Unpublished Disposition, 908 F.2d 976 (9th Cir. 1987)

MEMORANDUM^* 

Hodge Capital Company ("Hodge") appeals the district court's grant of summary judgment against it on its claims that the City of Sausalito's ("City") denial of its application for a conditional use permit violated its procedural and substantive due process rights and was an unconstitutional taking of property without just compensation under the fifth amendment. We affirm.

* In 1982, Hodge purchased 1.4 acres of property zoned for industrial use at 4000 Bridgeway Avenue in Sausalito. In November 1982, Hodge applied to the City for a conditional use permit for a building it planned to construct. After conducting a public hearing, as well as traffic and environmental reviews, the City Planning Commission denied the application in January 1984, stating that the project included more office space than was allowed under the applicable zoning restrictions and would negatively impact the traffic flow in the area. E.R. 52C at 19; 52E at 6.

At this point, Hodge could have revised the plan and filed a new application with the Planning Commission. However, it chose to appeal the Planning Commission's denial to the City Council. It made revisions in the plan¹  and submitted the revised plan, rather than the original plan, for Council approval. See E.R. 52D at 38.

At its meeting on February 7, 1984, the City Council decided to retain jurisdiction over the application, and, instead of relinquishing jurisdiction to the Planning Commission for another public hearing and review, requested the Planning Commission's advisory supplemental review. See E.R. 52D at 38-39.

On February 22, 1984, the Planning Commission recommended conditional approval of the revised plan. E.R. 52E at 10-14, 52F at 103. On March 6, 1984, the City Council held a public hearing and discussed the revised project. E.R. 52F. Only four of the five council members were present at the meeting. Before the public hearing began, the Council discussed the possibility of a tie vote and its effect. E.R. 52F at 103-104. It decided to proceed with the hearing. E.R. 52F at 105.

At the conclusion of the hearing, the Council discussed whether to resolve the matter or continue it until a time when the full Council could be present. Hodge's representative requested that the Council resolve the matter. E.R. 52F at 109-10. The Council then voted on a motion to approve the modified application, and the vote split 2-2. E.R. 52F at 109.

The City Attorney then advised the Council that under Sec. 10.939.07 of the Sausalito Municipal Code, a tie vote, without a continuance, was to be construed as an affirmance of the Planning Commission's action.²  E.R. 52F at 109. At that time, the City Attorney was not certain whether the tie affirmed the Planning Commission's initial decision, after conducting public hearings, to reject Hodge's original application, or the Planning Commission's advisory opinion recommending approval of the revised application. E.R. 52F at 1090-110. After further research, he advised the Council that the tie vote affirmed the Planning Commission's denial of Hodge's original application. E.R. 66B. The City Council subsequently enacted Resolution 3764 affirming the Planning Commission's denial of Hodge's original application. E.R. 66A.

Hodge petitioned the Marin County Superior Court for an administrative mandate stating that the tie vote affirmed the Planning Commission's advisory opinion recommending approval. The court found that the City correctly determined that the tie vote affirmed the Planning Commission's decision denying Hodge's original application. E.R. 46E. The California Court of Appeal affirmed.³  E.R. 46F.

Hodge also filed this action in federal court. The district court stayed the proceedings until the state proceedings concluded. The district court lifted the stay on September 27, 1987. The City moved for summary judgment on all ten of Hodge's claims. The court granted summary judgment on nine claims and remanded the substantive due process claim to the Council to make findings. E.R. 60 at 3; E.R. 63 at 3. After the City passed a resolution containing the requested findings, E.R. 66A, it renewed its motion for summary judgment, which the court granted. E.R. 80.

II

A district court's grant of summary judgment is reviewed de novo. Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989); State Farm Fire & Casualty Co. v. Martin, 872 F.2d 319, 320 (9th Cir. 1989); Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir. 1986). Hodge concedes that no genuine issues of material fact exist. See Appellant's Brief at 5. The relevant inquiry is therefore whether the district court correctly applied the relevant substantive law. Tzung v. State Farm Fire & Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir. 1989); Judie v. Hamilton, 872 F.2d 919, 920 (9th Cir. 1989).

III

Constitutional procedural due process requirements apply only to the deprivation of interests encompassed by the fourteenth amendment's protection of liberty and property. Board of Regents v. Roth, 408 U.S. 564, 569 (1972). To state a procedural due process claim, Hodge must show it has a protected property interest in its application for a conditional use permit, and that the City denied this property interest without the process which was due under the circumstances. See Bateson v. Geisse, 857 F.2d 1300, 1305 (9th Cir. 1988); see also Roth, 408 U.S. at 569; Parks v. Watson, 716 F.2d 646, 656 (9th Cir. 1983).

* Hodge argues that its claim of entitlement to a conditional use permit is created by state law, which provides the ability to apply for a conditional use permit, and the municipal code, which imposes substantive standards on the governing body reviewing the application. See Cal.Gov't Code Sec. 65901; Sausalito Mun.Code 10.310.1. A valid claim to an entitlement arises when an applicant has fulfilled all the qualifications necessary for obtaining a benefit under state law, so that the applicant's mere expectation or hope of receiving the benefit ripens into a protected property interest. However, when the benefit sought is conditioned on the approval of an agency or governing body, and the applicable regulations impose no substantive limits on that body's exercise of discretion, there is no way that the applicant can, in advance, satisfy all the necessary qualifications. The necessary qualifications are not satisfied until the agency or governing body exercises its discretion to approve the application; therefore, an entitlement cannot arise. See Bateson v. Giesse, 857 F.2d 1300, 1305 (9th Cir. 1988); Jacobson v. Hannifin, 627 F.2d 177, 179 (9th Cir. 1980).

As with the statutes in Bateson and Jacobson, Sausalito Mun.Code Sec. 10.939.11 gives the City Council discretion: the authority to "approve, approve with stated conditions, or disapprove any application or any other action recommended to them by the Planning Commission requiring its action." It puts no substantive limits on the council's exercise of this discretion. Cf. Parks v. Watson, 716 F.2d 646, 656 (9th Cir. 1983) (in which the statute at issue specified "that in ruling on a vacation petition, the agency 'shall' determine" whether three conditions were met, and mandated that if those conditions were met, the governing body "shall" vacate the streets. The court found that " [o]nce the conditions [were] met the city lack [ed] discretionary powers.").

Nor does Hodge have a claim of entitlement to the procedural right to present his application. See Parks, 716 F.2d at 656-57; Jacobson, 627 F.2d at 180; accord, Contra Costa Theatre, Inc. v. City of Concord, 511 F. Supp. 87, 89 (N.D. Cal. 1980), aff'd, 686 F.2d 798 (9th Cir. 1982), cert. denied, 460 U.S. 1085 (1983). Because Hodge demonstrated no protectable property interest supporting its procedural due process claim, summary judgment for the City was appropriate.

B

Even if Hodge had a protectable property interest under the fourteenth amendment, it did not demonstrate that it was denied due process in connection with this interest. The due process guarantee is the right to notice and a hearing at a meaningful time and in a meaningful manner. Sinaloa Lake Owners Ass'n v. City of Simi Valley, 882 F.2d 1398, 1405 (9th Cir. 1989) (quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965)), cert. denied, 110 S. Ct. 1317 (1990). Hodge received both.

In its motion for summary judgment, the City attached the notices of the Council meetings at which Hodge's application was to be discussed. These notices clearly state that the matter on the agenda is Hodge's appeal from the Planning Commission's denial of its original application. See R. 52, Exhibit 7. The fact that the City Council allowed Hodge to present modifications to the application did not change the nature of the matter pending before it. Furthermore, as the district court noted, Hodge's counsel attended the public hearing and made a presentation. See E.R. 63 at 2. It appears that Hodge had ample notice of the fact that the matter before the Council was an appeal from his original application.

Hodge also had notice of the tie-vote regulation and its possible effect. The regulation was a matter of public record; it was included in Sausalito Mun.Code Sec. 10.939.11. In addition, the tie-vote rule was discussed at great length during the Council meeting, prior to the opening of the public hearing. The Council discussed the tie-vote regulation again after the public hearing concluded. At that time, Hodge's representative requested that the Council not continue the matter until all council members were present. Thus, Hodge's representative's own action guaranteed that the tie-vote regulation would apply if the vote split.

Due process protects the right to a fair hearing "at a meaningful time and in a meaningful manner." Armstrong v. Manzo, 380 U.S. 545, 552 (1965); see also Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 19 (1978), cited in Sinaloa, 882 F.2d at 1405. In claiming that it did not receive a meaningful hearing, Hodge seems to be combining two claims: (1) it did not receive a meaningful appeal before the Council on its original application; and (2) it did not receive a fair hearing on its modified application.

Hodge points to no authority supporting a constitutional right to a meaningful appeal in this circumstance. The fourteenth amendment guarantees a meaningful hearing. Hodge already had a meaningful hearing before the Planning Commission on its original application. Only state procedural provisions, and not the fourteenth amendment, gave Hodge the right to a meaningful appeal from the Planning Commission's denial of the original application.

Even assuming Hodge had a right to a meaningful appeal, the argument that it was denied a meaningful appeal from the Planning Commission overlooks the posture in which the application came before the City Council. Hodge chose to modify the original application on appeal to the City Council instead of filing a modified application and appearing before the Planning Commission. The fact that the City Council acquiesced in Hodge's presentation of the modified application on appeal from the Planning Commission does not change the fact that Hodge had the opportunity to present arguments relating to his original application, but chose not to do so.

Hodge also argues that it was denied a meaningful hearing on its modified application because the effect of the City's tie-vote rule, affirming the Planning Commission's denial of the original application, made the hearing meaningless. The fact that the tie-vote rule came into play does not render the hearing on the modified application meaningless. The Council thoroughly examined the modified application, but was unable to issue a majority decision for either denial or approval. Its decision on the modified application was therefore the affirmance of the Planning Commission's decision on the original application.

Even if Hodge did not receive a meaningful hearing on the modified application, it cannot be said that the City denied him this opportunity. First, Hodge chose to forego his right to a meaningful hearing before the Planning Commission on the Modified Application. Second, Hodge requested that the Council not continue the matter until it could take a vote of the full Council, knowing that the failure to continue the matter would necessitate the application of the tie-vote regulation. In other words, Hodge could have waited and obtained a full Council decision on the modified application; instead, he chose to stand with the Council's inability to reach a decision and its resulting effect under Sausalito Mun.Code Sec. 10.939.11.⁴ 

Thus, even if Hodge was entitled to due process under the fourteenth amendment, the City did not deny Hodge the notice or meaningful hearing implicit in the due process guarantee.

IV

Hodge next contests the district court's grant of summary judgment against it on its substantive due process claim. A plaintiff claiming a denial of substantive due process must prove that the government's action was clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare. Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 395 (1926), cited in Sinaloa, 882 F.2d at 1407. "A substantive due process claim does not require proof that all use of the property has been denied, but rather that the interference with property rights was irrational or arbitrary." Bateson v. Giesse, 857 F.2d 1300, 1303 (9th Cir. 1988) (citations omitted).

The City Council did not act unreasonably in either enforcing its tie vote regulation or in affirming the Planning Commission's decision. First, the tie vote regulation itself is reasonable; if the Council cannot reach a majority to approve or deny, the status quo prevails. The application of this existing, reasonable, procedural provision cannot be defined as an arbitrary action. The City Council did not single out Hodge for discriminatory treatment. Instead, it fairly and even-handedly applied its tie-vote regulation to approve the Planning Commission's reasonable denial of Hodge's permit.⁵ 

Second, the City Council's substantive decision to affirm the Planning Commission's decision was not arbitrary or irrational. On remand, the Council adopted a resolution listing the reasons for the Planning Commission's decision. The Council adopted these findings as the basis for its own decision. The Planning Commission found that Hodge's original application did not comport with zoning restrictions and city plans. Its denial of the application, and the City's subsequent affirmance of that denial, were both reasonable.

V

Finally, Hodge appeals the district court's grant of summary judgment for the City on its claim that the delay in processing its application, the denial of its conditional use permit application, and the moratorium on development, resulted in a four-year "freeze" of its property in its undeveloped state and was a taking without just compensation in violation of the fifth amendment takings clause. The district court held that Hodge did not state a valid claim, as it did not allege that it was deprived of every meaningful economic use of the property.

Hodge asserts that regulation which results in temporarily freezing undeveloped property is a taking, citing First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987). There, the Court accepted as true the plaintiff's claim that it was deprived of all use of its property. Id. at 311, 313. The question before the court was whether the government was required to pay "compensation for the period of time during which regulations deny a landowner all use of his land." Id. at 318. In determining that the county was required to compensate the plaintiff, the Court stated:

We also point out that the allegation of the complaint which we treat as true for purposes of our decision was that the ordinance in question denied appellant all use of its property. We limit our holding to the facts presented, and of course do not deal with the quite different questions that would arise in the case of normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like which are not before us.

Id. at 321. Thus, the Court's holding expressly did not extend to this case, which involves a "normal delay in obtaining building permits."

In Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (1978), the Court discussed the issue of what constitutes a taking. The Court stated that

in instances in which a state tribunal reasonably concluded that 'the health, safety, morals, or general welfare' would be promoted by prohibiting particular contemplated uses of land, this Court has upheld land-use regulations that destroyed or adversely affected recognized real property interests. Zoning laws are, of course, the classic example, which have been viewed as permissible governmental action even when prohibiting the most beneficial use of the property.

Id. at 125.

In American Sav. and Loan Ass'n v. County of Marin, 653 F.2d 364, 368 (9th Cir. 1981), we recognized that " [g]overnment regulation can 'be so onerous as to constitute a taking which constitutionally requires compensation.' " Id. (citing Goldblatt v. Town of Hempstead, 369 U.S. 590, 594 (1962)). However, we went on to state,

A police power regulation is not invalid simply because it prevents the highest and best use of the land. Nor is a regulation invalid merely because it dramatically reduces the value of the property. The validity of the ordinance must be judged 'by focusing on the uses the regulations permit.' If the regulation is a valid exercise of the police power, it is not a taking if a reasonable use of the property remains.

Id. at 368 (citations omitted) (quoting Penn Central, 438 U.S. at 125, 131); see also William C. Haas & Co. v. City and County of San Francisco, 605 F.2d 1117, 1120-21 (9th Cir. 1979), cert. denied, 445 U.S. 928 (1980).

The delay in this case resulted from a development moratorium that was a valid exercise of the city's police power. The moratorium's purpose was to allow the city to revise its zoning plan on the basis of a transportation study prepared for the city. See Cal.Govt.Code Sec. 65858. Because the moratorium, and the resulting delay, were the result of a valid exercise of the city's police power, the district court correctly determined that to withstand a motion for summary judgment, Hodge had to present "some evidence" that it was denied all use of the land. Hodge did not present any such evidence, nor did its claim assert that it was deprived of all use of the land. The court properly granted the City's motion for summary judgment.

AFFIRMED.