EDUARDO VALERIO, et al. Plaintiffs,
CITY OF SAN DIEGO, et al. Defendants.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS [DOC. 13]
THOMAS J. WHELAN, District Judge.
Pending before the Court is Defendants' motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). ( MJP [Doc. 13]; Reply [Doc. 20].) Plaintiffs oppose. ( Opp'n [Doc. 18].) Plaintiffs filed a sur-reply. ( Sur-reply [Doc. 25].)
The Court decides the matter on the papers submitted and without oral argument. See Civ. L. R. 7.1(d.1). For the reasons below, the Court GRANTS-IN-PART and DENIES-IN-PART Defendants' motion for judgment on the pleadings.
Eduardo Valerio ("Valerio") is the founder of Valerio Resources, Inc. (with Valerio, "Plaintiffs"), a company that specializes in outdoor advertising. ( See Compl. ¶ 10.) According to the complaint, in 2009 Plaintiffs became curious as to whether a wall space currently occupied by a sign advertising the Agua Caliente Racetrack in Tijuana, Mexico, could be used for other advertising purposes ("the advertising plan"). ( See id. ¶ 11.)
The Agua Caliente sign is on the west wall of the California Theater ("the Theater"), which is located at Third Avenue and C Street in downtown San Diego. ( Compl. ¶ 1.) Plaintiffs contacted Civic San Diego ("CDS") to inquire whether Plaintiffs' advertising plan was feasible. ( See id. ¶ 12.) CDS is a nonprofit corporation owned by the City of San Diego ("the City") that is authorized to implement improvement projects in downtown San Diego. About Us, CIVICSD.COM, http://www.civicsd.com (last visited June 7, 2013). After CDS approved Plaintiffs' application to repaint the Agua Caliente sign, it referred Plaintiffs to the City's Development Services Department ("the DSD") to obtain a historical resources review of their application. ( See Compl. ¶ 13.)
A historical resources review was necessary because the Theater is designated as a historical building. ( Opp'n 4.) On October 28, 2011, Plaintiffs submitted their CDS-approved application to Cathy Winterrowd ("Winterrowd"), the principal planner in the DSD's historical resources section. ( Compl. ¶ 15.) On November 17, 2011, after conducting a historical resources review, Winterrowd signed Plaintiffs' application, authorizing Plaintiffs to commence their advertising plan. ( Id. )
After receiving this signed permit (the "advertising permit") from the DSD, Plaintiffs leased the Theater's west wall from the Theater for $10, 500 per month, with the intention of offering this wall space to other businesses for advertising purposes. ( See Opp'n 4.) Plaintiffs' complaint alleges that the value of the leased space as an advertising medium is about $40, 000 per month. ( Compl. ¶¶ 14, 30.)
Apparently, members of City Council as well as historic resource preservation groups such as Save Our Heritage Organization ("SOHO") were displeased with the DSD's decision to authorize Plaintiffs' advertising permit. ( See Compl. ¶¶ 17-21.) They believed that the Agua Caliente sign was a historically significant piece of art. ( Id. ¶ 22.) In response to an e-mail from one City Council member inquiring about the sign's historical significance, Winterrowd indicated that the DSD requires submission of a Historical Resource Research Report ("research report") for any resource before the Historical Resources Board can consider it for formal historical designation. ( Id. ¶ 22.) No members of City Council or SOHO conducted a research report on the Agua Caliente sign, allegedly due to the prohibitive cost of producing such a report. ( See id. ¶ 23.)
On December 15, 2011, Winterrowd sent Valerio an e-mail notifying him that DSD was revoking the advertising permit, thereby nullifying Plaintiffs' authorization to proceed with the advertising plan. ( Compl. ¶ 27.) In the e-mail, Winterrowd informed Valerio that DSD would only re-authorize the advertising permit if Plaintiffs submitted a research report on the Agua Caliente sign. ( Id. ¶ 28.)
On May 17, 2012, Plaintiffs commenced this action against the City, Winterrowd, and DOES 1-20 (collectively, "Defendants"), alleging: (1) violation of Fifth and Fourteenth Amendment right to procedural due process; (2) unlawful taking without just compensation; (3) violation of Fifth and Fourteenth Amendment right to substantive due process; (4) intentional misrepresentation; (5) violation of California Civil Code § 52.1, and requesting injunctive relief. ( See id. ¶¶ 42-59.)
On October 25, 2012, Defendants moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). ( See MJP 1.) Defendants contend that they are entitled to judgment given that: (1) they are entitled to qualified immunity with respect to Plaintiffs' first three causes of action; (2) Plaintiffs' takings claim is not ripe; (3) Plaintiffs lack the vested property right necessary to sustain either a procedural or substantive due process claim; (4) Defendants are immune from liability for intentional misrepresentation; (5) injunctive relief is not an appropriate remedy in this circumstance; and (6) Plaintiffs have not established the elements of a § 52.1 violation. ( See id. )
II. LEGAL STANDARD
"After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). Judgment on the pleadings is proper when, taking all the allegations in the pleadings as true, the moving party is entitled to judgment as a matter of law. Fajardo v. Cnty. of Los Angeles , 179 F.3d 698, 699 (9th Cir. 1999). A district court may grant judgment to a defendant only when it is "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co. , 132 F.3d 526, 529 (9th Cir. 1997) (citations omitted).
A. Qualified Immunity
Defendants argue that they are entitled to qualified immunity with respect to Plaintiff's first, second, and third causes of action. ( See MJP 3.) Plaintiffs contend that Defendants' reliance on qualified immunity is misplaced given that Plaintiffs have established a vested right in the advertising permit. ( See Opp'n 12.) Defendants have not established that they are entitled to qualified immunity.
"[G]overnment officials performing discretionary functions generally are shielded from liability from civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald , 457 U.S. 800, 818 (1982). Therefore, qualified immunity will not apply if Plaintiffs plead facts which, viewed in the light most favorable to Plaintiffs, show that (1) the official violated a statutory or constitutional right, and (2) the right was "clearly established" at the time of the challenged conduct. See Saucier v. Katz , 522 U.S. 194 (2001) (overruled on other grounds by Pearson v. Callahan , 555 U.S. 223 (2009)); Ashcroft v. al-Kidd, ___ U.S. ___ , 131 S.Ct. 2074, 2080 (2011) (quoting Harlow , 457 U.S. at 818).
Municipalities have no immunity from damages and liability resulting from violations of 42 U.S.C. § 1983. See Owen v. City of Independence, Mo. , 445 U.S. 622 (1980) ("How uniquely amiss' it would be, therefore, if the government itself-the social organ to which all in our society look for the promotion of liberty, justice, fair and equal treatment, and the settling of worthy norms and goals for social conduct'-were permitted to disavow liability for the injury it has begotten." (citations omitted)). Therefore, the Court DENIES Defendants' motion to the extent that it claims that the City is entitled to qualified immunity, and considers only whether Winterrowd is entitled to the affirmative defense.
1. Plaintiff's have plead a violation of a constitutional right.
Defendants argue that Plaintiffs lack a constitutionally-protectable property interest since the Plaintiff's permit was illegally granted. ( See MJP 3.) Plaintiffs respond that, despite the alleged illegality of the permit at the time of issue, their interest in the advertising permit vested when they incurred substantial liabilities in good faith reliance upon it. ( See Opp'n 6-8.) Thus, Plaintiffs argue, Winterrowd violated their constitutionally-protectable property interest when she revoked the permit without due process. ( See id. 11.)
Under California law, "if a permittee has acquired a vested property right under a permit, the permit cannot be revoked." Trans-Oceanic Oil Corp. v. City of Santa Barbara , 85 Cal. App.2d 776, 783 (1948). If a permittee does nothing after obtaining the permit or fails to comply with it terms, the proper authorities may revoke it. Id . However, a permittee acquires a vested right if he performs substantial work and incurs substantial liabilities in good faith reliance upon a permit issued by the government. See id., 85 Cal. App.2d at 784. Billboards constitute protectable property interests as they derive value as an advertising medium with the potential of generating high revenue. See Traverso v. People ex rel. Dept. of Transp. , 6 Cal.4th 1152, 1161 (1993).
In entering into the two-year lease agreement with the Theater, Plaintiffs incurred substantial liabilities in good faith reliance upon the advertising permit that Defendants issued. The parties do not dispute that Plaintiffs' $10, 500 per month lease constitutes a substantial liability. Nor do they dispute that this substantial liability was incurred in good faith reliance upon the issued advertising permit. In light of the foregoing, Plaintiffs acquired a vested property right. See Trans-Oceanic , 85 Cal. App.2d at 783.
Defendants contend that Plaintiffs' right to the advertising space failed to vest because the permit was illegal when issued, citing Avco Community Developers, Inc. v. South Coast Regional Commission , 17 Cal.3d 785 (1976). ( MJP 3.) However, Defendants' reliance on Avco is misplaced.
At issue in Avco was whether a developer acquired a vested right to construct buildings without a building permit after incurring significant expense subdividing and grading the property. See id., 17 Cal.3d at 788. Under Orange County's building code, Avco Community Developers, Inc. ("Avco") could not obtain a building permit until it completed grading its property. See id., 17 Cal.3d at 789. Avco did not complete rough grading by the deadline imposed by the California Coastal Zone Conservation Act of 1972 § 27400 ("the Act"), and therefore was not able to obtain a building permit. See id., 17 Cal.3d at 790. Avco applied to the California Coastal Zone Commission for an exemption under the Act, claiming that its substantial improvements on the property under the rough grading permit established a vested right to complete development. Id . The Commission denied Avco's application, and the trial court declined to issue a writ of mandate compelling the commission to grant the exemption. Id . On appeal, the Supreme Court of California held that "work undertaken pursuant to governmental approvals preparatory to construction of buildings can[not] form the basis of a vested right to build a structure which does not comply with the laws applicable at the time a building permit is issued." Id. at 793 (emphasis added). The court explained that by "issuing approvals for work preliminary to ...