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Kihagi v. City of San Francisco

United States District Court, N.D. California

November 22, 2019

ANNA KIHAGI, et al., Plaintiffs,


          KANDIS A. WESTMORE United States Magistrate Judge

         On March 12, 2015, Plaintiffs Anna Kihagi, Xelan Prop 1, LLC, Renka Prop, LLC, and Zoriall LLC (collectively, “Kihagi”) filed the instant suit, asserting that Defendants' enforcement of building, property maintenance, construction, and other ordinances with respect to Kihagi's properties violated their constitutional rights. (Compl. ¶1, Dkt. No. 1.) On June 4, 2015, Defendant City and County of San Francisco (“City”) filed a lawsuit against Kihagi in the Superior Court for the County of San Francisco, alleging that Kihagi had, “[i]n defiance of numerous state and local laws protecting these tenants and capping rents, [been waging] a war of harassment, intimidation, and retaliation using unlawful, unfair and fraudulent practices . . . .” (Defs.' Req. for Judicial Not. (“RJN”), Exh. A (“State Compl.”) at 1, Dkt. No. 107.)

         Pending before the Court are: (1) Defendants' motion to dismiss the complaint with prejudice, and (2) Kihagi's motion to voluntarily dismiss the case without prejudice, pursuant to Federal Rule of Civil Procedure 41(a)(2). (Defs.' Mot. to Dismiss, Dkt. No. 106; Pls.' Mot. to Dismiss, Dkt. No. 110.) Having considered the parties' filings, the relevant legal authority, and the arguments made at the November 21, 2019 hearing, the Court GRANTS Defendants' motion to dismiss with prejudice and DENIES Kihagi's motion to dismiss without prejudice.

         I. BACKGROUND

         Kihagi is the owner of residential rental units in San Francisco. (First Amended Compl. (“FAC”) ¶ 1, Dkt. No. 18.) Kihagi alleges that Defendants arbitrarily brought enforcement actions against Plaintiffs based on race discrimination and “bureaucratic hostility towards landlords' right to evict tenants who are breaking their leasing contracts.” (FAC ¶ 4.)

         Kihagi alleges that in 2014, she noticed tenants were illegally subletting their rent controlled units at market rates. (FAC ¶¶ 35-37.) Kihagi sought to evict the tenants, who then complained to the City. (FAC ¶¶ 38-39.) Kihagi alleges that the City then “initiated a full-fledged attack on Kihagi vis-à-vis the City's handling of applications for construction and remodeling permits and virtually anything else that required City approval . . . .” (FAC ¶ 40.) This included an April 2014 permit to demolish an illegal unit, a September 2014 permit at 1135 Guerrero, and a January 2015 permit at 1137 Guerrero Street. (FAC ¶¶ 41-44, 72-73.)

         The City then allegedly began to perform illegal and improper inspections in retribution for Kihagi's actions with respect to its tenants. (FAC ¶ 45.) This included a March 4, 2015 inspection, which Kihagi alleges was illegal. (FAC ¶¶ 50-64.) Kihagi further alleges that “she is the only person with property i[n] good condition which has been raided by a Task Force, ” and that none of the properties have the “uninhabitable conditions [that would] warrant attention by the Task Force.” (FAC ¶ 65.) Kihagi also alleges that the City issued a false Code Enforcement Violation in February 2015 with respect to the Filbert property, despite Kihagi having valid permits. (FAC ¶¶ 68-70.) Kihagi further asserts that the Code Enforcement Violation was the result of a discriminatory enforcement action. (FAC ¶ 68.)

         On June 4, 2015, after Kihagi filed the instant federal action, the City brought an enforcement action against Kihagi. (See State Compl. at 1.) The City alleged that Kihagi had engaged in unlawful “business practices to systematically displace and recover possession of rent-controlled units in violation of state and federal law, ” including harassing and intimidating tenants, reducing services, and refusing to timely and properly perform repairs. (State Compl. ¶ 8.) Further, once the tenants have left, Kihagi would “quickly renovate the units, in many cases without first obtaining the proper City permits and attendant inspections . . . .” (State Compl. ¶ 8.)

         On June 30, 2015, Defendants filed a motion to stay the federal action. (Dkt. No. 19.) The Court subsequently granted the motion, based on Younger abstention, to permit the state action to proceed. (Dkt. No. 43 at 6-7.)

         While the federal action was stayed, the state case proceeded. Due to Kihagi's failure to comply with their discovery obligations, numerous evidentiary sanctions were issued, including prohibiting Kihagi from testifying at trial. (Defs.' RJN, Exh. B (“Statement of Decision”) ¶¶ 62-69.) On May 23, 2017, following a trial, the state court issued a 151-page Statement of Decision, which found, amongst other things:

(1) Kihagi illegally evicted tenants. (Statement of Decision ¶¶ 164, 220, 253, 268, 363.)
(2) The City did not arbitrarily deny construction and building permits, and Kihagi failed to obtain permits. (Statement of Decision ¶¶ 387-90, 394-95, 399-437.)
(3) The City lawfully inspected or attempted to inspect Kihagi's properties. (Statement of Decision ¶¶ 454-62.)
(4) The City lawfully issued citations for building code violations. (Statement of Decision ...

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