California-Nevada Annual Conference of the Methodist Church v. City & Cnty. of S.F.

74 F.Supp.3d 1144

California–Nevada Annual Conference of the Methodist Church, Plaintiff

v.City and County of San Francisco, Defendant.

Case No. 11–cv–02338–YGR

United States District Court, N.D. California.

Signed November 24, 2014

Gordon William Egan, Signature Law Group, LLP, Sacramento, CA, for Plaintiff.

Thomas Spencer Lakritz, James Moxon Emery, Office of the City Attorney, San Francisco, CA, for Defendant.

Order Granting in Part and Denying in Part Defendant's Motion to Dismiss

Yvonne Gonzalez Rogers, United States District Court

Now before the Court is the motion of the City and County of San Francisco (“the City”) to dismiss the First Amended Complaint (“FAC”) of Plaintiff California–Nevada Annual Conference of the Methodist Church (“the Conference”), in which the Conference alleges the following three causes of action: (1) violation of the Religious Land Use and Institutionalized Persons Act of 2000 (“RLUIPA”), 42 U.S.C. §§ 2000cc et seq. ; (2) violation of the First Amendment; and (3) regulatory takings under 42 U.S.C. § 1983. (Dkt. No. 161; see also Dkt. No. 159.) The Conference has filed an opposition in response thereto, and the City has replied. (Dkt. Nos. 164, 165.)

Having carefully considered the papers submitted and the pleadings in this action, the arguments of counsel, and for the reasons set forth below, the Court hereby Grants in Part and Denies in Part the City's motion.¹

I. Factual Background

At the center of this case is a Methodist Church formerly located at 1601 Larkin Street in the Russian Hill area of San Francisco (the “church” or the “property”). The church was constructed after the 1906 earthquake. (FAC ¶ 14.) In the 1930s and 1940s, the church enjoyed its largest membership, but by the 1970s, the congregation had declined. By 2000, the congregation totaled only eight members, and the building was showing serious effects of wear and age. (FAC ¶¶ 18, 19.) The congregation determined that the church was “functionally obsolete and structurally deficient to the extent that it could not be safely occupied.” (Id. ¶¶ 1, 20.) In 2003, the congregation stopped using the property for religious purposes (id. ¶ 21) and in 2004, transferred title to the Conference to facilitate the sale of the property. (Id. ¶ 22.) Funds derived from the sale would be used for the development and building of a new congregation, new ministry initiative, or a congregational development effort in San Francisco. (Id. ¶ 21; Exh. A.)

In 2004, the Conference agreed to sell the property to Pacific Polk Properties, LLC (“Pacific Polk”) for the construction of market rate condominiums. (Id. ¶¶ 21, 25.) The purchase price was $3,000,000. As a condition, however, the parties agreed that the church structure had to be demolished. (Id. ¶¶ 1, 25.) The Conference and Pacific Polk thus undertook to obtain the required permits and authorizations. They filed applications with the San Francisco Planning Department (“Department”) to demolish the existing church structure and construct a new residential building on the property, and for environmental review of the project. (Id. ¶ 29.) On March 22, 2005, the Department's Environmental Review Officer determined that the Project required an environmental impact report (“EIR”) under the California Environmental Quality Act, Public Resources Code §§ 21000 et seq. (“CEQA”), to analyze its potential environmental effects. (Id. ¶ 30.) The City published a draft EIR on April 14, 2007. (Id. )

Almost three years after the Conference and Pacific Polk submitted their initial applications, on May 21, 2007, the Land Use and Economic Development Committee of the San Francisco Board of Supervisors held a hearing at which it was suggested for the first time that the property be designated a “landmark.” (Id. ¶ 32.) Over objection from the Conference, the resolution passed. (Id. ) On June 5, 2007, the resolution was adopted by the full Board of Supervisors, referring the matter to the City of San Francisco Historic Preservation Board for further study and having the effect of ceasing the land use entitlements and demolition permit. (Id. ¶ 33; Exh. F.) In May 2008, the California Superior Court found in favor of the Conference and the City was required to cease its landmarking proceedings. (Id. ¶ 37; Exh. H.) The City appealed. (Id. ¶ 39.) Approximately one year later, the California Court of Appeal unanimously affirmed the Superior Court's ruling, finding in the Conference's favor that the City had acted outside of its authority and could not landmark the property. (Id. )

Proceedings on the Conference and Pacific Polk's application for a conditional use permit authorization and a variance to demolish the church structure recommenced. On May 27, 2010, a year after the Court of Appeal issued its decision, a comments and responses document was published, containing the Department's responses to comments received on the 2007 Draft EIR. (Id. ¶ 41.) On June 24, 2010, the Planning Commission (“Commission”) held a public hearing to consider certification of the final EIR and approval of the project, including whether alternatives could preserve part of the church structure. (Id. ¶¶ 42–43.)

The Conference submitted reports of three structural engineers, all of whom expressed serious concerns regarding structural disintegration caused by severe rot. (Id. ¶¶ 47–50.) After deliberation, the Commission did not certify the final EIR. (Id. ¶ 55.)

The Commission then turned to the question of Pacific Polk's conditional use permit application for the construction of the new 27–unit residential building and, impliedly, to the Conference's application for the demolition of the existing church structure. (Id. ¶¶ 42, 57–58.) After closing public comment and deliberation, the Commission voted to deny the conditional use permit, essentially denying the Conference's demolition permit application as well. (Id. ¶ 62; Request for Judicial Notice (“RJN”), Exh. 1.² ) Because the Commission had denied the conditional use permit, and the zoning administrator had disapproved the variance, on September 1, 2010, the Department of Building Inspection cancelled the applications for a demolition permit and building permit. (RJN, Exhs.3, 4.) On January 19, 2012, the Commission voted that it “would accept a new conditional use permit application [for the project] that could rely on the existing environmental evaluation application, which may result in revisions to the draft EIR for changes to the project or the setting in which it is proposed.” (RJN, Exh. 5.)

On June 14, 2012, the Department published a revised EIR for the project (“revised EIR”) that reflected a new design and described several variants that would preserve portions of the existing church while constructing a new residential building on the property. On June 28, 2012, the Commission reviewed and certified the revised EIR. (RJN, Exh. 6.) At the same meeting, the Commission conducted a public hearing on Pacific Polk's new application for a conditional use permit. The Commission disapproved Pacific Polk's application. (RJN, Exh. 7.) What followed were more community meetings in an attempt to reach political and social consensus.

On October 3, 2013, Pacific Polk presented a revised proposal for its condominium project. That same day, the Commission approved a conditional use permit for Pacific Polk's condominium project. (RJN, Exh. 8.) Based on the Commission's decision, the zoning administrator granted the requested variances and issued a decision on November 15, 2013. (RJN, Exh. 9.) On November 25, 2013, the “Nob Hill Neighbors” appealed the zoning administrator's grant of a variance to Pacific Polk to the Board of Appeals. (FAC ¶ 82.) The Board of Appeals heard the matter on January 29, 2014, and denied the appeal. (Id. ; RJN, Exh. 10.)

On April 30, 2014, almost ten years after the Conference first sought the demolition permit, the Department of Building Inspection issued a demolition permit allowing Pacific Polk to demolish the structure and a building permit allowing Pacific Polk to build its condominium project. (FAC ¶ 82.) On or about May 16, 2014, Pacific Polk demolished the structure and cleared the site for construction of its condominium project. (Id. ¶ 83.)³

II. Legal Standard

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the nonmovant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir.1996). The Court need not accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig. , 536 F.3d 1049, 1055 (9th Cir.2008). In deciding a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must limit its review to the contents of the complaint, Clegg v. Cult Awareness Network, 18 F.3d 752, 754–55 (9th Cir.1994), including documents physically attached to the complaint or documents the complaint necessarily relies on and whose authenticity is not contested, Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir.2001). In addition, the Court may take judicial notice of facts that are not subject to reasonable dispute. Lee, 250 F.3d at 688.

III. Discussion

The City contends that all of the Conference's claims fail as a matter of law. First, the City argues that the Conference has failed to state a cause of action under RLUIPA for three reasons. One, the sale of the Property for a secular use does not constitute a “religious exercise” protected by RLUIPA, even if the proceeds from that sale would be used to further a religious purpose. Two, the City's denial of Pacific Polk's conditional use permit in 2010 and 2012, as well as the 2007 fact-finding process, did not impose a “substantial burden” as prohibited by RLUIPA....