San Diegans for Open Government v. City of San Diego

Filed 3/2/16 Certified for publication 3/16/16 (order attached)
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
SAN DIEGANS FOR OPEN D067578
GOVERNMENT,
Plaintiff and Appellant,
(Super. Ct. No.
v. 37-2013-00042425-CU-TT-CTL)
CITY OF SAN DIEGO,
Defendant and Respondent;
BH PARTNERSHIP,
Real Party in Interest and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County, Ronald S.
Prager, Judge. Affirmed.
Briggs Law Corporation, Cory J. Briggs and Anthony N. Kim for Plaintiff and
Appellant.
Jan I. Goldsmith, City Attorney, and Glenn T. Spitzer, Deputy City Attorney, for
Defendant and Respondent.
Barnes & Thornburg, L. Rachel Lerman, Kevin F. Rising and David W. Nelson
for Real Party in Interest and Respondent.
Plaintiff and petitioner San Diegans for Open Government (SDOG) appeals a
judgment denying its petition for writ of mandate and complaint for declaratory and
injunctive relief that challenged a decision by defendant and respondent City of San
Diego (City) approving a real property lease with defendant and real party in interest BH
Partnership (BH). The approval required an appraisal by an independent appraiser under
City's Municipal Code and, on appeal, SDOG contends City erred by approving the lease
because the evidence is insufficient to support its finding the appraisal of the property
was performed by an independent appraiser.
FACTUAL AND PROCEDURAL BACKGROUND
Since 1953, BH and its predecessors have leased from City certain real property in
Mission Bay Park on which it operates the Bahia Resort Hotel. On November 26, 2012,
the city council approved a 40-year lease agreement that would extend BH's tenancy of
that property. However, because that approval did not include a statement of the
property's fair market value, approval of the lease agreement was placed on the city
council's agenda for its February 26, 2013, meeting for reconsideration. BH hired
appraiser Bruce Goodwin to establish the property's fair market value.
At city council's February 26, 2013, meeting, Goodwin appeared and discussed his
$17.8 million appraisal of the fair market value of the property. James Barwick, director
of City's real estate assets division, also appeared and stated Goodwin's methodology was
sound. Although Goodwin's staff did not perform its own appraisal of the property's fair
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market value, it had prepared and submitted an extensive economic model. Members of
the city council questioned Goodwin regarding his independence. The city council
included Goodwin's appraisal in its resolution and then approved the new lease
agreement.
In April 2013, SDOG filed a petition for writ of mandate and complaint for
declaratory and injunctive relief, challenging City's approval of the lease. SDOG's
operative first amended petition and complaint alleged that City's approval of the lease
did not comply with San Diego Municipal Code section 22.0901(a)(3).1 It alleged
Goodwin did not qualify as an independent fee appraiser under the San Diego Municipal
Code because he was retained or otherwise compensated by one of the real parties in
interest and the city council's resolution approving the lease did not contain a statement
of the market value of the property as appraised by an independent fee appraiser or City
staff.
On November 18, 2014, after considering written and oral arguments of counsel,
the trial court issued a minute order denying the petition and complaint because it
concluded substantial evidence supported City's finding that Goodwin was an
independent fee appraiser. On December 4, the court entered its judgment against
SDOG, denying all relief it sought. SDOG timely filed a notice of appeal.
1 All statutory or municipal code references are to the San Diego Municipal Code
unless otherwise specified.
3
DISCUSSION
I
Standards of Review
"A public entity's 'award of a contract, and all of the acts leading up to the award,
are legislative in character.' [Citation.] '[T]he letting of contracts by a governmental
entity necessarily requires an exercise of discretion guided by considerations of the public
welfare.' [Citation.] '[T]he mere fact that a proceeding before a deliberative body may
possess certain characteristics of the judicial process does not convert legislative action
into an adjudication of a private controversy. [Citations.]' [Citation.] Thus, . . . the
award of the contract[] . . . should be considered legislative action[]." (Mike Moore's 24-
Hour Towing v. City of San Diego (1996) 45 Cal.App.4th 1294, 1303, fn. omitted.)
Contrary to SDOG's assertion, the city council's approval of the lease between City and
BH was legislative, and not adjudicatory, in nature.
"Review of a local entity's legislative determination is through ordinary mandamus
under [Code of Civil Procedure] section 1085. 'Such review is limited to an inquiry
whether the action was arbitrary, capricious or entirely lacking in evidentiary support.
[Citation.]' " (Mike Moore's 24-Hour Towing v. City of San Diego, supra, 45
Cal.App.4th at p. 1303.) On appeal, we generally determine de novo the question of law
whether the agency's decision was arbitrary, capricious, or entirely lacking in evidentiary
support. (Ibid.) However, if the trial court's findings on foundational matters of fact may
be conclusive on appeal, we review those findings for substantial evidence to support
them. (Ibid.) Code of Civil Procedure section 1094.5, subdivision (c), provides: "Where
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it is claimed that the findings are not supported by the evidence, in cases in which the
court is authorized by law to exercise its independent judgment on the evidence, abuse of
discretion is established if the court determines that the findings are not supported by the
weight of the evidence. In all other cases, abuse of discretion is established if the court
determines that the findings are not supported by substantial evidence in the light of the
whole record."
"Substantial evidence is evidence that a rational trier of fact could find to be
reasonable, credible, and of solid value. We view the evidence in the light most
favorable to the [decision] and accept as true all evidence tending to support the
[decision], including all facts that reasonably can be deduced from the evidence. The
evidence is sufficient to support a factual finding only if an examination of the entire
record viewed in this light discloses substantial evidence to support the finding." (Pedro
v. City of Los Angeles (2014) 229 Cal.App.4th 87, 99.) "There is a presumption the
agency's findings are supported by substantial evidence, and appellants have the burden
of demonstrating otherwise." (Schutte & Koerting, Inc. v. Regional Water Quality
Control Bd. (2007) 158 Cal.App.4th 1373, 1384.)
Interpretation of a statute or local charter provision or ordinance is a question of
law that we generally review independently, or de novo. (Citizens for Responsible
Equitable Environmental Development v. City of San Diego (2010) 184 Cal.App.4th
1032, 1040-1041; Bohbot v. Santa Monica Rent Control Bd. (2005) 133 Cal.App.4th 456,
462.) When the language of a statute or ordinance is clear and unambiguous, there is no
need for interpretation and we apply the statute or ordinance as written. (Bohbot, at
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p. 462.) Words used in a statute or ordinance should generally be given the meaning they
bear in ordinary use. (Ibid.) However, the plain meaning rule does not preclude us from
determining whether the literal meaning of a statute or ordinance comports with its
legislative purpose. (Ibid.) "Courts must . . . independently judge the text of a statute [or
ordinance], taking into account and respecting the agency's interpretation of its meaning,
of course, whether embodied in a formal rule or less formal representation. Where the
meaning and legal effect of a statute [or ordinance] is the issue, an agency's interpretation
is one among several tools available to the court. Depending on the context, it may be
helpful, enlightening, even convincing. It may sometimes be of little worth. [Citation.]
Considered alone and apart from the context and circumstances that produce them,
agency interpretations are not binding or necessarily even authoritative. To quote the
statement of the Law Revision Commission in a recent report, 'The standard for judicial
review of agency interpretation of law is the independent judgment of the court, giving
deference to the determination of the agency appropriate to the circumstances of the
agency action.' " (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19
Cal.4th 1, 7-8; Citizens for Responsible Equitable Environmental Development, at
pp. 1041-1042.)
II
City Council's Approval of the Lease
SDOG contends the city council erred by approving the lease between City and
BH because the evidence is insufficient to support its finding the appraisal of the property
6
was performed by an "independent" fee appraiser within the meaning of section
22.0901.2
A
At the February 26, 2013, meeting of the city council, Robert Gleason, BH's chief
financial officer and general counsel, appeared at the meeting on behalf of BH and
discussed Goodwin's experience, credibility, and independence, stating:
"I would note that Mr. Goodwin has been active in San Diego in the
hospitality business and regionally, particularly in Central and South
America, for over 30 years. He's the past president and Chairman
Emeritus of the International Society of Hospitality Consultants. His
extensive experience, I think at some point, has represented every
hotel property on Mission Bay and probably most of the Port
[District of San Diego] properties, including Princess, Starwood,
Wyndham, Grupo Situr, Marriott, InterContinental, Hilton, and
Hyatt; worked for major financial institutions, including GE Capital,
Goldman Sachs, Strategic Hotel, Deutsche Bank, Equitable Real
Estate Trust, Secured Capital, Wells Fargo, Bank of America,
Lodging Capital partners, Tishman Realty, and Citigroup. So Mr.
Goodwin . . . has extensive situation [sic].
"And I would note, as far as the . . . independence question, just as
when you have refinanced your house or other commercial situations
and the bank has required an appraisal, we paid for Mr. Goodwin's
services. We provided financial information to allow him to perform
his work. But we didn't direct his work. We didn't dictate the
2 On September 18, 2015, City filed a request that we take judicial notice of the
following exhibits: (1) Exhibit A (excerpts from Barron's Dictionary of Real Estate
Terms); (2) Exhibit B (the International Society of Hospitality Consultants Code of
Conduct); (3) Exhibit C (definitions from the Uniform Standards of Professional
Appraisal Practice); and (4) Exhibit D (a DVD of the city council's February 26, 2013,
meeting at which it approved the lease between City and BH). On October 8, we issued
an order stating we would consider City's request for judicial notice concurrently with the
appeal. We now grant City's request to take judicial notice of Exhibit D and deny its
request to take judicial notice of Exhibits A, B, and C.
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outcome of his analysis, and his fee wasn't based on the outcome of
the report. (Italics added.)
Barwick, City's director of real estate assets, stated: "I believe the methodology
[used by Goodwin] was sound. I believe Mr. Goodwin did a very diligent research in
arriving at his numbers, did a discounted cash flow, which I believe is a very reasonable
way to value this property."
Goodwin appeared at the hearing, stating he "probably worked on almost every
hotel here [in San Diego] developed before 2004." City councilmember Zapf asked
Goodwin whether "the Evans family [i.e., BH]" at any time asked him "to skew things in
their favor or anything like that?" Goodwin replied:
"No. [¶] I've worked for competitors. I've worked for competitors
of the Bahia. I've worked for developers. I've worked for financial
institutions. My independence is absolutely my life blood. I cannot
even remotely consider bowing to anything of that nature." (Italics
added.)
Zapf asked Goodwin whether his reputation would be at stake if he provided a valuation
skewed in favor of who paid for it. He replied, "Of course."
City council President Gloria asked Goodwin whether he was "in any way
dependent on—or subject to the control, restriction, modification, or limitation by any
given outside source?" Goodwin replied that he was governed by the specific provisions
of the Code of Conduct of the ISHC [i.e., International Society of Hospitality
Consultants] on conflict of interest and independence. When Gloria asked him whether
anyone influenced his decision or valuation, Goodwin replied, "Absolutely not." When
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Gloria asked him whether BH gave him a specific number to arrive at, Goodwin replied,
"Absolutely not." Gloria asked him:
"During the course of your development of the numbers that we're
looking at and the number we're looking at today, beyond retaining
your services, did they [i.e., BH] direct you any particular way, ask
you to look at anything in a specific manner?"
Goodwin replied, "No." City council included Goodwin's $17.8 million appraisal of the
property in its resolution and then approved the new lease agreement between City and
BH.
SDOG filed the instant amended petition for writ of mandate and complaint for
declaratory and injunctive relief, challenging City's approval of the lease on the ground
that City's approval of the lease did not comply with section 22.0901(a)(3). SDOG
argued Goodwin did not qualify as an independent fee appraiser under the San Diego
Municipal Code because he was retained or otherwise compensated by one of the real
parties in interest (i.e., BH) and the city council's resolution approving the lease did not
contain a statement of the market value of the property as appraised by an independent
fee appraiser or City staff.
The trial court issued a minute order denying the petition because substantial
evidence supported City's finding that Goodwin was an independent fee appraiser and
then entered its judgment against SDOG, denying all relief it sought.
9
B
Based on our review of the record, we conclude there is substantial evidence to
support the city council's implicit finding that Goodwin was an "independent" fee
appraiser within the meaning of section 22.0901(a), which provides:
"No real property belonging to the City shall be leased except in
pursuance of a resolution passed by a majority vote of all members
of the Council, which shall contain the following: [¶] (1) [t]he
reason for leasing such real estate; [¶] (2) [a] description of the real
estate to be leased; [and] (3) [a] statement of the market value of
such real estate as appraised by an independent fee appraiser or City
staff."3 (Italics added.)
Gleason represented to the city council that although BH paid for Goodwin's services and
had provided him with financial information to allow him to perform his appraisal of the
property, BH did not direct Goodwin's work or dictate the outcome of his appraisal, and
his fee was not based on the outcome of his appraisal. Goodwin told the city council that
BH had never asked him "to skew things in their favor or anything like that," explaining
that his independence is his life blood and he could not "even remotely consider bowing
to anything of that nature." He stated his reputation would be at stake if he provided a
valuation skewed in favor of the client who paid for it. Goodwin adamantly stated no one
had influenced his valuation or given him a specific number to arrive at. Goodwin denied
that BH had directed him "to look at anything in a specific manner." Under any
3 It would appear that a more useful appraisal for the city council when it considers
a proposed lease of City's real property would be an appraisal of the fair market rental
value of that property, rather than an appraisal of its "market value" (i.e., fair market sale
value) as required by section 22.0901. The city council may consider amending section
22.0901 in the future to provide for an appraisal of a property's fair market rent.
10
reasonable definition of "independence" adopted for purposes of applying section
22.0901, the above evidence is adequate to support the city council's finding that
Goodwin was an independent fee appraiser within the meaning of that provision.
SDOG asserts we should adopt the definition of "independent" as set forth in
Black's Law Dictionary (10th ed. 2014) at page 88, column 2, i.e., "[n]ot subject to the
control or influence of another . . . ." Assuming arguendo, without deciding, that
definition should apply to the term "independent" as used in section 22.0901, there
nevertheless is substantial evidence to support the city council's finding Goodwin
satisfied that standard for an independent fee appraiser.4 The evidence summarized
above provides adequate support for a finding by the city council that Goodwin was not
subject to the control or influence of BH or anyone else and was therefore an independent
fee appraiser.
Contrary to SDOG's argument, the purported lack of "unbiased" evidence does not
show there is insufficient evidence for that finding by the city council. The statements by
Gleason and Goodwin are not necessarily deemed incredible, unreliable, and/or
untrustworthy simply because they may have been self-serving, as SDOG argues. (Jutzi
v. County of Los Angeles (1987) 196 Cal.App.3d 637, 653.) Rather, the city council
4 For purposes of deciding this appeal, we need not, and do not, decide the specific
definition of "independent" under section 22.0901. Rather, because under any reasonable
interpretation of that term, based on its plain and ordinary meaning, the city council could
determine Goodwin was an "independent" fee appraiser under that ordinance, we need
only decide whether there is substantial evidence to support its finding that he was, in
fact, an independent fee appraiser.
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could rationally consider the purported self-serving nature of their statements and
nevertheless conclude they provided sufficient evidence of Goodwin's independence. To
the extent SDOG cites evidence and/or inferences from the evidence that would have
supported a contrary finding by the city council, it misconstrues and/or misapplies the
substantial evidence standard of review. (Pedro v. City of Los Angeles, supra, 229
Cal.App.4th at p. 99; Schutte & Koerting, Inc. v. Regional Water Quality Control Bd.,
supra, 158 Cal.App.4th at p. 1384.) The fact that BH paid Goodwin to perform the
appraisal does not necessarily show he was not independent, as SDOG argues.
To the extent SDOG argues section 22.0901 requires an appraiser to be an "MAI"
(member of the Appraisal Institute) appraiser in order to be an "independent" fee
appraiser under its provisions, SDOG does not cite any case or other authority holding,
and does not otherwise persuade us, that an appraiser cannot be considered independent,
whether under section 22.0901 or otherwise, unless he or she is a member of a particular
appraisal organization (e.g., an MAI appraiser).
To the extent SDOG argues the term "independent" under section 22.0901 should
be interpreted in the same manner as it is applied in the lease agreement between City and
BH, we disagree. As SDOG notes, the lease agreement provides that future rent
adjustments are to be determined by a "qualified professional independent real estate
appraiser." It further provides the appraiser shall be selected by the mutual consent of
City and BH from a list of appraisers approved by City. However, if the parties do not
agree on a particular appraiser, then City and BH shall each select an appraiser and those
two appraisers shall select a third appraiser to make the rent adjustment. Contrary to
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SDOG's assertion, the lease agreement's procedure for making future rent adjustments
has little relevance to, and does not establish, the meaning of an "independent" fee
appraiser under section 22.0901. First, because the lease agreement was entered into by
the parties after section 22.0901 was originally adopted and subsequently amended, its
use of the term "independent" cannot be determinative of the legislative intent underlying
section 22.0901. Second, although the lease agreement uses the term "independent"
appraiser, it further provides a mechanism for selecting an "independent" appraiser from
a presumably large base of qualified "independent" appraisers.5 To the extent SDOG
argues that mechanism should be made part of the definition of an "independent" fee
appraiser in section 22.0901, we disagree. Absent an express provision in that ordinance,
it cannot be reasonably inferred the city council intended "independent," as used in that
ordinance, to require a potentially complex method for selecting an appraiser, rather than
simply any qualified "independent" appraiser.
Contrary to SDOG's assertion, the fact City's attorney declined to provide an
opinion whether Goodwin was an "independent" fee appraiser under section 22.0901
does not support a reasonable inference that he was not an independent fee appraiser.
Rather, the question of whether Goodwin was an "independent" fee appraiser under
section 22.0901 was a question of fact for the city council, as the legislative body
5 Likewise, although SDOG does not expressly so argue, we also do not believe the
term "independent" fee appraiser as used in section 22.0901 should be limited to only an
appraiser contained on the list of appraisers approved by City to which the lease
agreement refers.
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approving the proposed lease, to decide. Although City's attorney apparently attempted
to assist the city council with its understanding of the applicable standard for
"independent," the ultimate question of fact of whether Goodwin was an "independent"
fee appraiser was not a question for City's attorney to decide. As we concluded above,
there is substantial evidence to support the city council's finding that Goodwin was an
"independent" fee appraiser within the meaning of section 22.0901.6
Finally, contrary to SDOG's apparent assertion, no independent corroboration of
Goodwin's appraisal was required by section 22.0901 for the city council to approve the
lease between City and BH. Although Barwick ultimately agreed with Goodwin's
methodology and implicitly concurred with his appraisal, corroboration of Goodwin's
appraisal by Barwick or any other person was not required for the city council to approve
the lease.
Because there is substantial evidence to support the city council's finding Goodwin
was an independent fee appraiser within the meaning of section 22.0901, we conclude
SDOG has not carried its burden to show the city council abused its discretion by
approving the lease between City and BH.7
6 Because we do not rely on San Franciscans Upholding the Downtown Plan v. City
and County of San Francisco (2002) 102 Cal.App.4th 656 in disposing of this appeal, we
need not, and do not, address SDOG's discussion of that case in its appellant's opening
brief.
7 To the extent SDOG separately argues City was bound to follow section 22.0901,
it has not carried its burden on appeal to persuade us City did not do so in the
circumstances of this case.
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III
BH's Request for Sanctions Against SDOG
In its respondent's brief, BH requests that we impose sanctions against SDOG for
its purportedly frivolous appeal in this matter. We have considered SDOG's arguments in
this appeal and decline to impose sanctions against it. (Code Civ. Proc., § 907; Avila v.
Continental Airlines, Inc. (2008) 165 Cal.App.4th 1237, 1261.)
DISPOSITION
The judgment is affirmed.
McDONALD, Acting P. J.
WE CONCUR:
O'ROURKE, J.
IRION, J.
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Filed 3/16/16
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
SAN DIEGANS FOR OPEN D067578
GOVERNMENT,
Plaintiff and Appellant,
(Super. Ct. No.
v. 37-2013-00042425-CU-TT-CTL)
CITY OF SAN DIEGO, ORDER CERTIFYING OPINION
FOR PUBLICATION
Defendant and Respondent;
BH PARTNERSHIP,
Real Party in Interest and Respondent.
THE COURT:
The opinion in this case filed March 2, 2016, was not certified for publication. It
appearing the opinion meets the standards for publication specified in California Rules of
Court, rule 8.1105(c), the request pursuant to California Rules of Court, rule 8.1120(a)
for publication is granted.
IT IS HEREBY CERTIFIED that the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c); and
ORDERED that the words "Not to Be Published in Official Reports" appearing on
page 1 of said opinion be deleted and the opinion herein be published in the Official
Reports.
McDONALD, Acting P. J.
Copies to: All parties
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