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Los Globos Corp. v. City of Los Angeles

California Court of Appeals, Second District, First Division

November 20, 2017

LOS GLOBOS CORPORATION, Plaintiff and Appellant,
CITY OF LOS ANGELES et al. Defendants and Respondents.

         APPEAL from an order of the Superior Court of Los Angeles County No. BC526006 Frederick C. Shaller, Judge. Affirmed.

          Smith Law Firm and Craig R. Smith for Plaintiff and Appellant.

          Michael N. Feuer, City Attorney, Blithe S. Bock, Assistant City Attorney, and Matthew A. Scherb, Deputy City Attorney, for Defendants and Respondents.

          JOHNSON, J.

         The Los Globos nightclub claims that Los Angeles inspectors harmed its business by reducing the number of patrons allowed at the club and did so without first providing the club with a statutorily-required hearing. Los Globos appeals from the trial court's order sustaining the defendants' demurrer without leave to amend. Los Globos admittedly failed to exhaust its administrative remedies prior to filing suit in superior court. This failure bars Los Globos from pursuing its claim here. We affirm the trial courts order.

         BACKGROUND [1]

         In 2011, the Los Globos Corporation (Los Globos) operated a nightclub out of a two-story building in Los Angeles (the City). In September 2011, Los Angeles Fire Department Inspector Gerald Travens (Travens) examined the club and issued a warning regarding the building's “ ‘unimproved [sic] construction.' ” Travens also forwarded his concerns about the club to Frank Lara (Lara), the principal inspector for the Los Angeles Department of Building and Safety (the Department). In turn, Lara dispatched a code enforcement inspector to the club. On September 22, 2011, the officer issued an “order to comply” citing the club's change of use of its first floor and its unpermitted improvements. On September 26, 2011, Los Globos says it was told it had the proper permits for the club's current use and needed no other permits from the Department. However, on September 28, 2011, the Department issued the club a formal violation notice based on its unpermitted improvements.

         In October 2011, Los Globos met with the fire department to discuss the occupant load (the maximum number of people allowed at any one time) for the building.[2] The fire department would not approve any occupant loads until a sprinkler system was installed. At a subsequent meeting, a fire department captain (acting on behalf of the chief) approved a maximum occupant load of 408 people for the first floor of the building and 330 people for the second floor, once Los Globos added 24-hour monitoring to the alarm and other alarm enhancements. The captain put this conditional approval in writing and Los Globos completed the work. In January 2012, another fire department captain inspected the building, ratified the same occupant loads that were conditionally approved back in October 2011, and told Los Globos it was approved to operate under them.

         In March 2012, a news article about Los Globos highlighted the club's all-night dancing. As a result, in May 2012, the Department representatives Lara and Andrew Longoria (Longoria) told Los Globos that the club lacked a permit to operate a dance hall and a proper certificate of occupancy for dancing on the first floor. According to Los Globos, however, the club showed Lara and Longoria permits demonstrating the property could be used as a dance hall and that the two knew a certificate of occupancy allowing a dance hall on the property had been issued over 30 years earlier.

         On June 6, 2012, Longoria and another representative from the Department issued Los Globos a “ ‘Not Approved' ” notice asserting allegedly “unintelligible” violations. A week later, with its desired occupancy amounts allegedly approved, Los Globos resumed talks with the fire department on the issue. Los Globos had not been issued occupancy load cards displaying the maximum occupancy for posting on the premises and learned that none would issue until the club provided a “Division Four” fire permit, any applicable conditional use permits, and a certificate of occupancy for the uses shown on plans previously given to the fire department.

         According to Los Globos, although the club complied immediately with all three conditions, the fire department did not issue occupancy load cards. Instead, it told Los Globos that the fire department first had to speak with Lara, the principal inspector of the Department. Later, Los Globos posted occupancy load cards on its own, which listed the occupancy limits it claims the fire department had approved-408 people on the first floor; 330 people on the second. The club operated with those occupancies until December 28, 2012, when Travens confiscated the occupancy load cards and replaced them with cards allowing the same 330 people on the second floor, but only 49 people on the first floor-one person less than an assembly occupancy.

         In January 2013, Los Globos received a certificate of occupancy from the Department stating that the building was a two-story dance hall, restaurant, and office. According to Los Globos, this certificate of occupancy was subsequently revoked without justification. Los Globos also alleges that the Los Angeles Police Commission became involved at some point by claiming that the club lacked a valid permit to operate a dance hall business. The police commission later granted such a permit, but only after imposing numerous conditions and an unreasonable delay.

         On March 21, 2013, Los Globos filed a claim for damages with the City. The claim sought damages solely for the Department's determination that part of the club's first floor could not be used as a restaurant or for dancing. The City denied the claim on April 29, 2013.

         On October 9, 2015, Los Globos filed a second amended complaint (SAC). The SAC alleges four causes of action against the City, the fire department, the Department, the police commission, Lara, Longoria, and Travens (collectively, the defendants).[3] The first two causes of action allege that reducing the first floor occupancy intentionally and negligently interfered with the club's prospective economic advantage. The third cause of action alleges ordinary negligence based on the same conduct. The fourth cause of action seeks declaratory relief-specifically, a ...

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