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March 18, 1996


The opinion of the court was delivered by: INFANTE


 This is a federal civil rights case brought pursuant to 42 U.S.C. Section 1983 arising from the routine denial of a zoning change by the defendant City of Sunnyvale. Plaintiffs Leonard and Maryann Tyson allege violations of their rights to due process and equal protection secured by the Fourteenth Amendment to the United States Constitution, claiming that defendants arbitrarily denied plaintiffs' application to rezone certain real property. Defendants move for summary judgment, asserting that (1) plaintiffs' cause of action is barred by the doctrines of res judicata and collateral estoppel because plaintiffs failed to exhaust their judicial remedies in state court; (2) plaintiffs cannot establish that they had a property right protected by the due process clause; (3) the individual defendants are entitled to qualified immunity; and (4) plaintiffs' claim for damages is unsupported by the evidence. *fn1"


 In 1993, plaintiffs purchased a parcel of real property at a foreclosure sale with the intention of developing the property into single family homes. The total cost to plaintiffs was approximately $ 395,000, consisting of plaintiffs' bid of $ 150,000 and existing encumbrances on the property. The property, which measures approximately 38,768 square feet, is located at 1043 Cascade Drive, Sunnyvale, and is surrounded on three sides by single-family homes with lot sizes ranging from approximately 7,600 to 12,700 square feet. The property is L-shaped with a limited frontage of approximately 117 linear feet along Cascade Drive, and is wider and deeper towards the back. Plaintiffs knew at the time of purchase that the properly was in a residential neighborhood zoned "R-1," which required a minimum lot size of 8,000 square feet per dwelling unit, and a minimum front yard lot width (or "frontage") of 76 feet per lot The minimum frontage requirement prevented the development of more than one home along 1043 Cascade Drive, even though plaintiffs' 38,786 square foot lot could theoretically be divided into four 8,000 square foot lots under the R-1 zoning designation. However, prior to purchasing the property, Leonard Tyson had conversations with a member of the City of Sunnyvale planning staff, David Gates, which led him to believe that the property could be rezoned to allow for higher density home development. According to Mr. Gates, rezoning the property from R-1 to R-0 would be a "slam dunk." *fn2"

 In April of 1993, plaintiffs submitted three separate applications to the City of Sunnyvale Department of Community Development, Planning Division. Most importantly, plaintiffs applied for a zoning change from R-1 to "R-0/PD," to allow construction of up to six homes with frontage along a private access road and cul-de-sac instead of along a public road. The "R-1" to "R-0" zoning change would have reduced the minimum lot size requirement from 8,000 to 6,000 square feet per lot; the "PD" or planned development designation would have allowed for the construction of a private access street and a deviation from the minimum frontage restriction. The remaining two applications were for a special development permit ("SDP") and a tentative map *fn3" for the development of single family homes under the proposed R-0/PD zoning.

 In accordance with the City of Sunnyvale's Charter *fn4" and Municipal Code, the Department of Community Development, Planning Division staff is responsible for reviewing the three applications, and preparing a report with recommendations to the Planning Commission. The Planning Commission reviews the staff's report and recommendations, conducts public hearings, and votes on the applications. Although the Planning Commission has the authority to approve SDPs, it is the City's standard policy to refer any matter involving re-zoning automatically to the City Council for additional public hearings and a final vote.

 Over the course of the following year, plaintiffs' property was the subject of seven separate Planning Commission or City Council meetings, as well as four public hearings. At all relevant times, defendants William F. Powers, Trudi Ryan, and Gerri Langtry were employed by the City of Sunnyvale: Powers was Director of Community Development; Ryan was Planning Officer, acting supervisor of the Planning Division of the Department of Community Development; and Langtry was an Associate Planner within the Planning Division who reported directly to Ryan.

 Trudi Ryan assigned Gerri Langtry the responsibility for reviewing the plaintiffs' applications and for preparing a Planning Division staff report ("staff report") for distribution to the Planning Commission, members of the public, and the plaintiffs. In the report, Ms. Langtry recommended on behalf of the staff that the Planning Commission deny the applicant's request to rezone the property from R-1 to R-0, and in the alternative, modify the zoning designation from R-1 to R-1/PD to allow the construction of four single family units along a private access street and cul-de-sac. Attached to the report were: maps, sketches and diagrams submitted by the plaintiffs; six letters submitted by residents in support of the proposed project and one resident letter in opposition to the project; a petition containing 90 signatures of individuals in opposition to the project; and other related documents.

 The Planning Commission convened on June 14, 1993 to discuss the Planning Division's recommendations and to vote on plaintiffs' applications. The Commission also conducted a public hearing, during which seven individuals residing in the Cascade Drive neighborhood stated their opposition to the proposed project. Nevertheless, the Commission decided to postpone taking any action until June 28, 1993 at the request of Leonard Tyson. In the interim, the plaintiffs submitted modifications to the proposed SDP application, including changes to the lot sizes and architectural modifications to three of the six house plans.

 At the Planning Commission meeting held on July 26, 1993, plaintiffs requested another continuance to August 9, 1993. Before the next meeting, Leonard Tyson submitted a modified proposal for developing five homes instead of six, a document he characterizes as a "positive consensus" illustrating neighborhood support for the proposed development, and a speech.

 The Planning Division staff prepared an updated staff report, which inexplicably did not include Mr. Tyson's "positive consensus" or speech. However, Mr. Tyson personally distributed the "positive consensus" and read his speech verbatim at the Planning Commission meeting held on August 9, 1993. The Planning Division staff recommended that the Commission deny plaintiffs' proposed development of five homes, and instead approve development of four homes. Seven of the eight neighbors attending the meeting also voiced their opposition to the proposed development. The Planning Commission voted 5-2 in favor of denying plaintiff's proposal and in favor of the staff's recommendations, whereupon the matter was automatically referred to the Sunnyvale City Council, which retains sole discretion to authorize zoning changes.

 At the first City Council meeting held on August 31, 1993, a group of neighbors from the Cascade Drive area requested and received a continuance of the matter. On September 14, 1993, the City Council met again. During the public hearing portion of the meeting, Leonard Tyson distributed various materials and addressed the Council at length regarding the history of the project, his proposal, and the concerns of the staff and neighbors. Nine neighbors also addressed the Council, six who stated their opposition, and three who stated their support, for the plaintiffs' proposed development. The City Council voted unanimously in accordance with the recommendations of the Planning Commission to deny plaintiffs' applications, and in the alternative to approve rezoning from R-1 to R-1/PD.

 At the next scheduled meeting held on September 21, 1993, the City Council denied plaintiffs' request for reconsideration of his applications, and for the second time, voted unanimously to support rezoning from R-1 to R-1/PD. Thereafter, plaintiffs did not submit any petitions or additional applications to have the property rezoned. *fn5" Instead, consistent with the new R-1/PD zoning designation, plaintiffs submitted new applications for an SDP to construct four homes and for a tentative map to subdivide the property into four lots and a private street, which were both unanimously approved by the planning Commission by May of 1994. Shortly thereafter, plaintiffs executed a purchase and sale agreement for their property.

 Plaintiffs did not seek review of the City Council's decision by way of administrative mandamus pursuant to California Code of Civil Procedure Section 1094.5, *fn6" or ordinary mandamus pursuant to California Code of Civil Procedure Section 1085. Instead, plaintiffs filed the instant action on July 6, 1994, claiming that defendants violated their constitutional rights to due process and equal protection, and deprived them of the fair market value of their property. *fn7" On July 27, 1994, plaintiffs signed and accepted the terms and conditions of the SDP granted by the City of Sunnyvale. In November of 1994, plaintiffs ...

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