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North Pacifica, LLC v. City of Pacifica

May 16, 2005


The opinion of the court was delivered by: Edward M. Chen United States Magistrate Judge


Plaintiff North Pacifica LLC ("NP") filed suit against Defendant the City of Pacifica ("City" or "Pacifica"), alleging that the City violated NP's right to equal protection by imposing on NP's development project a condition of approval, known as Condition 13(b), that was more onerous than that imposed on similarly situated development projects. The Court bifurcated the trial on the equal protection claim into a liability phase and a damages phase. See Docket No. 198 (order, filed on 7/7/03). Because neither party had demanded a trial by jury, the action proceeded to a bench trial, with the liability phase beginning on July 28, 2003, and ending on August 1, 2003. On October 23, 2003, the Court issued findings of fact and conclusions of law on liability, determining that the City had violated NP's right to equal protection by imposing Condition 13(b) on NP's development project. See Docket No. 264 (order, filed on 10/23/03). The damages phase of the trial was scheduled to begin on February 7, 2005. As part of its pretrial filings for the damages phase, the City submitted a trial brief in which it argued that NP's lawsuit is barred by claim and/or issue preclusion.

Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel and the supplemental briefs, the Court hereby DENIES the City's motion to dismiss based on claim and/or issue preclusion.


A. Waiver of Preclusion Defense

As a preliminary matter, the Court addresses NP's contention that the Court already considered and rejected the City's preclusion argument during the liability phase of trial. The Court does not agree. During the liability phase, the City did raise the matter of issue preclusion in a motion in limine, see Docket No. 185 (City's Motion in Limine No. 1, filed on 7/2/03); however, the argument in that motion was different from the argument now presented to the Court.

In the prior motion in limine, the City argued that NP was precluded by the doctrine of collateral estoppel from challenging the constitutionality of Condition 13(b) because a state court had previously held that NP failed to challenge the conditions of approval, including Condition 13(b), within the statute of limitations. See Liability Ex. P (order of San Mateo County Superior Court in Case No. 429148, filed on 6/20/03). Now, the City contends that there is preclusion --claim preclusion as well as issue preclusion -- not based on the state court decision but rather based on the decision of the City Council to approve Condition 13(b), which NP failed to challenge via an administrative writ. In support of this argument, the City relies on the Ninth Circuit case Miller v. County of Santa Cruz, 39 F.3d 1030 (9th Cir. 1994), and its progeny. In Miller, the Ninth Circuit concluded that, where a state agency acts in a judicial capacity to resolve disputed issues of law and fact properly before it, and the parties have had an adequate opportunity to litigate those issues, a federal court must give the state agency's fact-finding and legal determinations the same preclusive effect that they would have if they were litigated in state court.*fn1

See Miller, 39 F.3d at 1032-33.

Although the Court concludes that it did not, as argued by NP, previously address the Miller preclusion argument, it finds that the City's failure to raise the argument until now is not without consequences. As noted above, the City previously argued preclusion at the liability phase based on a prior state court decision. After the Court rejected this particular preclusion argument, the City never at any point during the liability proceedings made another preclusion argument. Moreover, after the Court's liability decision on October 23, 2003, the City never moved for summary judgment on the basis of any preclusion defense even though it twice sought dismissal of the suit on other grounds. See, e.g., Docket No. 283 (City's motion to dismiss or, in the alternative, for summary judgment on damages, filed on 2/11/04); Docket No. 389 (City's request for immediate stay, filed on 12/23/04). The first time that the City brought the Miller preclusion argument to this Court was with its trial brief for the damages phase of the case, which was filed only a few weeks before the damages trial was scheduled to begin. See Def.'s Trial Br. at 11-17.

Given the above circumstances, the Court agrees with NP that the City's delay led NP -- as well as the Court -- to believe that the issue of preclusion was resolved and no longer at issue in this case. In other words, because the City failed to raise the Miller preclusion argument until now, there has been unfair surprise to NP. Cf. Boston Sci. Corp. v. Schneider (Eur.) AG, 983 F. Supp. 245, 254 (D. Mass. 1997) (in discussing whether defendant waived a preclusion argument because of a failure to assert the defense in the answer, addressing whether plaintiff was unfairly surprised and unduly prejudiced by late assertion of preclusion argument at summary judgment).

Moreover, case law indicates that a party who "delay[s] too long" in asserting a preclusion argument may lose the defense. 18-131 Moore's Fed. Prac. -- Civ. § 131.50[1] (discussing whether defendant waives preclusion argument because of a failure to assert the defense in the answer, noting that a defendant who "delay[s] too long in asserting claim or issue preclusion may lose the defense"). For example, in Kern Oil & Refining Co. v. Tenneco Oil Co., 840 F.2d 730 (9th Cir. 1988), the defendant argued that the plaintiff was barred by res judicata from proceeding with its case, but the Ninth Circuit disagreed because the defendant had delayed in raising the argument. The court noted first that the defendant had failed to raise the preclusion defense in its original answer to the plaintiff's complaint. See id. at 735. Although the court in other cases had "allowed a party to raise res judicata after the initial pleadings by construing the attempt as a motion to file a supplemental answer, . . . we have always required that it be raised before trial." Id. Here, the defendant did not make the preclusion argument until after the end of the trial -- more specifically, until seven months after the lower court ruled in the plaintiff's favor on liability. See id. at 735 & n.2. The Ninth Circuit also emphasized that the defendant failed to make the preclusion argument even though the prior court proceeding to which the defendant attributed preclusive effect was decided two years earlier. See id.

The Court finds Kern Oil persuasive. Although the instant case is arguably different from Kern Oil to the extent that the City listed preclusion as an affirmative defense in its answer, its allegation was conclusory and failed to provide clear notice of the particular nature of the preclusion argument now advanced. More fundamentally, the reasoning in Kern is still applicable -- i.e., that undue delay should not be rewarded. Like the defendant in Kern Oil, the City failed to assert the preclusion argument until months after the liability decision was made -- indeed, until more than a year after the liability decision.*fn2 Further, like the defendant in Kern Oil, the City did not argue preclusion until more than a year after the earlier proceeding to which it attributed preclusive effect.*fn3

Notably, the City has never tried to justify its delay or explain why it could not have moved for Miller-based preclusion earlier, e.g., when it moved for preclusion during the liability phase on the basis of the prior state court decision.

Given the unfair surprise to NP and the undue delay by the City, the Court finds it appropriate to deem the Miller preclusion argument waived. This conclusion is buttressed by the purposes underlying the preclusion rules, namely, "conserving judicial resources and protecting parties from 'the expense and vexation' of relitigating issues that another party previously has litigated and lost." Harvey v. United Transportation Union, 878 F.2d 1235, 1243 (10th Cir. 1989); see also Disimone v. Browner, 121 F.3d 1262, 1267 (9th Cir. 1997) ("The purposes of preclusion doctrines are to 'conserve judicial resources, protect litigants from multiple lawsuits, and foster certainty and reliance in legal relations.'"). In this case, because the City did not assert the Miller preclusion defense until after the liability phase was completely litigated and until the trial on damages was just about to begin, allowing the City to make the preclusion argument does nothing to vindicate either purpose. A vast amount of judicial resources, ...

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