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Andy's Bp, Inc., A California Corporation, Sabek, Inc., A v. the City of San Jose

February 6, 2013


The opinion of the court was delivered by: Lucy H. Koh United States District Judge

For the Northern District of California States District Court


Plaintiffs, Andy's BP, Inc. ("Andy's BP"), Sabek, Inc., and Andy Saberi (collectively, "Plaintiffs"), bring this action against the City of San Jose, Joseph Horwedel ("Horwedel"), and 25 Amir Shirazi ("Shirazi") (collectively, "Defendants") alleging: (1) violation of the Fourteenth 26 Amendment's Equal Protection Clause; (2) violation of Plaintiffs' right to equal protection of the 27 laws guaranteed by Article 1, Section 7, of the California Constitution; (3) violation of 42 U.S.C. 28 § 1983; (4) violation of the California Business and Professions Code § 17200, et seq., unlawful and unfair business acts and practices; (5) intentional interference with prospective economic 2 advantage; and (6) negligent interference with prospective economic advantage. See First 3 Amended Complaint ("FAC"), ECF No. 11. 4

Having considered the submissions of the parties and the relevant law, the Court hereby GRANTS Defendants' Motions to Dismiss Plaintiffs' federal law claims, the first and third causes 6 of action. The Court dismisses Plaintiffs' federal claims with prejudice as Plaintiffs were already 7 granted leave to amend these claims, yet failed to cure the previously identified deficiencies in the 8


Further, the Court believes that further amendment will prove futile. 9 In light of the Court's dismissal of Plaintiffs' federal claims, the Court declines to exercise 10 jurisdiction over the remaining state law claims. Therefore, the Court GRANTS Defendants' Motions to Dismiss as to the remaining state law claims-the second, fourth, fifth, and sixth causes of action-without prejudice. Plaintiffs may re-file these claims in state court. In addition, the 13 Court finds that Plaintiffs Sabek, Inc. and Andy Saberi lack standing because of their failure to 14 allege individual injury. If Plaintiffs re-file in state court, Plaintiffs Sabek, Inc. and Andy Saberi 15 must correct this deficiency.


A.Factual Allegations

Plaintiff Andy's BP is the owner and operator of a gasoline service station. FAC ¶ 14. Plaintiffs Andy Saberi and Sabek, Inc. own the land on which the gas station operates. FAC ¶ 15. 20 Defendant Shirazi owns and operates Moe's Stop, a gas station that is located across the street from 21 Andy's BP. FAC ¶¶ 6, 17. Plaintiffs are in competition with Shirazi in the sale of gasoline to the 22 public. FAC ¶ 16. 23 On or about April 1, 2009, Shirazi requested a Conditional Use Permit ("CUP") from the City of San Jose to allow demolition of a single family residence and expansion of his gas and 25 service station. FAC ¶ 19. Plaintiffs objected to issuance of the CUP, and raised these objections 26 before the San Jose Planning Commission and the San Jose City Council. FAC ¶20. Nevertheless, 27 on June 15, 2010, the City of San Jose approved the CUP for Shirazi. Id. 28

Plaintiffs then filed a Petition for Writ of Mandate against the City of San Jose and Shirazi 2 in the Santa Clara Superior Court. FAC ¶ 21. The Superior Court judge granted Plaintiffs' 3 petition, finding that the City of San Jose "failed to proceed in the manner required by law" when 4 approving the CUP. Id.; FAC, App. A, at 7. The Superior Court then issued a peremptory writ of 5 mandate, which set aside the Shirazi CUP and ordered the preparation of an environmental impact 6 report. FAC ¶ 23; FAC, App. B, at 2. The peremptory writ also ordered the City of San Jose "to 7 suspend all activities of the Shirazi CUP . . . that could result in an adverse change or alteration to 8 the physical environment until completion of the environmental impact report . . . ." Id.; FAC, 9 App. C, at 2. 10

Plaintiffs allege that, thereafter, Defendants City of San Jose and Horwedel, the Director of San Jose's Planning, Building and Code Enforcement Department, unlawfully ignored violations of local zoning ordinances by Defendant Shirazi, while at the same time enforcing the zoning laws 13 and regulations against Plaintiffs in a discriminatory fashion. See FAC ¶¶ 25, 27. For example, 14 after issuance of a second CUP to Shirazi, Defendants City of San Jose and Horwedel allegedly 15 ignored evidence showing that Shirazi improperly remodeled his roof, awning, and garage without a permit from the City of San Jose, and allowed Shirazi to disregard "the CUP conditions regarding 17 the egress and ingress to and from the gas station premises." FAC ¶ 25(c). In contrast, Defendant 18

Horwedel issued Plaintiffs a "series of harassment [administrative] citations," which "disrupted and 19 interfered with Plaintiffs['] business." FAC ¶¶ 25(b), 27. 20

As a result of Defendants' "unequal enforcement of the laws of the State of California and 21 the zoning requirements of the City of San Jose," Defendants provided Shirazi with a competitive 22 advantage over Plaintiffs' service station business and caused Plaintiffs' economic harm. FAC 23 ¶¶ 24, 27. Consequently, Plaintiffs seek monetary damages for lost business, income, and property 24 use, as well as a permanent injunction restraining Defendants from discriminating against 25 Plaintiffs. FAC at 9--10.26

B.Procedural History

Plaintiffs filed a complaint against Defendants on April 2, 2012. ECF No. 1. Defendants City of San Jose, Horwedel, and Shirazi then filed Motions to Dismiss. ECF Nos. 5 & 6. On June 6, 2012, the Honorable James Ware granted Defendants' Motions to Dismiss Plaintiffs' first and 2 third causes of action, with leave to amend, and declined to consider the merits of Plaintiffs' 3 remaining claims, all of which involved state law. See ECF No. 10 ("Order Granting Motions to 4 Dismiss"). 5

On June 24, 2012, Plaintiffs filed a first amended complaint. ECF No. 11. Defendants San Jose and Horwedel then filed a Motion to Dismiss the FAC based on: (1) failure to state a claim 7 upon which relief may be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil 8 Procedure; and (2) lack of subject matter jurisdiction as required by Rule 12(b)(1) of the Federal 9 Rules of Civil Procedure. See Mot. to Dismiss Pl.'s FAC ("Mot."), ECF No. 13. Defendant 10 Shirazi also filed a Motion to Dismiss Plaintiffs' FAC, ECF No. 17, "on the grounds set forth in the 11 motion to dismiss the first amended complaint filed on behalf of defendants City of San Jose and Joseph Horwedel . . . insofar as those grounds apply to [Shirazi]." Id. at 2. Plaintiffs then filed an 13 opposition the motion filed by Defendants City of San Jose and Horwedel, see Pl.'s Opp. to Defs.' 14 Mot. to Dismiss FAC ("Opp'n"), ECF No. 21, to which Defendants City of San Jose and Horwedel 15 filed a reply, see Defs.' Reply Supp. Mot. to Dismiss P1.'s FAC ("Reply"), ECF No. 22.

This case was reassigned to the undersigned on September 6, 2012. ECF No. 23.


A.Rule 12(b)(6)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an 20 action for failure to allege "enough facts to state a claim to relief that is plausible on its face." Bell 21 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the 22 plaintiff pleads factual content that allows the court to draw the reasonable inference that the 23 defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 24 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted 25 unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation omitted). For purposes 26 of ruling on a Rule 12(b)(6) motion, the court "accept[s] factual allegations in the complaint as true 27 and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. 28 Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

Nonetheless, the court need not accept as true allegations contradicted by judicially 2 noticeable facts, Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and the "[C]court may 3 look beyond the plaintiff's complaint to matters of public record" without converting the Rule 4 12(b)(6) motion into one for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 5 1995). Nor is the court required to "'assume the truth of legal conclusions merely because they are 6 cast in the form of factual allegations.'" Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) 7 (per curiam) (quoting W. Min. Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)). Mere 8 "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to 9 dismiss." Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); accord Iqbal, 556 U.S. at 678. 10

Furthermore, "'a plaintiff may plead [him]self out of court'" if he "plead[s] facts which establish that he cannot prevail on his . . . claim." Weisbuch v. Cnty. of L.A., 119 F.3d 778, 783 n.1 (9th Cir. 1997) (quoting Warzon v. Drew, 60 F.3d 1234, 1239 (7th Cir. 1995)). 13

B.Rule 12(b)(1)

A defendant may move to dismiss an action for lack of subject matter jurisdiction pursuant 15 to Federal Rule of Civil Procedure 12(b)(1). A Rule 12(b)(1) motion to dismiss tests whether a complaint alleges grounds for federal subject matter jurisdiction. If the plaintiff lacks standing 17 under Article III of the U.S. Constitution, then the court lacks subject matter jurisdiction, and the 18 case must be dismissed. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101--02 (1998). 19

Once a party has moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the 20 opposing party bears the burden of establishing the court's jurisdiction. See Chandler v. State 21 Farm Mut. Auto. Ins.Co., 598 F.3d 1115, 1122 (9th Cir. 2010); St. Clair v. City of Chico, 880 F.2d 22 199, 201 (9th Cir. 1989) (same).

C.Leave to Amend

If the court determines that the complaint should be dismissed, it must then decide whether 25 to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend 26 "shall be freely given when justice so requires," bearing in mind "the underlying purpose of Rule 27 15 . . . [is] to facilitate decision on the merits, rather than on the pleadings or technicalities." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks and citation 5 omitted). Nonetheless, a court "may exercise its discretion to deny leave to amend due to 'undue 2 delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by 3 amendments previously allowed, undue prejudice to the opposing party. ...

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