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Seaside Civic League, Inc. v. United States Department of Housing and Urban Development

United States District Court, N.D. California, San Jose Division

October 15, 2014

SEASIDE CIVIC LEAGUE, INC., and DEL MONTE MANOR, INC., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, and SHAUN DONOVAN, in his official capacity as Secretary of United States Department of Housing and Urban Development Defendants.

ORDER RE: EVIDENTIARY HEARING; DISMISSING CASE PURSUANT TO NOTICE OF VOLUNTARY DISMISSAL [RE: DKT NOS. 52, 65]

RONALD M. WHYTE, District Judge.

An evidentiary hearing was held in this case on Tuesday, October 7, 2014 to determine who has standing to pursue (or dismiss) the pending action purportedly brought by the Seaside Civic League, Inc. ("Seaside Civic League") and Del Monte Manor, Inc. ("DMM"). See Dkt. No. 65. The court held the evidentiary hearing to resolve two subsidiary questions: (1) whether several new Seaside Civic League board members were properly appointed, and (2) whether Kathleen Clack or Richard Glenn is the attorney for Seaside Civic League. Id. The court finds that the new Seaside Civic League board members were properly appointed, and that because Kathleen Clack was subsequently dismissed as counsel for plaintiffs, she is not authorized to pursue this matter on behalf of the Seaside Civic League and DMM. Accordingly, the court dismisses the action pursuant to plaintiffs' Rule 41(a)(1)(A)(i) notice of voluntary dismissal.[1]

I. BACKGROUND

A. The Current Litigation

This case arises out of a dispute between DMM and HUD over subsidies paid by HUD to Section 8 housing facilities. The court's May 23, 2014 order denying plaintiff's motion for a preliminary injunction describes in detail the origins of the dispute. See Dkt No. 22, at 2-3.

DMM filed the instant action through its counsel Kathleen Clack on April 21, 2014 against the United States Department of Housing and Urban Development ("HUD") and Shaun Donovan, secretary of HUD. See Dkt. No 1. In its complaint, DMM alleged seven causes of action: breach of contract, interference with contract, "statutory violations, " violation of due process, violation of equal protection, "violation of civil rights, " and "abuse of power." Id. Along with its complaint, DMM filed for a temporary restraining order, a preliminary injunction, and a permanent injunction. See Dkt. Nos. 2-4. On April 22, 2014, the court denied DMM's application for a temporary restraining order without prejudice. Dkt. No. 10. The next day, DMM re-filed for a temporary restraining order, which the court denied, requiring notice to be given to defendants. Dkt. No. 12. After holding a hearing on the matter, on May 23, 2014 the court denied DMM's request for a preliminary injunction, finding that DMM had failed to show irreparable harm would result absent an injunction, and that the public interest weighed against such an injunction. Dkt. No. 22.

On June 15, 2014 DMM filed a first amended complaint ("FAC"). Dkt. No. 25. The FAC alleges three claims for relief: (1) failure to make subsidy payments to DMM in amounts required by the United States Housing Act of 1937, 42 U.S.C. § 1437; (2) Racial discrimination, disparate treatment of minorities, improper demands and threats, and failure to provide DMM with notice and due process in violation of Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 1983, and Amendments Five and Fourteen of the U.S. Constitution; and (3) requiring DMM to charge rents at its unsubsidized units which were lower than the available market rate, in violation of the Fifth Amendment's prohibition on the taking of private property without just compensation. Id. On August 5, 2014 HUD moved to dismiss the FAC. Dkt. No. 32. DMM filed an opposition on August 20, 2014. Dkt. No. 35. Also on August 20, 2014 DMM filed a motion for leave to file a second amended complaint ("SAC"). Dkt. Nos. 40, 37. DMM then moved on August 29, 2014 to join various indispensable parties, including several former and current Seaside Civic League board members, the City of Seaside, the Seaside City Manager and Deputy City Manager, the Seaside Police Department, and several Seaside police officers. See Dkt. No. 44. On September 2, DMM moved to amend the SAC. Dkt. No 46. The amended SAC contains several additional claims, including constitutional violations under the Fourth, Fifth, and Fourteenth Amendments, statutory violations under 42 U.S.C. §§ 1981, 1982, 1985(2), as well as common law tort claims for tortious interference, conversion, fraud, gross negligence, and trespass. Id.

On September 5, 2014 several tenants at Del Monte Manor moved to intervene as party defendants. Dkt. No. 47. HUD filed a reply in support of its motion to dismiss the FAC, an opposition to DMM's motion for leave to file the SAC, and a response to DMM's motion to join additional parties on September 12, 2014. Dkt No. 53. On September 18, 2014 HUD filed a statement of non-opposition to the tenants' motion to intervene. Dkt. No. 61. On September 19, DMM filed a reply in support of its motions for leave to file the SAC and to join additional parties. Dkt. No. 64.

The issue now before the court concerns plaintiffs' representation in this matter. As is discussed in the following section, in August, 2014 Richard Glenn was hired as counsel for Seaside Civic League and DMM. On September 8, 2014, Mr. Glenn filed a notice of appearance as counsel for DMM and Seaside Civic League. Dkt. No. 48. Mr. Glenn also filed a notice of voluntary dismissal pursuant to Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure on behalf of DMM and Seaside Civic League. See Dkt. No. 52.

B. The August 11, 2014 Meeting of the Seaside Civic League Board of Directors

The dispute over DMM's representation centers on the August 11, 2014 Seaside Civic League board meeting, at which Ms. Clack was dismissed as counsel for DMM and Mr. Glenn retained.[2]

The Seaside Civic League has six members, all of which are local civic organizations and churches. Dkt. No. 56 ("Seaside Civic League bylaws"), Art. III, § 1. The current members of the Seaside Civic League are: (1) the Seaside Chamber of Commerce; (2) the Seaside Lions Club; (3) the Seaside Rotary Club; (4) the Seaside Kiwanis Club; (5) Ocean View Baptist Church; and (6) Greater Victory Temple Church. See Dkt. No. 68 ("Glenn Brief"), at 5. The Seaside Civic League articles and bylaws provide that the member organizations will each appoint one director to serve on the Seaside Civic League board of directors. Seaside Civic League bylaws, Art. III, § 2. Del Monte Manor's bylaws provide that its directors are to be selected from the directors or members of the Seaside Civic League. Dkt. No 57, at ECF p. 22-26. Although Seaside Civic League and Del Monte Manor are separate California non-profit corporations and Del Monte Manor is subordinate to the Seaside Civic League, several witnesses testified at the evidentiary hearing that the same individuals have historically served as directors of both corporations.

On August 7, 2014 three Seaside Civic League directors called a special meeting of the Seaside Civic League board to be held on August 11, 2014. Dkt. No. 67, Ex. 1, at ECF p. 2. The meeting was called by: (1) Monica Mapp, appointed by the Seaside Chamber of Commerce; (2) Wayne Dalton, appointed by the Seaside Rotary Club; and (3) Cyndi Dorsey, appointed by the Seaside Kiwanis Club. Id. Present at the August 11 meeting were five directors appointed by the member organizations and one non-participating observer sent in the place of Norah Saffold, the director appointed by Greater Victory Temple Church. Dkt. No. 67, Ex. 3, at ECF p. 11-12. At the meeting, three individuals presented written authorizations for appointment to the Seaside Civic League board and were seated as ...


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