49Hopkins, LLC v. City and County of San Francisco

Background

49Hopkins, LLC alleged that it owned real property at 49 Hopkins Avenue in San Francisco and had purchased the property and an approved 2014 building permit in January 2017. The permit authorized construction of a three-story, four-bedroom home and required certain portions of the existing structure to remain.

During demolition in 2017, the company’s general contractor allegedly found structural elements that were compromised and posed immediate safety dangers. The contractor removed those elements, and the San Francisco Department of Building Inspection issued a notice of violation stating that the demolition exceeded the permit’s scope. The Planning Department later issued a notice of enforcement, and the Department of Building Inspection cancelled the 2014 permit.

The company then sought approval through the City’s conditional-use process. In December 2018, the Planning Commission approved a project requiring reconstruction of a replica of the original 927-square-foot structure and installation of an interpretive plaque. After nearly seven months of negotiations following the filing of this lawsuit, the Commission approved a different two-unit project in August 2019, but limited it to 3,280 square feet, required at least 1,000 square feet for an accessory dwelling unit, and removed a proposed roof deck. The company alleged that these actions were retaliatory, arbitrary, and economically infeasible.

Claims and legal standards

The defendants moved to dismiss all seven claims in the second amended complaint under Federal Rule of Civil Procedure 12. Rule 12(b)(1) permits dismissal for lack of subject-matter jurisdiction, while Rule 12(b)(6) tests whether a complaint alleges enough facts to state a legally plausible claim. At this stage, the court generally accepts well-pleaded factual allegations as true and draws reasonable inferences for the plaintiff.

The seven claims alleged violations of the First Amendment right to petition and access to courts; due process under the Fourteenth Amendment; inverse condemnation under the Takings Clause; equal protection; the Excessive Fines Clause; and two California writ-of-mandate claims. The first five claims were brought under 42 U.S.C. § 1983, a federal law that allows claims against people acting under state law for violating federal rights.

First Amendment claim

The company alleged that the Planning Commission’s second decision was retaliation for filing this lawsuit and criticizing the City in public statements. The court held that the complaint did not provide enough factual detail showing a connection between those protected activities and the Commission’s later decision. The First Amendment claim was dismissed with leave to amend.

Due process and inverse-condemnation claims

The court held that both due process and takings claims required the company to identify a constitutionally protected property interest. It concluded that the company had not plausibly alleged such an interest in using and enjoying the property, in approval of its negotiated project, or in protection from reputational harm. The court also relied on its earlier conclusion that the company did not have a vested right in the 2014 permit.

Because the second amended complaint still did not identify a protected property interest, the court dismissed the due process claim with prejudice. For the same reason, it dismissed the inverse-condemnation claim with prejudice.

Equal-protection claim

The company alleged that the defendants singled it out by cancelling its permit rather than revoking or suspending it, treating its violation as requiring a conditional-use process, and imposing the two Planning Commission decisions. It also alleged that similarly situated properties were treated differently.

The court held that these allegations were sufficient at the motion-to-dismiss stage. The defendants did not provide a rational explanation for the Planning Commission’s actions, and factual disputes about whether other properties were similarly situated were better addressed at summary judgment. The court therefore denied the motion to dismiss the equal-protection claim.

Excessive-fines claim

The company alleged that cancelling the permit and imposing the conditional-use decisions amounted to an excessive fine. The court held that the alleged actions were not fines because they did not require a cash or in-kind payment to the government. It also found implausible the company’s allegation that the decisions eliminated all economically productive use of the property, because the company had received approval for a two-unit, 3,280-square-foot project. The court dismissed the excessive-fines claim with prejudice.

State-law writ claims

The defendants argued that the two California writ-of-mandate claims were untimely and inadequately pleaded. The court declined to dismiss them on statute-of-limitations grounds because the company alleged that the permit’s cancellation itself deprived it of appellate rights. The court also found that the defendants’ arguments depended on factual disputes, including whether the company had a meaningful opportunity to be heard and whether the second Planning Commission decision was legally a disapproval requiring additional findings. The court denied the motion to dismiss both state-law claims.

Disposition

Judge Susan Illston granted in part and denied in part the defendants’ motion to dismiss. The First Claim was dismissed with leave to amend. The Second Claim for due process, Third Claim for inverse condemnation or takings, and Fifth Claim for excessive fines were dismissed with prejudice. The motion was denied as to the Fourth Claim for equal protection and the Sixth and Seventh Claims for writs of mandate. Leave to amend was granted only for the First Claim, with any third amended complaint due by September 16, 2020.