County

Property Owners Association—sent an email to James demanding that the Department of

Public Works perform another site inspection of the Properties. Id. § 70. Plaintiff

alleges, based on information and belief, that Lorenzen—at that point, Assistant Director

of Street Services—inspected the Properties on December 7, 2015, and discovered the

three trees that Gonzalez improperly removed. Id. Lorenzen reported this finding

to James in an email on December 8, 2015, and set out three options for responding to the

violation. Id. 75—76. On December 9, 2015, Greg Good—Director of Infrastructure

for the Office of the Mayor—emailed James and stated: “Again, this is amazing — and

you have several options. What are you thinking at this point?” Id. 79. Plaintiff

alleges that Good was referring to the discovery of the Gonzalez errors. Id. On

December 10, 2015, in an email to Lorenzen, Bonin’s Chief of Staff, Chad Molnar stated

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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that Bonin strongly believed that the City should revoke all permits for plaintiffs project,

given the violation. Id. 4 81. In response, Lorenzen stated that he was “in agreement.”

Id. { 82. On December 15, 2015, Molnar emailed James, saying that Bonin felt “strongly

that we need to quickly move ahead with revoking these permits” and that Lorenzen “‘is

working through the process with the City Attorney.” Id. § 83. Molnar also stated that

he understood that James “wanted to help with this as well.” Id. Also on December 15,

2015, Debbie Dyer Harris, District Director for Bonin, sent an email to Molnar and

another member of Bonin’s staff, stating that Harris had received a call from the Greg

Spotts, Assistant Director at the Bureau. Id. § 85. Spotts reportedly told Harris that

Bonin’s office “wants to implement the scorched earth policy to prevent the builder from

building on the site for ten years.” Id. Molnar responded to Harris: “Yes, this is true.

Mike feels strongly that we need to revoke all building and construction permits, and ban

new permits for ten years. I will call him.” Id. { 86.

Plaintiff recerved a Notice of Administrative Hearing on December 20, 2015,

indicating that three trees had been removed without a permit and that the Bureau

intended to act pursuant to LAMC § 46.06. Id. 4] 39, 87.

A hearing was scheduled before the Bureau on February 12, 2016. On February

10, 2016, plaintiff's attorney submitted a letter to the Board in advance of the hearing

stating that the removal of the three trees was an unintentional error, that plaintiff was

unaware of the error prior to the Bureau notice, that plaintiff has never improperly

removed protected trees previously, and that the circumstances did not warrant the

application of the “Scorched Earth” penalty. Id. ] 88. Plaintiff's counsel volunteered

additional mitigation and replacement measures. Id. Plaintiff also submitted sworn

declarations from the arborist, property owners, and site supervisor stating that the

removal was unintentional, and that there was no benefit to be gained by the removal

because the three trees had not blocked access or otherwise interfered with plaintiff s

development plans. Id. § 89.

On February 11, 2016, Molnar wrote to a “Project opponent” stating that she

“personally sat down with Urban Forestry to discuss this hearing . . . and they are fully

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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aware of CM Bonin’s expectation that the department will hold the applicant accountable

for the removal of the protected trees.” Id. § 90.

On February 12, 2016, the hearing before the Bureau of Street Services took place,

before Lorenzen, who served as the hearing officer. As plaintiff describes it, Lorenzen is

the very same individual who recommended the issuance of the permits, was publicly

scrutinized for it, acted as the City’s lead investigator into the matter, “schemed” with a

representative of the Mayor’s office to come after plaintiff, and was “in agreement” that

the plaintiff's building permits should be revoked. Id. 91. Plaintiff therefore alleges

that the hearing was a sham and the result preordained. Id. During the hearing plaintiff

presented evidence that the removal of the three non-permitted trees was accidental and

proposed mitigation measures. Id. ¥ 92.

On March 14, 2016, the Bureau issued its determination, recommending the

invocation of the “Scorched Earth Ordinance.” Id. 93. Specifically, the Bureau

recommended that the Department of Building and Safety revoke all existing building

permits, suspend existing building permits, and suspend issuance of any new building

permits on the properties for five years. Id. The Bureau’s primary findings were that:

(1) three of the protected trees on the Properties were removed improperly; (2) plaintiff

“had implemented a comprehensive process to ensure that only those trees permitted to

be removed would in reality be removed”; and (3) because trees were improperly

removed in spite of these measures, plaintiff intended to willfully remove the three non-

permitted trees. Id. §]95. The Bureau further concluded that the three trees “were not

removed by accident but intentionally to provide better access to the property or in some

other fashion enable easier development.” Id. 97. Plaintiff alleges that this finding

cannot be sustained because “all of the evidence . . . was to the contrary.” Id.

According to plaintiff, the revocation of existing building permits and a five-year

moratorium on new permits means that any future development of the Properties would

have to comply with the City’s new hillside ordinance. Id. § 98. The new hillside

ordnance does not allow for the design and size of the homes that plaintiff planned for the

3 The City’s Urban Forestry Division is a division within the Bureau of Street Services.

Compl. § 15.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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Properties. Id. Therefore, the revocation and suspension of plaintiff's building permits

eviscerates its planned project. Id.

On April 12, 2016, plaintiff timely appealed the Bureau determination to the Board

of Public Works. In advance of the hearing on plaintiffs appeal, Lorenzen prepared a

staff report recommending that the Board deny plaintiff's appeal. Id. 4 102.

On June 24, 2016, the Board heard plaintiff's appeal and voted to uphold the

determination. Id. § 104. James, president of the Board, presided over the hearing and

made the motion to deny the appeal. Id. 9 101, 105. Plaintiff alleges that James was

biased against plaintiff and plaintiff's project and had pre-committed to ensure that the

appeal was denied. Id. § 101. According to plaintiff, James was “politically motivated to

clear the name of the Department that had issued the tree permit in the first place[.]” Id.

In addition, James and other members of Department staff failed to disclose their “ex

parte communications.” Id. § 104.

As a result of the hearings before the Bureau and the Board, plaintiffs building

permits have been revoked and the City refuses to issue any new permits for the

Properties and will not do so for five years from the date of the City’s determination. Id.

| 106. The City has recorded its determination against the Properties. Id.

B. Proceedings in State Court

Plaintiffs factual allegations in the state court mandamus action are virtually

identical to its allegations in this action. (Compare dkt. 96, RIN, Exh. A {14-108 to

FAC 4§ 10-106). As relevant here, plaintiff's first cause of action in state court alleged

that “[t]he City failed to provide a fair hearing prior to the revocation of the [p]ermits.”

Dkt. 96, RJN, Exh. A § 115. Although administrative mandamus proceedings are

generally limited to the administrative record, plaintiff sought additional discovery before

the Superior Court. Dkt. 96, RJN, Exh. C at 22. While the Superior Court denied most

of plaintiff's discovery requests, it permitted certain additional discovery. Id. This

included limited depositions of James and Lorenzen involving questions on specific

emails. Id. Excerpts of the deposition transcripts were admitted into the record. Id. The

Superior Court additionally granted plaintiff's request to augment the record with seven

email chains (totaling twelve pages) that the Superior Court concluded could be relevant

to plaintiff's claims of bias. Id.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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On August 12, 2019, following briefing and a bench trial, the Superior Court

issued an order finding that plaintiff had demonstrated an unacceptable probability of

actual bias and granting plaintiffs first cause of action. Id. at 26. On appeal, the appeals

court reversed, holding in a lengthy order that plaintiff had failed to show that the hearing

was unfair on account of the decisionmakers being biased. Id. at 29. Specifically, the

appeals court considered plaintiffs allegation that Lorenzen and James were personally

embroiled in the dispute and concluded that “neither Lorenzen nor James held a financial

stake, harbored personal animosity, or held any other personal interest in the project.” Id.

at 35. Further, the appeals court concluded that the statements made by Lorenzen and

James at the hearings and in emails were insufficient evidence that they had precommited

to aresult. Id. 36-38. Finally, the appeals court concluded that “the overlapping

administrative roles inhabited by Lorenzen and James were permissible and that Sullivan

failed to produce evidence of bias arising from those roles.” Id. at 38. In accordance

with these findings, the appeals court concluded that plaintiff had failed to present

evidence of a constitutionally unacceptable risk of bias. Id. at 41. The appeals court

reversed the Superior Court’s decision on the first cause of action and did not remand for

further litigation on the issue of fairness.

Following the decision on appeal, the Superior Court set a writ trial date to hear the

remaining issue of whether there were sufficient findings and substantial evidence to

support the administrative findings. Dkt. 96, RJN, Exh. D. And, on April 10, 2023, the

Superior Court issued a final order ruling against plaintiff and denying the petition. Id.

Il. LEGAL STANDARD

A motion for judgment on the pleadings brought pursuant to Fed. R. Civ. P. 12(c)

provides a means of disposing of cases when all material allegations of fact are admitted

in the pleadings and only questions of law remain. See McGann v. Emst & Young, 102

F.3d 390, 392 (9th Cir. 1996). Such a motion may be brought “after the pleadings are

closed—but early enough not to delay trial.” Fed. R. Civ. P. 12(c). “Analysis under Rule

12(c) is substantially identical to analysis under Rule 12(b)(6) because, under both rules,

a court must determine whether the facts alleged in the complaint, taken as true, entitle

the plaintiff to a legal remedy.” Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir.

2012). Accordingly, while the complaint “does not need detailed factual allegations, a

plaintiff's obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more

than labels and conclusions, and a formulaic recitation of the elements of a cause of

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

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action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

“|FJactual allegations must be enough to raise a right to relief above the speculative

level.” Id.

In considering a Rule 12(c) motion, as with a 12(b)(6) motion, the district court

must view the facts presented in the pleadings and the inferences to be drawn from them

in the light most favorable to the nonmoving party. NL Indus. v. Kaplan, 792 F.2d 896,

898 (9th Cir. 1986); In re Century 21-Re/Max Real Estate Adver. Claims Litig., 882 F.

Supp. 915, 921 (C.D. Cal. 1994). However, “[i|n keeping with these principles a court

considering a motion to dismiss can choose to begin by identifying pleadings that,

because they are no more than conclusions, are not entitled to the assumption of truth.

While legal conclusions can provide the framework of a complaint, they must be

supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1950

(2009): Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a

complaint to survive a motion to dismiss, the non-conclusory ‘factual content,’ and

reasonable inferences from that content, must be plausibly suggestive of a claim entitling

the plaintiff to relief.”’) (citing Twombly and Iqbal). Ultimately, “[d]etermining whether

a complaint states a plausible claim for relief will . . . be a context-specific task that

requires the reviewing court to draw on its judicial experience and common sense.”

Iqbal, 129 S. Ct. at 1950. For purposes of a Rule 12(c) motion, the moving party

concedes the accuracy of the factual allegations of the complaint, but does not admit

other assertions that constitute conclusions of law or matters that would not be admissible

in evidence at trial. 5C Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,

Federal Practice and Procedure § 1368 (3d ed. 2004).

Unless a court converts a Rule 12(b)(6) or 12(c) motion into a motion for summary

judgment, a court generally cannot consider material outside of the complaint (e.g., facts

presented in briefs, affidavits, or discovery materials). In re American Cont’]

Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on

other grounds sub nom Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523

US. 26 (1998). A court may, however, consider exhibits submitted with or alleged in the

complaint and matters that may be judicially noticed pursuant to Federal Rule of

Evidence 201. In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999):

Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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IV. DISCUSSION

A. Preclusion of Plaintiff’s First Claim for Relief

The City argues that the state court’s resolution of plaintiff's first cause of action

precludes plaintiff from litigating its first claim for relief in this action, pursuant to the

doctrines of claim preclusion and issue preclusion. Mot. at 21, 26.

Pursuant to 28 U.S.C. § 1738, federal courts must “give preclusive effect to state-

court judgments whenever the courts of the State from which the judgment emerged

would do so.” Allen v. McCurry, 449 U.S. 90, 96 (1980). Accordingly, federal courts

apply the law of the state in which the prior judgment was entered to determine the

preclusive effect on claims in federal court. Takahashi v. Bd. of Trs. of Livingston Union

Sch. Dist., 783 F.2d 848, 850 (9th Cir. 1986).

Claim preclusion, also called res judicata, “prevents relitigation of the same cause

of action in a second suit between the same parties or parties in privity with them.”

Mycogen Corp. v. Monsanto Co., 28 Cal. 4th 888, 896 (2002). Claim preclusion has

three requirements under California law: (1) the second lawsuit must involve the same

“cause of action” as the first lawsuit; (2) the first lawsuit must have resulted in a final

judgment on the merits; and (3) the party to be precluded must have been a party, or in

privity with a party, to the first lawsuit. San Diego Police Officers’ Ass'n v. Sand Diego

City Emples. Ret. Sys., 568 F.3d 725, 734 (9th Cir. 2008).

The doctrine of issue preclusion, also known as collateral estoppel, “precludes

relitigation of issues argued and decided in prior proceedings,” when six elements are

met. Lucido v. Superior Court., 5] Cal.3d 335, 341(1990). These elements are: (1) “the

issue sought to be precluded from relitigation must be identical to that decided in a

former proceeding”; (2) the issue to be precluded “must have been actually litigated in

the former proceeding”; (3) the issue to be precluded “must have been necessarily

decided in the former proceeding”; (4) “the decision in the former proceeding must be

final and on the merits”; (5) “the party against whom preclusion is sought must be the

same as, or in privity with, the party to the former proceeding”; and (6) application of

issue preclusion must be consistent with the public policies of “preservation of the

integrity of the judicial system, promotion of judicial economy, and protection of litigants

from harassment by vexatious litigation.” Id. at 341-43.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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“Preclusion does not apply where the litigant did not have a ‘full and fair

opportunity’ to litigate the issue in the earlier case.” United States Parcel Service, Inc. v.

California Public Utilities Com’n, 77 F.3d 1178, 1185 (9th Cir. 1996) (quoting Allen, 449

US. at 101).

In its opposition, plaintiff raises several arguments as to why it should not be

precluded from litigating its due process claim. See Opp. at 7-17. First, plaintiff

contends that preclusion would be improper because it made an England reservation in

the state court proceedings. Id. at 7. Second, plaintiff argues that a state mandamus

proceeding does not bar a subsequent federal claim pursuant to § 1983. Id. at 14. Third,

plaintiff argues that it did not have the opportunity to fully litigate its claim in the state

court proceedings. Id. at 11. And finally, plaintiff urges the Court to apply an equity

exception in the event that the Court concludes that the elements of claim or issue

preclusion are met here. Id. at 16. The Court addresses each of these arguments in turn.

1. Effect of England Reservation on Claim and Issue Preclusion

Sullivan contends that it cannot be precluded from litigating its claims in federal

court because it was forced to litigate in state court and expressly reserved its right to

pursue its claims in federal court pursuant to an England reservation. Id. at 7.

Pursuant to England, 375 U.S. 411, “[w]hen [plaintiff] presents his state law claims

to the California courts, [it] is free to present [its] federal . . . clatm[s] to them as well. If

[plaintiff] wishes to retain [its] to return to federal court for adjudication of [its]

federal claim|s], [plaintiff] must make an appropriate reservation in state court.” San

Remo Hotel v. City and Cnty. of San Francisco, 145 F.3d 1095, 1106 n.7 (9th Cir. 1998)

(citation omitted); see England, 375 U.S. at 422 n.12 (“We are confident that state courts,

sharing the [Pullman] abstention doctrine’s purpose of furthering the harmonious relation

between state and federal authority, will respect a litigant’s reservation of his federal

claims for decision by the federal courts.” (citation and quotation marks omitted)).

The Ninth Circuit distinguishes between the effect of an England reservation on

claim preclusion on the one hand and issue preclusion on the other. When litigants are

forced to litigate in state court pursuant to Pullman, “a proper England reservation may

prevent claim preclusion.” Los Altos El Granada Investors v. City of Capitola, 583 F.3d

647, 686 n.3 (9th Cir. 2009). See also Los Altos El Granada investors v. City of

Capitola, 2010 WL 3835665, at *2 (N.D. Cal. Sept. 29, 2010) (“An England reservation

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CENTRAL DISTRICT OF CALIFORNIA

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is sufficient to avoid the doctrine of claim preclusion.’’) (citing San Remo Hotel, L.P. v.

City and County of San Francisco, 364 F.3d 1088, 1094 (9th Cir. 2004), aff'd 545 ULS.

323 (2005)); Dunex, Inc. v. City of Oceanside, 2010 WL 4537824, at *8 (S.D. Cal. Nov.

2, 2010) (‘If [p]laintiffs had made an England reservation in the state action, the

judgment in the state action would not have imposed a res judicata bar to [p|laintiffs'

federal claims.”).

However, “the doctrine of issue preclusion can apply to bar relitigation in federal

court of issues necessarily decided in state court, notwithstanding that plaintiffs must

litigate in state court pursuant to Pullman.” San Remo, 364 F.3d at 1096. This is true

even where litigants have reserved federal claims under England. Id. at 1096-98

(concluding that California state court determination on state takings law issues

precluded relitigation of “equivalent” federal takings law issues, notwithstanding

plaintiff's England reservation). See also Los Altos, 2010 WL 3835665, at *3-5 (finding

that England reservation did not prevent doctrine of issue preclusion from barring

relitigation of issues decided in state court proceedings in which plaintiff was forced to

litigate).

In Dodd v. Hood River Cnty., 136 F.3d 1219 (9th Cir. 1998), the Ninth Circuit

considered whether an England reservation could prevent the application of issue

preclusion where the Dodds had unsuccessfully pursued a takings claim under Oregon

law in Oregon state court and sought to litigate a federal takings claim in federal court.

Id. at 1125-28. The court concluded that “the reservation doctrine does not enable them

to avoid preclusion of issues actually litigated in the state forum.” Id. at 1127. Thus,

the extent that they fully litigated a necessary issue in the course of the state

proceedings that is identical to an issue before the federal court, the Dodds [wel]re

precluded from taking a second bite at the apple.” Id, While the Dodds had not been

forced to litigate in state court under Pullman or a similar doctrine, the Ninth Circuit

reasoned that a litigant does not have “an unrestricted opportunity to relitigate an issue

already decided in state court [where] the issue arose in a state proceeding in which he

would rather not have been engaged at all.” Id. at 1228 (quoting Allen, 449 U.S. at 104).

See also San Remo, 364 F.3d at 1096 (applying Dodd holding where plaintiffs were

forced to litigate in state court pursuant to Pullman).

Plaintiff cites Tovar v. Billmeyer, 609 F.2d 1291 (9th Cir. 1980) for the contention

that federal courts have an “unflagging obligation” to hear claims for relief pursuant to 42

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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U.S.C. § 1983. Opp. at 8 (quoting Tovar, 609 F.2d at 1293). But Tovar does not stand

for the rule that § 1983 claims are immune from issue preclusion where equivalent issues

were actually decided in a state court proceeding. Indeed, the Supreme Court has

“repeatedly held, to the contrary, that issues actually decided in valid state-court

judgments may well deprive plaintiffs of the ‘right’ to have their federal claims

relitigated in federal court.” San Remo Hotel, L.P. v. City and Cnty. of San Francisco,

545 U.S. 323, 342 (2005). “This is so even when the plaintiff would have preferred not

to litigate in state court, but was required to do so by statute or prudential rules.” Id.

And specifically with respect to § 1983 claims, the Supreme Court has rejected the

argument that § 1983 evinces Congressional intent “to allow relitigation of federal issues

decided after a full and fair hearing in state court.” Allen, 449 U.S. at 101.

In short, while plaintiff's England reservation may prevent the application of

claim preclusion here, the Court concludes that plaintiff's claims are not immune from

the doctrine of issue preclusion to the extent that the same issues were actually litigated

in the state court proceedings and the doctrine’s requirements are otherwise met.

2. Preclusive Effect of a State Mandamus Action

Next, plaintiff argues that decisions in state mandamus actions should not have a

preclusive effect because they are “special proceedings” and not causes of action. Opp.

at 14. In support of this argument, plaintiff quotes a Ninth Circuit case, Honey v.

Distelrath, 195 F.3d 531 (9th Cir. 1999), which, relying on a California Court of Appeal

decision, Mata v. City of Los Angeles, 20 Cal. App. 4th 141 (1993), finds that a

mandamus action is a special proceeding and does not bar a subsequent § 1983 claim.

According to plaintiff, Honey and Mata provide an additional ground on which to bar

preclusion here. Opp. at 14-16.

In its reply, the City points out that since Honey and Mata were decided, both the

Ninth Circuit and the California Court of Appeal have clarified that state mandamus

actions may serve as the basis of claim or issue preclusion. Specifically, in Federation of

Hillside & Canyon Assns. v. City of Los Angeles, 126 Cal. App. 4th 1180 (2004), the

California Court of Appeal explained that Mata distinguished special proceedings for the

purpose of showing that the causes of action at issue were not the same, not to hold that

special proceedings cannot have a preclusive effect. Id. at 1205. The Federation court

further stated, “[w]e see no reason to distinguish between actions and special proceedings

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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for the purposes of res judicata if the requirements of the doctrine are satisfied and if

the issues asserted in the later proceeding could have been asserted in the prior

proceeding.” Id. In so concluding, the court cited California Supreme Court cases

finding that the doctrine of issue preclusion could apply to judgments on the merits in

mandamus proceedings. Id. (citing Hollywood Circle, Inc. v. Dep’t of Alcohol Beverage

Control, 55 Cal. 2d 728, 733 (1961); Caminetti v. Bd. of Trustees, 1 Cal. 2d 354, 356

(1934). In light of these precedents, its analysis of Mata, and the purposes of the

preclusion doctrines, the Federation court concluded that state mandamus actions may

give rise to both claim preclusion and issue preclusion. Federation, 126 Cal. App. 4th at

1205.

In Manufactured Home Communities, Inc. v. City of San Jose, 420 F.3d 1022 (9th

Cir. 2005), the Ninth Circuit rejected the argument that a state mandamus proceeding

cannot have a preclusive effect under Mata. Id. at 1031 n.12. Relying on Federation and

Hollywood Circle, the court found that this argument “misrepresents California law” and

concluded that “[a] mandamus action may . . . preclude further litigation.” Id.

Accordingly, following Federation and Manufactured Home, courts in the Ninth Circuit

have found that final judgments in state mandamus proceedings can preclude relitigation

of claims and issues in federal court. See Naranjo v. Cnty. of Los Angeles, 2016 WL

11755022, at *6 (C.D. Cal. Nov. 14, 2016) (applying doctrine of claim preclusion to bar

plaintiff from litigating claims in federal court that were raised or could have been raised

in state mandamus proceeding); Stokes v. City of Visalia, 2018 WL 2970765, at *12

(E.D. Cal. June 8, 2018) (same).

Based on the foregoing, the Court finds plaintiff's argument and reliance on Honey

to be unpersuasive. The fact that the prior judgment arose in a state mandamus

proceeding, by itself, is not sufficient to bar the application of issue preclusion here.

3. Application of the Doctrine of Issue Preclusion

Having concluded that neither the England reservation nor the fact that the prior

judgment was issued in a state mandamus proceeding bars the application of issue

preclusion here, the Court next considers whether the requirements for issue preclusion

under California law are met. For plaintiff to be estopped from relitigating issues, six

elements must be met: (1) “the issue sought to be precluded from relitigation must be

identical to that decided in a former proceeding”; (2) the issue to be precluded “must

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

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have been actually litigated in the former proceeding”; (3) the issue to be precluded

“must have been necessarily decided in the former proceeding”; (4) “the decision in the

former proceeding must be final and on the merits”; (5) “the party against whom

preclusion is sought must be the same as, or in privity with, the party to the former

proceeding”; and (6) application of issue preclusion must be consistent with the public

policies of “preservation of the integrity of the judicial system, promotion of judicial

economy, and protection of litigants from harassment by vexatious litigation.” Lucido,

51 Cal. 3d at 341-43.

a. Whether the State Court Necessarily Decided the Same Issue in a

Final Judgment

In the present action, plaintiff's first claim for relief for a violation of due process

states as follows:

111. The Due Process Clause of the Fourteenth Amendment guarantees

parties a fair trial before a fair tribunal, whether it be an administrative agency or a

court. A plaintiff establishes a claim of bias violating due process requirements

where it shows actual bias on the part of decisionmakers or the "appearance of

partiality". The test of the ability of the administrative body to act is whether in

light of the particular facts experience teaches that the probability of actual bias on

the part of the decisionmaker is too high to be constitutionally tolerable. Thus, due

process is violated where the decision maker 1s actually biased against a party, is

personally embroiled in the controversy to be decided or has pre-committed to

decide the matter in a particular way. Likewise, it is a fundamental rule of due

process that no employee involved in investigating or prosecuting a case may

participate as an adjudicator. The fair hearing to which a person is entitled must be

before an arbiter that has not participated in staff decisions.

112. Ron Lorenzen and Kevin James were biased against Plaintiff, Plaintiff's

Property and the Project. They had conducted and led the investigation of the

matter prior to presiding over the only two quasi-judicial hearings afforded

Plaintiff prior to the deprivation of its property rights in the Properties and Permits.

Each had precommitted to deciding the matter against Plaintiff. Each was

personally embroiled in the controversy. Their participation in the City hearings

rendered the proceedings a sham and the results preordained.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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113. The Scorched Earth Ordinance is unconstitutional on its face and as

applied to Plaintiff given the lack of procedural due process.

114. Plaintiff has substantive due process rights to be free from arbitrary and

capricious government conduct. A deliberate flouting of the law that trammels

significant personal or property rights violates substantive due process and is

actionable under the Fourteenth Amendment and Section 1983.

115. The City deliberately flouted the law and trammeled Plaintiff's property

rights in the Properties and Permits by failing to provide Plaintiff with a fair

hearing before a neutral arbiter, by revoking permits for a property on which no

unpermitted protected trees were removed in plain violation of the LAMC, by

revoking grading permits also in plain violation of the LAMC and recording

documents against the Properties invoking penalties the City was not authorized to

impose thereby slandering Plaintiff's title.

FAC 111-115.

The foregoing allegations indicate that plaintiff's due process claim is based on its

contention that the administrative hearing process was unfair due to the decisionmakers’

bias against plaintiff. Plaintiff specifically alleges that the decisionmakers were biased

because they were personally embroiled in the dispute, precommitted to decide the matter

in a particular way, and both investigated and presided over the dispute.

It is clear from the state court record, and plaintiff does not appear to dispute, that

the fairness issue is the same issue addressed and ruled on in the state court proceedings.

Indeed, plaintiff raised the fair hearing issue in its May 12, 2017 state court petition. See

dkt. 96, RJN, Exh. A § 115 (“The City failed to provide a fair hearing prior to the

revocation of the [p]ermits[.]””). Plaintiff then engaged in discovery on the fairness issue

and litigated the issue in a bench trial with briefing and oral argument on May 14, 2019.

Dkt. 96, RJN, Exh. B at 1. On August 12, 2019, the Superior Court ruled on plaintiff's

first cause of action for an administrative writ, alleging that the administrative hearing

process was unfair. Id. The August 12, 2019 order engaged in a thorough analysis of

plaintiff's bias claims, concluding that plaintiff had presented sufficient evidence to show

an improper probability of bias. Id. On appeal, following briefing and oral argument, the

appeals court reversed and concluded that plaintiff failed to present sufficient evidence to

demonstrate a constitutionally unacceptable risk of bias. Dkt. 96, RJN, Exh. C at 41.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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Both courts specifically decided the issues of personal embroilment, precommitment to a

result, and overlapping roles. Id. at 29-41. And the appeals court decision, which was

the final decision on the fairness issue, concluded that plaintiff had failed to present

sufficient evidence on these issues. Id.

Accordingly, the Court finds that the first, third, and fourth elements are met. The

issues sought to be relitigated are identical to those raised in the state mandamus

proceedings, and these issues were necessarily decided in a final decision on the merits.

In its opposition, plaintiff contends that no court has ruled on plaintiffs claim that

the ordinance at issue 1s “unconstitutional on its face and as applied to [p|laintiff given

the lack of procedural due process.” Opp. at 17; FAC § 113. It appears to the Court that

the “as applied” due process issue is the same as the fairness issue addressed in the state

mandamus proceedings, in light of the fact that plaintiff's allegations of a due process

violation exclusively relate to the alleged unfairness of the hearing. See FAC 4 111-

115. Furthermore, to the extent that the state court addressed and rejected the as applied

challenge, it necessarily rejected a facial challenge as well, given that “[a] facial

challenge is really just a claim that the law or policy at issue is unconstitutional in all of

its applications.” Bucklew v. Precythe, 139 S. Ct. 1112, 1127 (2019). That is, a finding

that the ordinance was constitutional as applied implicitly requires a conclusion that the

ordinance was constitutional on its face.

b. Whether plaintiff had a full and fair opportunity to actually litigate

the issue

With respect to the second element, the requirement that the issue was actually

litigated in the former proceeding, plaintiff argues at length that it did not have the

opportunity to “freely and fully” present its case in the state mandamus action. Opp. at

11-14. Plaintiff points out that the state mandamus proceeding was based on the

administrative record, most of plaintiff's discovery requests were denied, plaintiff was

prevented from putting on live testimony or cross-examining witnesses, and plaintiff did

not receive a jury trial. Id. In short, according to plaintiff, because of the procedural

limitations inherent in a state mandamus proceeding, it was denied the opportunity to

present all of the evidence in support of his first cause of action. Thus, plaintiff contends,

the appeals court’s finding that the evidence before it was insufficient to demonstrate that

the administrative hearings were unfair should not preclude relitigation of this issue in

federal court.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

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It is well settled that the doctrine of issue preclusion does not apply when a litigant

did not have a “full and fair opportunity” to litigate the issue in the prior proceeding.

Allen, 449 U.S. at 95. “Redetermination of issues is warranted if there is reason to doubt

the quality, extensiveness, or fairness of procedures followed in prior litigation. Montana

v. United States, 440 U.S. 147, 164 n.11 (1979). The Supreme Court has held that the

relevant question for determining whether a party had a full and fair opportunity to

litigate is whether the prior proceeding “satisf[ied] the applicable requirements of the

[Fourteenth Amendment’s| Due Process Clause.” Kremer v. Chemical Const. Corp., 456

US. 461, 482 (1982). “A State may not grant preclusive effect in its own courts to a

constitutionally infirm judgment, and other state and federal courts are not required to

accord full faith and credit to such a judgment.” Id. “[N]o single model of procedural

fairness, let alone a particular form of procedure, is dictated by the Due Process Clause.”

Id. at 483. However, the fundamental requirements of procedural due process are notice

and opportunity to be heard “at a meaningful time and in a meaningful manner.”

Mathews v. Eldridge, 424 U.S. 319, 333 (1976).

Here, plaintiff first presented testimony and evidence, including regarding

allegations of bias, at public hearings before the Board and the Bureau. Plaintiff then had

the opportunity to fully brief and argue its writ of mandamus claims before the state

Superior Court in a bench trial on the merits and to litigate the City’s appeal before the

appeals court through briefing and oral argument. While the kinds of claims plaintiff

brought in the state mandamus proceedings are normally reviewed based solely on the

administrative record, the Superior Court granted plaintiff the opportunity to conduct

limited discovery, including taking depositions of Lorenzen and James, and to augment

the administrative record with email chains and excerpts from the deposition transcripts,

after concluding that that evidence could be relevant to plaintiffs claims of bias.

Furthermore, while the Superior Court denied a number of plaintiff's requests to do

additional discovery and to enter specific evidence into the record, it did so after

considering plaintiff's arguments and the propriety of augmenting the record with the

evidence that plaintiff proffered. Indeed, plaintiff's requests to conduct additional

discovery were the subject of five motions to compel and three hearings before the

Superior Court. Plaintiff additionally raised its requests to augment the administrative

record before the appeals court, which concluded that plaintiff failed to make a showing

that the Superior Court erred by denying plaintiffs discovery requests. Dkt. 96, RJN,

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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Exh. C at 22-23 n.12. Further, the appeals court determined that it should not consider

evidence outside of the record which plaintiff cited in its brief on appeal. Id. Thus,

plaintiff's unsuccessful requests to obtain additional evidence and to augment the record

were considered and denied based on the information before the Superior Court and the

appeals court.

The state court record reveals that both the Superior Court and the appeals court

carefully considered plaintiff's arguments and evidence of bias—including with respect

to personal embroilment, precommitment to a result, and overlapping roles—and issued

lengthy written decisions on the same. Based on the evidence in the augmented record,

the Superior Court concluded that plaintiff had set forth sufficient evidence of bias

rendering the administrative hearings unfair. The appeals court, in turn, considered the

same evidence and concluded that it was insufficient to support a finding of unfairness.

Rather than remanding for consideration of additional evidence and further litigation on

the question of unfaimess, the appeals court simply reversed the Superior Court’s

decision, implicitly finding that consideration of additional evidence was not necessary to

uphold the fairness of the hearings.

This extensive process does not support a finding that the state court proceedings

resulted in a “constitutionally infirm judgment.” Kremer, 456 U-S. at 482. Plaintiff had

the opportunity to fully brief its claims, present evidence, including evidence outside of

the original administrative record, present oral argument at a bench trial, and to argue the

bias issues on appeal. Plaintiff's argument that the limited discovery and inability to put

on live testimony and cross-examine witnesses—ordinary characteristics of state

mandamus proceedings—denied it a full and fair opportunity to present its claims 1s

contrary to the general rule that state mandamus judgments can have a preclusive effect.

Clark v. Yosemite Cmty. Coll. Dist., 785 F.2d 781, 784 n.1 (9th Cir. 1986) (“[I]t is well

established in California that the doctrine of res judicata applies to judgments in

mandamus proceedings.”). Additionally, the fact that the Superior Court found, based on

the evidence in the record, that plaintiff had demonstrated that the hearings were unfair

further undermines plaintiff's argument that its ability to present evidence was so

restricted that it was denied a full and fair opportunity to litigate its claim.

Nonetheless, following the Court’s hearing on July 31, 2023, the Court invited

plaintiff to submit a supplemental brief addressing how the exclusion of specific evidence

by the state trial court is claimed to have prevented plaintiff from having a full and fair

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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opportunity to litigate its due process claim. Plaintiff responded with examples of

evidence that it would have offered to prove that “the administrative hearings were

unfair, improper, and presided over by biased hearing officers who had pre-committed to

aresult.” Dkt. 103 at 6. Plaintiff further explained that it had sought additional

discovery to prove that there was a conspiracy among certain City officials to deprive

plaintiff of a fair hearing, but its discovery requests were repeatedly denied. Id. at 6-7.

In the event the Court granted the City’s motion for judgment on the pleadings, plaintiff

requested leave to amend. Id. at 9. Plaintiff proffered that if leave to amend were

granted, it would argue that the state court’s exclusion of evidence and denial of

discovery deprived it of the opportunity to fully and fairly litigate its due process claim.

Id.

Plaintiff asserted that it is significant that the state court admitted only 7 of the 209

documents that plaintiff had sought to add to the record. Id. at 2. However, it does not

appear that the three examples proffered by plaintiff as indicative of the excluded

documents differ substantially from the evidence that was before the state court. And

plaintiff has failed to explain how the denial of certain of its discovery requests prevented

it from fully litigating its claim. On the contrary, the state court record indicates that

consideration of additional evidence was not necessary to decide the fairness issue. The

relevant question is not whether the state court permitted plaintiff to present all possible

evidence in favor of its claims; rather, the Court must inquire whether the state court

proceedings “satisf]ied] the applicable requirements of the Due Process Clause.”

Kremer, 456 U.S. at 482. Plaintiff has not shown that the state court proceedings failed

to meet this standard.

The Court thus grants the City’s motion for judgment on the pleadings, with leave

to amend. Plaintiff should respond to the appeals court’s conclusion that plaintiff “failed

to present ‘specific evidence demonstrating actual bias or a particular combination of

circumstances creating an unacceptable risk of bias’ that would meet the standard of the

exceptional case involving a constitutionally unacceptable risk of bias.” Dkt. 96, RIN,

Exh. C (citation omitted). Specifically, plaintiff should allege with reasonable

particularity the factual basis for its claim that the decisionmakers’ personal embroilment,

precommitment to a result, and overlapping roles resulted in an unfair administrative

hearing. Accordingly, the Court grants the City’s motion for judgment on the pleadings,

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CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

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with thirty days’ leave to amend for plaintiff to address the concerns raised in the appeals

court decision.

c. Remaining Issue Preclusion Elements

The remaining elements additionally weigh in favor of the City. It is undisputed

that plaintiff, the party to be estopped from relitigating issues, was a party in the prior

proceedings. As for the sixth element, application of issue preclusion here would

preserve the integrity of the judicial system and promote judicial economy by avoiding

relitigating of issues already decided in state court. The Court therefore concludes that

the elements of issue preclusion are met and that plaintiff shall be estopped from

relitigating the question of whether the administrative hearings were unfair due to bias.

4. Equity Exception

Finally, plaintiff argues that, even if the Court finds the elements of preclusion to

be met, it should apply an equity exception and allow plaintiff to relitigate issues decided

in the state court proceedings. Opp. at 16. In support of this contention, plaintiff argues

that it was forced into state court against its will pursuant to Pullman and was not able to

freely and fully litigate its claims in the state mandamus proceedings. Plaintiff cites

Citizens for Open Access to Sand & Tide, Inc. v. Seadrift Ass’n, 60 Cal. App. 4th 1053,

1065 (1998) for the rule that “res judicata will not be applied if injustice would result or

if the public interest requires that relitigation not be foreclosed” (internal quotation marks

omitted). But plaintiff has failed to show that application of issue preclusion here would

result in injustice or harm the public interest. As addressed above, an England

reservation does not foreclose application of issue preclusion “even when the plaintiff

would have preferred not to litigate in state court.” San Remo, 545 U.S. at 342. And

plaintiff has not shown that the state mandamus proceedings were so limited that 1t was

denied a full and fair opportunity to present its claims.

Accordingly, the Court concludes that application of an equity exception is not

appropriate. Because plaintiff's due process claim appears to be based entirely on the

alleged unfairness of the administrative hearings and plaintiff is precluded from

relitigating this unfairness issue, the Court finds that the City’s motion for judgment on

the pleadings on plaintiff's first claim for relief should be granted, with leave to amend.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

AL.

B. Declaratory Relief

Plaintiff seeks declaratory relief as to six issues: “that (1) the Scorched Earth

Ordinance is unconstitutional in its face and as applied to Plaintiff; (2) Plaintiff was

denied a fair hearing; (3) application of the Scorched Earth Ordinance effects a taking of

property without the payment of just compensation in violation of the United States and

California Constitutions; (4) the revocation of the permits in respect to a non-offending

property and the revocation of the grading permits effects a taking of the Properties

without the payment of just compensation in violation of the United States and California

Constitutions; (5) Plaintiff is entitled to the immediate reinstatement of the Permits; and

(6) Plaintiff has vested rights to complete the Project and develop its Property under the

terms of the Permits.” FAC § 126.

The City first contends that the declaratory relief claim is moot because a

legitimate claim for declaratory relief seeks prospective relief regarding a live

controversy and plaintiff simply seeks a declaration that the City wrongly revoked its

permits. Mot. at 29. Plaintiff responds that the FAC seeks prospective relief in the form

of a declaration that the Scorched Earth Ordinance is unconstitutional on its face and as

applied to plaintiff. Opp. at 9. The City counters that “[b]oth the facial and as-applied

challenges to the [ordinance] on due process grounds have essentially been determined

because the state court’s ruling upholding the City’s actions in applying the [ordinance]

to [plaintiff] necessarily upholds the fairness of the procedures outlined in the [ordinance]

as well.” Reply at 16.

The City additionally argues that plaintiffs request for declaratory relief based on

a takings violation fail as a matter of law because the enforcement of penalty provisions

does not constitute a regulatory taking. Mot. at 30. Plaintiff responds that this rule only

applies to lawfully imposed penalties. Opp. at 18. According to plaintiff, because its

permits were revoked in violation of its due process rights, the fact that the revocation

constituted enforcement of a penalty does not preclude a takings claim. Id.

Generally, “[t|he government may not be required to compensate an owner for

property which it has already lawfully acquired under the exercise of governmental

authority other than the power of eminent domain.” Bennis v. Michigan, 516 U.S. 442,

453 (1996). Thus, “an enforcement action that results in the seizure of property cannot

be challenged as a taking.” Johnson v. United States, 49 Fed. Cl. 648, 649 (2001). See

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

AL.

also Miranda v. Bonner, 2013 WL 794059, at *10 (C.D. Cal. Mar. 4, 2013) (concluding

that a lawful forfeiture cannot give rise to a taking “as it would be an ‘exercise of

governmental authority other than the power of eminent domain’”) (quoting Bennis, 516

at 442): Mateos-Sandoval v. Cnty. of Sonoma, 942 F. Supp. 2d 890, 912 (N_D. Cal.

2013) (If... [p|laintiffs ultimately fail to prove their Fourth Amendment claim, their

takings clause claim would also fail because [d]efendants acquired their [property] “under

the exercise of governmental authority other than the power of eminent domain.’”’)

(quoting Bennis, 516 U.S. at 442).

Here, the City revoked plaintiff's permits as a penalty, pursuant to LAMC § 46.06,

which allows for the revocation of existing permits when a protected tree is removed or

revoked without a permit. It 1s undisputed that plaintiff improperly removed three

protected trees from the property at issue, and, as concluded above, plaintiff has failed to

show that the revocation of its permits violated its right to due process. Accordingly, the

revocation of plaintiff's permits occurred through lawful government action, and plaintiff

cannot now argue that it has a right to be compensated for a measure meant to penalize it.

See Bennis, 516 U.S. at 442.

Plaintiff cites to a recent Supreme Court decision, Tyler v. Hennepin Cnty, 143 S.

Ct. 1369 (2023) for the contention that an otherwise lawful forfeiture may give rise to a

takings claim. Opp. at 18-19. Tyler addressed a Minnesota statute, which permitted the

state to sell the property of a delinquent taxpayer and to keep any proceeds in excess of

the tax debt. Tyler, 143 S. Ct. at 1373. Plaintiff Tyler filed a federal takings claim for

relief after her property was sold pursuant to the state law. Id. at 1374. The district court

dismissed for failure to state a claim, and the Eighth Circuit affirmed. Id. The Supreme

Court reversed, finding that Tyler had stated a takings claim and was entitled to just

compensation. Id. at 1376.

The Court does not read Tyler to disturb the general rule that the lawful imposition

of a penalty does not give rise to a takings claim. The Tyler decision is based on “[t]he

principle that a government may not take more from a taxpayer than she owes.” Id. at

1376. Thus, the Minnesota statute impermissibly penalized Tyler for failing to pay her

taxes by withholding the proceeds in excess of her tax debt. This is clearly distinct from

the present action, in which plaintiffs permits were revoked pursuant to a lawful exercise

of the state’s police power to penalize plaintiff for impermissibly removing protected

trees.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:16-cv-07148-CAS (AGRx) Date September 15, 2023

Title SULLIVAN EQUITY PARTNERS, LLC V. CITY OF LOS ANGELES, ET

AL.

The Court thus concludes that plaintiffs claim for declaratory relief that the

revocation of permits violated the Takings Clause fail as a matter of law. Because none

of the constitutional grounds raised in plaintiff's declaratory relief claim pass muster,

there is no basis for finding that plaintiff's permits must be reinstated. Accordingly, the

City’s motion for judgment on the pleadings on plaintiffs declaratory relief claim 1s

granted.

C. Request to Amend FAC to Reallege Inverse Condemnation Claim

Plaintiff seeks leave to amend the FAC to reallege an inverse condemnation claim.

Opp. at 19. Plaintiff cites the Court’s prior order dismissing the claim as unripe and

stating that “[a]fter a final decision is reached that clarifies the extent of the regulatory

burden on Sullivan’s rights, if any, the Court will entertain a motion for leave to file a

further amendment.” Dkt. 54.

While, as a general rule, leave to amend should be freely granted, leave to amend

may be denied when “the court determines that the allegation of other facts consistent

with the challenged pleading could not possibly cure the deficiency,” Schreiber Distrib.

Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986), or amendment

would be otherwise futile, Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004).

Having concluded that the enforcement of the ordinance against plaintiff cannot give rise

to a takings claim here as a matter of law, the Court finds that amending the FAC to

reallege an inverse condemnation claim would be futile. Accordingly, the Court denies

plaintiff's request.

V. CONCLUSION

In accordance with the foregoing, the Court GRANTS the City’s motion for

judgment on the pleadings, with thirty days’ leave to amend to address the issue of

whether plaintiff had a full and fair opportunity to litigate its claims in state court.

IT IS SO ORDERED.

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