Gallagher v. City and County of San Francisco

Background

Patrick Gallagher sued the City and County of San Francisco, several current and former City employees, and a structural engineer. He brought the case individually and as trustee for the Madison Trust FBO Patrick Gallagher. Gallagher alleged that, after he refused to participate in and spoke to the Federal Bureau of Investigation about a suspected pay-to-play scheme involving City building officials, City employees retaliated against him.

According to the second amended complaint, the alleged retaliation included code-enforcement liens, notices of violation, abatement orders, permit revocations, and revocation of a certificate of completion. Gallagher alleged that these actions delayed renovations, caused attempted sales of the property to fall through, required additional work and expenses, and caused other losses and emotional distress.

The complaint asserted seven causes of action: slander of title, inverse condemnation, intentional interference with prospective economic relations, retaliation under 42 U.S.C. § 1983, intentional infliction of emotional distress, negligence, and declaratory relief. The court had previously dismissed an earlier complaint because its allegations supporting municipal liability were insufficient and had allowed Gallagher to amend.

Federal Civil-Rights Claim

The court analyzed the fourth cause of action as a First Amendment retaliation claim under § 1983. To state that claim, Gallagher had to allege protected activity, adverse action that could deter an ordinarily firm person from continuing that activity, and a substantial connection between the protected activity and the adverse action.

As to the City, the court considered the municipal-liability rule commonly called a Monell claim. That rule can hold a local government responsible when an official policy or custom causes a constitutional violation, but it does not impose liability merely because the government employs the person who allegedly acted unlawfully. The court found that Gallagher had alleged enough to proceed under a policy-or-custom theory. It relied on allegations about his own experiences and another recent retaliation lawsuit involving City employees, which together alleged a pattern of unnecessary inspections, violation notices, and permit revocations after complaints about corruption.

The court also found sufficient allegations that Bernard Duffy, a San Francisco Department of Building Inspection deputy director, was a final policymaker who was involved in or approved the alleged conduct. Gallagher alleged that Duffy had oversight of the department, attended a meeting concerning the challenged actions, heard Gallagher’s evidence that the actions were excessive, and expressed that he believed Gallagher had spoken to the Federal Bureau of Investigation.

As to the individual defendants, the court found Gallagher’s allegations sufficient at the pleading stage to support causation. He alleged that he had received permits and a certificate of completion, that the individual defendants knew he had spoken to the Federal Bureau of Investigation, and that they then revoked the certificate, issued violation notices, and required additional work without cause. The court therefore denied the motion to dismiss the fourth cause of action under § 1983.

State-Law Claims

The defendants argued that Gallagher’s state-law claims were not ready for judicial decision because permits, violation notices, and related matters remained pending. They also argued that Gallagher first had to pursue administrative review through the applicable San Francisco bodies and then seek judicial review through a writ of mandate under California law.

The court agreed that, to the extent Gallagher sought relief based on the City’s liens, violation notices, abatement orders, permit revocations, and certificate-of-completion revocation, he had to pursue administrative review and then seek a writ of mandate. The court rejected Gallagher’s argument that his contact with the Board of Supervisors and a meeting with the inspection department satisfied that requirement. It also found that he had not shown administrative review would be futile.

The court stated that Gallagher’s state-law claims were dismissed without prejudice. In addition, to the extent any state-law claims were not subject to administrative exhaustion, the court declined to exercise supplemental jurisdiction because those claims raised complex issues of state law.

Disposition

The court granted in part and denied in part the defendants’ motion to dismiss the second amended complaint. It denied the motion as to the fourth cause of action under 42 U.S.C. § 1983 and granted the motion as to the state-law claims, which were dismissed without prejudice. The court also scheduled an initial case-management conference for March 1, 2024, at 2:30 p.m., by video conference.