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Woody'S Group, Inc. v. City of Newport Beach

California Court of Appeals, Fourth District, Third Division

January 29, 2015

WOODY’S GROUP, INC., et al. Plaintiffs and Appellants,
CITY OF NEWPORT BEACH et al., Defendants and Respondents.

Appeal from one order and purported appeal from another order of the Superior Court of Orange County, No. 30-2013-00687091 Derek W. Hunt, Judge. First order reversed with directions, purported appeal from other order treated as a petition for writ of mandate.

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Roger Jon Diamond for Plaintiffs and Appellants.

Aaron C. Harp, City Attorney, Michael Torres, Assistant City Attorney; Best Best & Krieger, Jeffrey V. Dunn and HongDao Nguyen for Defendants and Respondents.

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The language of the law is replete with synonyms for fairness: due process, equal protection, good faith, and harmless error are all ways of expressing our commitment to fairness. The City Council of Newport Beach violated at least two basic principles of fairness in overturning a permit application approved by the city’s planning commission. It should come as no surprise, then, that their action also violated California law.

First basic principle: You cannot be a judge in your own case. In this case Councilmember Mike Henn, having already voiced his “strong[]” opposition to Woody's Group, Inc.'s application, was allowed to appeal the approval of Woody’s application to the very body on which he sits, where he did his best to convince his colleagues to vote with him against the application.

Second basic principle: You cannot change the rules in the middle of the game. The Newport Beach Municipal Code requires appeals from the city’s planning commission to the city council be brought by “interested part[ies], ” who pay a filing fee and submit their appeal on a form provided by the city. (Newport Beach Mun. Code, § 20.64.030.)[1] The Newport Beach Municipal Code makes no provision for appeals by council members acting in their role as council members. The city council violated its own municipal code by entertaining Henn’s appeal even though he did not follow the procedures laid out in the code, and then retroactively tried to justify that violation by claiming the city has a custom of extending such lenity to council members.

As we explain in detail below, two cases requiring municipal governments to play fair are directly on point and require reversal here. Cohan v. City of Thousand Oaks (1994) 30 Cal.App.4th 547 [35 Cal.Rptr.2d 782] (Cohan) invalidated a city council decision to reverse a planning commission decision after the council appealed the planning commission’s decision to itself. Cohan held dispositive the fact the city council’s initiation of an appeal from the planning commission decision was in violation of the city’s own municipal code. Nasha v. City of Los Angeles (2004) 125 Cal.App.4th 470 [22 Cal.Rptr.3d 772] (Nasha) held the prehearing bias of one planning commission member was enough, by itself, to invalidate a planning commission decision that had overruled a city planning director’s approval of a project.

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Reading those two cases together we can only conclude the trial court erred in not granting Woody’s request for an administrative writ of mandate restoring the original planning commission’s grant of its application.


Woody’s Wharf is a long-established restaurant overlooking the harbor in Newport Beach. It sits on the Lido Isle portion of Newport Beach, a strip of land that curves around Newport Harbor, which itself surrounds Balboa Island. In land-use jargon, the neighborhood is a “mixed use” one, but “mixed use” understates its nature. The restaurant is in a trendy marina area that includes a number of restaurants, bars, residences and condominiums. A diner at Woody’s would likely be looking out at boats and boat slips in the harbor and a parade of residents, shoppers, and tourists. There was testimony at the city council meeting that some customers come to the restaurant in their boats.

On September 5, 2013, the Newport Beach Planning Commission voted 5 to 2 to approve a conditional use permit and variance to allow Woody’s to have a patio cover, remain open until 2:00 a.m. on weekends, and allow dancing inside the restaurant. The patio approval and 2:00 a.m. extension were, in fact, interrelated. The idea was to minimize, by the construction of the new patio cover, any noise that might be made by patrons talking on the patio after 11:00 p.m.

Four days later, on September 9, Newport Beach City Council member Mike Henn sent the city clerk an e-mail in which he made an “official request to appeal” the planning commission’s decision because he “strongly believ[ed]” (italics added) the “operational characteristics requested in the application and the Planning Commsion’s decision are inconsistent with the existing and expected residential character of the area and the relevant policies of the voter approved 2006 General Plan.”

The Newport Beach Municipal Code has a number of detailed requirements to appeal a planning commission decision. To be eligible to appeal at all, one must be an “interested party.” (Newport Beach Mun. Code, § 20.64.030.A.) Appeals “shall” be filed on forms provided by the city clerk (Newport Beach Mun. Code, § 20.64.030.B.1.b), and must be accompanied by a filing fee identified in the city’s fee schedule. (Newport Beach Mun. Code, § 20.64.030.B.2.)

It is undisputed that Henn does not claim to have been an “interested party, ” as that term is typically used, did not use the city clerk’s form, and paid no filing fee. It is a reasonable inference that the total cost of appealing a

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planning commission decision to the city council (not including attorney fees) can easily exceed $1,000, and might even run as high, in a matter like Woody’s application, as $4,100.[2]

The city council heard Henn’s appeal on October 8, 2013. Woody’s did not waive any challenges to the irregularity of Henn’s appeal to a body on which he himself would sit. Woody’s attorney took several minutes of his allotted time at the city council meeting to argue that Henn was not allowed to bring the appeal under the relevant municipal code provisions and that he was biased.[3] But he was rebuffed by the city attorney who said “Well, the Code does provide that the city council member can basically call it up for review.”

It was a lively meeting, with a number of speakers on both sides. The case to reverse the planning commission’s decision may be fairly summarized this way: While the area in which Woody’s is located is a mix of residential and commercial uses including a number of bars, restaurants and marinas, the recent trend (apparently encouraged by a 2006 general plan adopted by the city) has been for more residential development. However, the aggregation of bars in the area has led to the problem of patrons who have had too much to drink leaving their respective establishments at 2:00 a.m. and sometimes vomiting and urinating in public. The point was perhaps best articulated by a resident of the 28th Street Marina, who asserted Woody’s patrons are intoxicated when “they are all dumped onto the street at 2 a.m.” To let Woody’s remain open until 2:00 a.m. would only exacerbate the problem of 2:00 a.m. inebriates. Residents complained that allowing Woody’s such late hours would effectively convert it from a restaurant into a “nightclub.”

The case to affirm the planning commission was set out with equal fervor: Woody’s is a long-time Newport Beach “institution” (the mayor’s own characterization), once owned by actor Chuck Norris. It has been open late on weekends and has allowed interior dancing since its inception in the mid-1960’s. It is located in a truly mixed-use area that appeals to urbanites seeking a “walk-to” social life, and opponents of the way it has always operated are simply trying to change the area into something less diverse than it has been historically. One 24th Street resident speaking on behalf of Woody’s, in the process of praising the diversity of the area, went so far as to argue Woody’s opponents were trying to change the character of the area into

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something more like Irvine. Moreover, as a representative from the planning commission noted, noise is not a problem at all. While several residents complained of noise, the only evidence received by the council from actual noise studies (both Woody’s and the city’s) found that Woody’s does not even marginally add to the area’s ambient noise level, a fact specifically noted by the planning commission as well.

After the council concluded the public commentary portion of the meeting, council member Henn spoke first. Henn’s speech takes up about 13 pages of transcript of the city council meeting. None of the other council members spoke for more than two or three paragraphs. Henn gave an extraordinarily well-organized, thoughtful and well-researched presentation why the planning commission decision needed to be overturned. The speech, in fact, was so well-organized, well-researched, and thoughtful it seemed unlikely to be extemporaneous and Henn admitted that very fact at the end of the meeting. He said—when Woody’s counsel pointed out his obvious pre-meeting preparation—that he had prepared his remarks before the meeting based on a “careful review and my own independent diligence before this meeting started.”

The council voted 4 to 1 to reverse the planning commission’s decision, with a 6th member abstaining and the 7th recusing himself. The formal resolution reversing the city planning commission’s decision was adopted November 12, 2013, as Resolution 2013-75. With regard to the question of whether Henn’s appeal was appropriate under the city’s own municipal code, the resolution said: “Councilmembers are exempt from paying the filing fee provided by NBMC Section 20.64.030(B)(2) under the City’s long-standing policy and practice of not requiring Councilmembers to pay a filing fee because then-appeals are taken for the benefit of the City’s residents. Since 2008, there have been eleven (11) appeals of Planning Commission decisions initiated by City Council Members and the City Clerk has not required the payment of an appeal fee under the City’s long-standing policy and practice.”

The case segued rapidly into litigation. Woody’s sought administrative mandate to overturn the resolution the next day (November 13), also asserting a second cause of action for violation of civil rights (a “1983” claim). Less than 30 days later – before the administrative record had been completed—the city filed a cross-complaint for injunctive relief. In March 2014, the city requested, and in April obtained, a preliminary injunction which prohibited Woody’s from operating after 11:00 p.m. or allowing dancing. And in May the court heard Woody’s application for a writ of administrative mandate, which it denied. Woody’s notice of appeal in May included both the April order granting the city its preliminary injunction and the May order denying Woody’s administrative mandate.

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A. Appealability

There is a small procedural detour we need to make before we address the merits of this case. An appeal from a preliminary injunction is directly appealable. (Code Civ. Proc., § 904.1, subd. (a)(6); e.g., Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 208 [147 Cal.Rptr.3d 41].) The appeal from the preliminary injunction in this case was timely, so there is no problem there. But an appeal from an order denying a petition for administrative mandate is not appealable when there are still causes of action that remain outstanding. Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 697 [107 Cal.Rptr.2d 149, 23 P.3d 43] made that clear in no uncertain terms: “When an order denying a petition for writ of administrative mandate does not dispose of all causes of action between the parties, allowing an appeal from the denial order would defeat the purpose of the one final judgment rule by permitting the very piecemeal dispositions and multiple appeals the rule is designed to prevent.” In that regard, Woody’s second cause of action for damages under federal law (42 U.S.C. § 1983) has not been dismissed, a fact noted by the trial judge at the hearing on the administrative mandate. That means we have only one strictly proper appeal before us: the one involving the preliminary injunction.

However, this is an appropriate case in which to exercise our power to consider the appeal from the order denying the petition for administrative mandate as a de facto petition for a writ of mandate seeking to vacate that order. There are several reasons this case presents sufficiently unusual facts to justify such discretion. Mainly, we must address the merits of the preliminary injunction anyway, and, given the nature of the record here, those merits are almost coterminous with the merits of the challenge to the trial court’s denial of the administrative mandate petition. Not considering the merits of the ruling on the administrative mandate petition would be unnecessarily circuitous and expensive to both parties, particularly if we were to conclude the preliminary injunction was improvidently granted. Furthermore, the parties have briefed the merits and treated the appeal as an appeal; no good purpose would be served by confining our review to the preliminary injunction. And not only does Supreme Court precedent support our conclusion (Olson v. Cory (1983) 35 Cal.3d 390, 401 [197 Cal.Rptr. 843, 673 P.2d 720] [treating appeal from a nonappealable order as a petition for an extraordinary writ because not doing so could lead to unnecessary trial proceedings and result in ‘“‘unnecessarily dilatory and circuitous’”’ further litigation]) but Cohan, supra, 30 Cal.App.4th 547 is directly on point. That case likewise considered the merits of a petition for writ of mandate challenging a city council’s reversal of a planning commission decision even though other causes of action remained.

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(See Cohan, supra, 30 Cal.App.4th at p. 554 [“Judicial economy would not be served by awaiting the outcome of the trial on the other causes of action if a procedural violation raised in an improvident appeal required reversal of the trial court’s ruling.”].) So we proceed.

B. Due Process

1. No Biased Adjudicators

Most of us think of city councils as legislative bodies. But city councils sometimes act in an adjudicatory capacity, that is, they sit in a role similar to judges. Judging applications for land-use permits is one of those times. (Wiltshire v. Superior Court (1985) 172 Cal.App.3d 296, 304 [218 Cal.Rptr. 199].) And, as recognized in BreakZone Billiards v. City of Torrance (2000) 81 Cal.App.4th 1205 [97 Cal.Rptr.2d 467] (BreakZone)—the main case on which the city relies – when functioning in such an adjudicatory capacity, the city council must be “neutral and unbiased.” (Id. at p. ...

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