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VH Property Corp. v. City of Rancho Palos Verdes

March 23, 2009

VH PROPERTY CORP. AND VHPS LLC, PLAINTIFFS,
v.
CITY OF RANCHO PALOS VERDES; COTTON, SHIRES AND ASSOCIATES, INC.; WILLIAM COTTON; HELENSCHMIDT GEOTECHNICAL INC.; STANLEY HELENSCHMIDT; GEOKINETICS INC. A/K/A APPLIED GEOKINETICS; GLENN TOFANI; AND DOES 1-100, DEFENDANTS.



The opinion of the court was delivered by: Margaret M. Morrow United States District Judge

ORDER GRANTING PLAINTIFFS' MOTION TO REMAND

On December 18, 2008, plaintiffs VH Property Corp. and VHPS LLC (collectively, "VH") filed a complaint against the City of Rancho Palos Verdes (the "City"); Cotton, Shires and Associates, Inc. ("CSA"); William Cotton; Helenschmidt Geotechnical, Inc. ("HGI"); Stanley Helenschmidt; Geokinetics, Inc. ("Geokinetics"); and Glenn Tofani in state court. VH's complaint, which arises out of the City's alleged denial of VH's land development applications, asserts claims for violation of due process under both the federal and California constitutions, violation of equal protection under both the federal and California constitutions, fraud, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and intentional interference with prospective economic advantage against all defendants; inverse condemnation, taking of property without just compensation, and mandamus against the City; and unfair business practices against CSA, Cotton, HGI, Helenschmidt, Geokinetics, and Tofani. On January 14, 2009, defendants removed the case to federal court pursuant to 28 U.S.C. §§ 1331 and 1441(b). Plaintiffs filed a motion to remand on February 13, 2009. Plaintiffs assert that the court should decline to exercise jurisdiction based on Pullman and Burford abstention.

I. FACTUAL BACKGROUND

VH is the owner various real property in the City, including the Trump National Golf Club.*fn1 VH wants to develop the property by constructing sixteen homes in an area now used as a driving range; by constructing four homes landward from the existing clubhouse; by constructing a terrace on the clubhouse; and by maintaining ficus trees on the property.*fn2 VH must obtain the City's permission before proceeding with these projects.*fn3 VH alleges that the City has unreasonably and pretextually withheld its permission despite knowledge that the proposed projects are safe.*fn4 As a result, VH asserts, it has been required "to spend millions of dollars on unnecessary, repetitive, unreasonable, and unlawful geologic and geotechnical studies and reviews, and in satisfaction of other unnecessary, repetitive, unreasonable, and unlawful bureaucratic requirements."*fn5 VH alleges that the City does not hold other property owners to the standards it has imposed on VH.*fn6 In particular, VH contends that the City has acted unreasonably in requiring that VH demonstrate the existence of a "1.5 safety factor" before undertaking development of the property.*fn7

The City counters that VH's property is located in an active landslide area.*fn8 The City notes that, in 1999, the eighteenth hole of VH's golf course suddenly collapsed and fell into the Pacific Ocean.*fn9 It states that "the collapse of the 18th hole. . . into the Pacific Ocean has led to closer examination of the geotechnical details [of VH's proposed development projects], to assure that occupied homes do not suffer the same fate."*fn10 It asserts that it has nonetheless approved most of VH's development applications. Regarding VH's intent to construct homes on the present location of the driving range and landward of the clubhouse, the City states that it has not yet received applications from VH for such projects. The City contends that it has already granted VH permission to construct a terrace on the clubhouse, and that the ficus trees violate the City's general prohibition against maintaining trees that block views of the ocean from neighboring residential properties.*fn11

Defendants CSA and HGI are geological consulting firms that were retained by the City to review VH's proposed development projects.*fn12 VH asserts that it has been required to pay more than $3,000,000 for work performed by CSA and HGI.*fn13 Tofani is a member of a peer review panel organized to evaluate CSA and HGI's conclusions because of the dispute between VH and the City.*fn14 VH alleges that it has spent $380,000 for work performed by Tofani and his company.*fn15

VH's complaint pleads claims for inverse condemnation, taking of property for public use without just compensation, and mandamus against the City; violation of due process and equal protection under the federal and California constitutions, fraud, breach of contract (as a third-party beneficiary), breach of the implied covenant of good faith and fair dealing, unjust enrichment, and intentional interference with prospective economic advantage against all defendants; and unfair business practices against all defendants except the City.

II. DISCUSSION

A. Legal Standard Governing Pullman Abstention

The Pullman abstention doctrine allows a federal court to postpone the exercise of federal jurisdiction when "a federal constitutional issue . . . might be mooted or presented in a different posture by a state court determination of pertinent state law." C-Y Development Co. v. City of Redlands, 703 F.2d 375, 377 (9th Cir. 1983) (quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 189 (1959)); see also Pearl Investment Co. v. City and County of San Francisco, 774 F.2d 1460, 1462 (9th Cir. 1985) (under the Pullman abstention doctrine, courts should abstain in cases presenting a federal constitutional question if constitutional adjudication could be avoided or the constitutional question narrowed by a state court ruling on an uncertain question of state law). In the Ninth Circuit, three criteria must be met before Pullman abstention is appropriate:

" (1) The complaint touches a sensitive area of social policy upon which the federal courts ought not to enter unless no alternative to its adjudication is open.

(2) Such constitutional adjudication plainly can be avoided if a definitive ruling on the state issue would terminate the controversy.

(3) The possibly determinative issue of state law is doubtful."

Sinclair Oil Corp. v. County of Santa Barbara, 96 F.3d 401, 409 (9th Cir. 1996); see also Smelt v. County of Orange, 447 F.3d 673, 679 (9th Cir. 2006) (enumerating factors); Canton v. Spokane School District No. 81, 498 F.2d 840, 845 (9th Cir. 1974) (same).

Since "[t]he doctrine of abstention . . . is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy," it is properly invoked only "where the order to parties to repair to the state court would clearly serve an important countervailing interest." Canton, 498 F.2d at 845. Thus, courts should abstain under Pullman only "where principles of comity and federalism justify postponing the ...


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