Flightcar, Inc. v. City of Millbrae

FLIGHTCAR, INC., Plaintiff, v. CITY OF MILLBRAE, and DOE 1 through DOE 50, Defendants.

Case No: C 13-5802 SBA

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION

Dated: June 13, 2014

ORDER GRANTING IN PART

AND DENYING IN PART

DEFENDANT'S MOTION

TO DISMISS

Dkt. 4

Plaintiff FlightCar, Inc. ("FlightCar" or "Plaintiff"), filed the instant action against the City of Millbrae ("the City" or "Defendant") to challenge its revocation of FlightCar's Conditional Use Permit ("CUP"). The parties are presently before the Court on Defendant's Motion to Dismiss Plaintiff's Complaint Pursuant to Fed. R. Civ. Proc. 12(b)(6). Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby GRANTS IN PART and DENIES IN PART Defendant's motion to dismiss for the reasons set forth below. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).

I. BACKGROUND

A. Factual Summary¹

FlightCar is a startup car sharing company which allows vehicle owners to park their cars for free at a FlightCar lot, usually located close to an airport, provided that FlightCar can, in turn, rent out the vehicle while the owner is away. Compl. ¶ 4, Dkt. 1. The company began operating in February 2013 in Burlingame, California. Id. ¶ 5. In need of more space, FlightCar later moved to a vacant lot located at 480 El Camino Real in Millbrae, California ("the Property"). Id. ¶ 5. FlightCar sought a business license from the City in order to conduct business at the new location. Id. ¶ 6. The City advised FlightCar that in order to obtain a business license, the company must first obtain a CUP from the Millbrae Planning Department. Id.

FlightCart applied for a CUP in March 2013. Id. ¶ 7. On April 15, 2013, the Planning Department unanimously approved a three-year CUP, subject to the completion of certain alterations of the Property. Id. ¶ 7. Following a public hearing, the Planning Commission unanimously approved a modified CUP on June 3, 2013. Id. ¶¶ 8-9. In reliance on the CUP approval, FlightCar then entered into a one-year lease for the Property, hired staff members and made more than $10,000 in tenant improvements. Id. ¶ 10. Such improvements included changes necessary to comply with the CUP. Id.

In July 2013, FlightCar submitted plans to the Building Department to construct a temporary structure on the Property, as specified in the CUP. Id. ¶ 11. The Building Department rejected the plans, and instead required FlightCar to build a permanent structure. Id. FlightCar complied, and submitted plans for a permanent structure. Id. The plans were accepted by the Building Department, but were rejected by the Planning Commission, which stated that the structure must be temporary. Id. After several weeks of effort by FlightCar, the Building and Planning Departments finally agreed to allow FlightCar to build a temporary structure. Id.

In August 2013, FlightCar commenced operations and applied for a business license. Id. ¶ 13. The application indicated that approvals from the Planning and Building Departments were necessary before the application could be approved. Id. On September 17, 2013, representatives from the City's Building and Planning Departments visited the Property to ascertain FlightCar's compliance with the CUP. Id. The inspectors noted about a dozen items requiring correction. Id. ¶¶ 14-15. In response, FlightCar sent the Planning Department a timeline for completing the work to address the City's concerns. Id. ¶¶ 14-15. However, on October 11, 2013, about a week before FlightCar was scheduled to complete the corrections, the Planning Commission notified FlightCar that it was holding a hearing on October 21, 2013, to consider revoking the CUP. Id. ¶ 16. As a result, FlightCar accelerated its efforts to complete the corrections. Id. The hearing did not proceed on the scheduled date. Id.

On October 24, 2013, a City inspector (identified as "Ms. Harris") visited the Property. Id. ¶ 17. She informed FlightCar that all of the items previously identified by City had been addressed to her satisfaction, except for a small bush that needed to be replaced. Id. FlightCar subsequently replaced the bush, as directed. Id. Ms. Harris then advised FlightCar that it was fully compliant with the CUP. Id. ¶ 18. Shortly thereafter, FlightCar representatives went to a City office to obtain a business license. Id. The representatives were informed that although FlightCar had made all of the necessary corrections, a license could not be issued because the Planning Commission had scheduled a hearing to revoke the CUP for November 4, 2013. Id. FlightCar alleges that it received notice of that hearing on October 28, 2013, three days less than the ten days' notice required by the Millbrae Municipal Code. Id. ¶ 19.

The Planning Commission hearing on the proposed revocation of FlightCar's CUP took place as scheduled on November 4, 2013. Id. ¶ 20. Kevin Petrovich, one of FlightCar's founders, was present at the hearing and presented argument to the Commission. Def.'s Request for Jud. Notice ("RJN") Ex. C, Dkt. 5-4. At the conclusion of the hearing, the Commission voted to recommend the revocation of the CUP. Id. at 32.Specifically, the Commission's recommendation was based on reasons relating to: "(1) landscape maintenance, (2) maintenance conditions of the property, (3) zoning code requirements, (4) Building permit requirements, (5) [inadequate] number of employees on the premises, (6) employee parking, (7) curb painting, (8) taxes[,] and [(9)] [lack of] business license approval." Id. ¶ 20.

According to FlightCar, it had ten days to appeal the Planning Commission's recommendation. Compl. ¶ 23. Despite this, on November 12, 2013, two days before FlightCar's deadline to appeal, the City Council convened to consider the revocation of the CUP. Id. ¶ 24. A non-lawyer representative appeared at the hearing on behalf of FlightCar. RJN Ex. D. Though conceding that FlightCar was compliant with CUP, the City Council voted in favor of revocation. Compl. ¶ 25. The City Council was advised by an attorney from the San Mateo County Counsel's Office that notwithstanding the revocation of the CUP, FlightCar could be shut down only upon the commencement of an abatement proceeding. Id. ¶ 26. Under the Municipal Code, the initiation of an abatement proceeding would afford FlightCar an opportunity to cure any non-compliance issues. Id. ¶ 26. The City, however, has not commenced an abatement proceeding against FlightCar. Id. ¶ 29.

On November 13, 2013, a Sheriff's Deputy from the County of San Mateo visited the Property. Id. ¶ 27. The Deputy issued a Notice to Appear for a "violation of two City of Millbrae Municipal Code sections" to FlightCar employee Andrei Parenco. Id. ¶ 27. The two citations were for "violation of the City of Millbrae Municipal Code § 7.05.020 operating without a business license and § 10.05.2520 zoning non-compliance." Id. ¶ 27. After the citations were issued, the employee was told that he would go to "jail" if FlightCar did not cease operations. Id. ¶ 27. The Sheriff's Deputy returned again on November 14, 2013 and issued another unspecified citation. Id. ¶ 28. Since November 12, 2013, the Sheriff's Deputy has returned to the property "every day at least once a day ... making statements that the business should be shut down." Id. ¶ 29. In total, the San Mateo County Sherriff's office issued four citations "for failure to have a business license 7.05.020 and one citation for non-compliance with zoning 10.05.25.20." Id. ¶ 29.

B. Procedural History

On November 18, 2013, FlightCar filed a "Verified Petition for Writ of Mandate (CCP §§ 1085, 1094.5); Complaint for Damages, Declaratory Relief and Injunctive Relief ("Complaint") in San Mateo Superior Court. The Complaint alleges the following claims against the City: (1) writ of mandate pursuant to Cal. Civ. Code § 1085 ("§ 1085"); (2) writ of mandate pursuant to Cal. Civ. Code § 1094.5 ("§ 1094.5"); (3) violation of 42 U.S.C. § 1983 ("§ 1983") (for violation of the Due Process Clause, the Takings Clause and the Equal Protection Clause); (4) inverse condemnation; (5) declaratory relief; and (6) injunctive relief.

On December 16, 2013, the City removed the action to this Court under 28 U.S.C. § 1441(b), based on FlightCar's claim under 42 U.S.C. § 1983. The City now brings a Rule 12(b)(6) motion to dismiss the first claim for ordinary mandamus under § 1085, the third claim for violation of § 1983 and the fourth claim for inverse condemnation. In support of its motion, the City has submitted a Request for Judicial Notice, which contains, inter alia, transcriptions of the Planning Commission and City Council hearings. The motion is fully briefed and ripe for adjudication.²

II. LEGAL STANDARD

Rule 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A complaint may be dismissed under Rule 12(b)(6) for failure to state a cognizable legal theory or insufficient facts to support a cognizable legal theory. Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). "[C]ourts must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may takejudicial notice." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). The court is to "accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party." Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899-900 (9th Cir. 2007). Where a complaint or claim is dismissed, "[l]eave to amend should be granted unless the district court determines that the pleading could not possibly be cured...