City of Costa Mesa v. Enclave Assets CA4/3

Filed 6/1/23 City of Costa Mesa v. Enclave Assets CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
CITY OF COSTA MESA,
Plaintiff and Respondent, G061200
v. (Super. Ct. No. 30-2021-01210115)
ENCLAVE ASSETS, LLC et al., OPINION
Defendants and Appellants.
Appeal from an order of the Superior Court of Orange County, Layne H.
Melzer, Judge. Affirmed.
Frank A. Weiser, for Defendants and Appellants.
Jones & Mayer, Amanda A. Pope and Robert L. Wakefield, for Plaintiff
and Respondent.
* * *
“Sections 17980.6 and 17980.7 of the Health and Safety Code compose a
statutory scheme providing certain remedies to address substandard residential housing
that is unsafe to occupy. Pursuant to section 17980.6, an enforcement agency may issue a
notice to an owner to repair or abate property conditions that violate state or local
building standards and substantially endanger the health and safety of residents or the
public. Section 17980.7 provides that, if the owner fails to comply with the notice
despite having been afforded a reasonable opportunity to do so, the enforcement agency
may seek judicial appointment of a receiver to assume control over the property and
remediate the violations or take other appropriate action.” (City of Santa Monica v.
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Gonzalez (2008) 43 Cal.4th 905, 912, fn. omitted.) Here, after appellants Enclave
Assets, LLC and David Brent Adams failed to timely comply with a Notice to Abate, the
City of Costa Mesa (the City) filed a petition seeking an appointment of a receiver
pursuant to section 17980.7. The trial court granted the petition and appointed a receiver.
Appellants challenge the order on numerous grounds, but as discussed below, we
conclude they failed to affirmatively establish error. Accordingly, we affirm.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. Receivership Petition
On July 12, 2021, the City filed a petition seeking an “Order to Abate
Substandard Building and Appointment of Receiver” (the Receivership Petition). The
Receivership Petition alleged that following a small fire at the subject property (the
property) in April 2019, the City discovered the property had been illegally subdivided
and used as an unpermitted sober living facility. A subsequent City inspection in May
2019 revealed further state law and City Municipal Code violations including, among
others, unpermitted kitchen and laundry room additions and two structurally unsound
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All further statutory references are to the Health and Safety Code, unless otherwise
stated.
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balconies. Over the following months, the City received, but rejected, proposed plans for
the property because the plans did not address the violations.
On August 31, 2020, the City sought, but was refused, consent to perform
an inspection of the property. On March 8, 2021, pursuant to an inspection warrant, City
Code Enforcement Officer Winston Kagura inspected the property. Officer Kagura
observed that (1) the previously cited violations still existed, and (2) portions of the
property had been changed without the required zoning approvals or building permits.
Based on the March 2021 inspection, on April 14, 2021, the City issued a Notice to Abate
pursuant to section 17980.6. Finally, the petition alleged that in the following months the
property’s owner has taken no action to remedy the violations or health and safety
hazards identified in the Notice to Abate.
The Receivership Petition attached a declaration from Officer Kagura, who
is the Code Enforcement Officer assigned to the property. According to Kagura, the
permits on file show the property should have two single-family residences. However,
Kagura’s May 20, 2019 inspection following the fire revealed three kitchens in the front
unit. The inspection also revealed two structurally unsound balconies, as well as
unpermitted plumbing and electrical work. Following this inspection, Kagura informed
Adams that he needed to remove the two kitchens and later sent a Notice of Violations.
During July and August of 2019, Adams submitted plans to legalize the additions, but the
plans were rejected as inadequate. Subsequently, the COVID-19 pandemic greatly
restricted the City’s ability to continued code enforcement activities.
On August 31, 2020, Kagura contacted Adams to ask if he could inspect the
property to see if any progress had been made to correct the previously noted violations.
After Adams refused to grant consent, Kagura obtained an inspection warrant and
conducted a full inspection on March 8, 2021. Kagura observed that Adams had failed to
abate any of the prior violations. He also noted that new work had been done, including
“structural, electrical and plumbing changes all of which is substantially dangerous to any
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occupants.” Based on the violations noted, the City issued a Notice to Abate, which
Kagura posted on the property on April 14, 2021. Finally, Kagura stated that as of the
date of his declaration (July 12, 2021), no action has been taken to abate any of the
violations identified in the Notice to Abate despite having over two months to do so since
the issuance of the Notice to Abate and over two years since the City’s code enforcement
efforts began.
B. Opposition to Receivership Petition
On December 3, 2021, appellants opposed the Receivership Petition. They
argued the petition was procedurally defective because the City did not provide notice to
the occupants of the property as required by section 11573.5. They further argued the
petition was “premature and should await proper discovery as to whether evidence
gathered by the police [sic] violated defendants’ Fourth Amendment rights.” Appellants
also claimed they would suffer irreparable injury if the property was closed and a receiver
appointed because the property was their main source of income. Finally, appellants
contended that appointment of a receiver was not necessary because they “are willing to
correct any alleged code violations if necessary.”
In a supporting declaration, respondent Adams stated he is a principal
member of Enclave Assets, LLC, and he owns and operates through Enclave the
property. The property is a “vital source of income.” In April 2019, as a result of a fire
on the property, City officials entered without his consent or a court order or a warrant
and inspected the property. Subsequently, the City issued administrative citations for
code violations. Adams denied any code violations and requested an administrative
appeal, which the City has refused to provide. He also requested the filed plan
documents regarding the property, but claimed the City informed him that the documents
regarding the permitted work on the property prior to Adams’s purchase of the property
were lost and could not be retrieved. Adams also stated his belief that the May 5, 2021
inspection “was not limited to an administrative inspection of the property but for the
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purposes of a criminal investigation.” Finally, he stated that without waiving any of his
objections, “if there are in fact code violations that I am legally responsible for, I can
correct them myself under the Court’s supervision, and I respectfully request that I be
given an opportunity to do so instead of appointing a receiver.”
C. Reply
In reply, the City argued it was not required to comply with the notice
requirements of section 11573.5 because it is not seeking an injunction or temporary
restraining order under section 11573, but rather an order to abate and appointment of a
receiver pursuant to section 17980 et seq. The City asserted it complied with all the
required notice under section 17980 et seq. The City further argued the constitutionality
of the inspection warrant was not relevant to the instant matter, but could be addressed in
a separate proceeding. Moreover, the City claimed appellants already had filed a Federal
Civil Rights Action based on the inspection and administrative citations, but the action
was dismissed for failure to prosecute. The City also argued that it has shown
appointment of a receiver is necessary, and “[r]espondents have had every opportunity to
present contrary evidence and have failed to do so.”
D. Order Appointing Court Receiver
On December 16, 2021, the trial court issued a minute order granting the
Receivership Petition. The court found the “City has demonstrated that there are
significant and ongoing housing and building code violations at the Subject Property, . . .
and that these violations pose a serious risk to the health and safety of any occupants and
the public. The City has also demonstrated that [respondents] have been afforded a
reasonable opportunity to correct the conditions at the Subject Property but ha[ve] failed
to do so. The City has been attempting to gain compliance on the Subject Property since
at least April 2019. . . . Despite the passage of over two years, [r]espondents have failed
to show that even a single correction has been made to the Subject Property.” The court
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was not “persuaded by [r]espondents’ assertion that they can [correct] the violations
without the appointment of a receiver.”
On January 18, 2022, the trial court issued the order appointing a receiver.
In the order, the court found that respondents “have been afforded their procedural due
process rights guaranteed by the California Constitution and the United States
Constitution, including, but not limited to, receipt of the Notices [of Violations] and an
adequate and reasonable period of time to comply with those notices, as well as notice
and a reasonable opportunity to be heard in connection with the City’s petition.”
II
DISCUSSION
A. Standard of Review
Appellants contend the trial court erred in appointing a receiver over the
property. “We review an order appointing a receiver for abuse of discretion. [Citation.]
An abuse of discretion is demonstrated if the court’s decision was not supported by
substantial evidence or the court applied an improper legal standard or otherwise based
its determination on an error of law. [Citation.] ‘As to factual issues, “we determine
whether the record provides substantial evidence supporting the trial court’s factual
findings. [Citation.] Applying the substantial evidence test on appeal, we may not
reweigh the evidence, but consider that evidence in the light most favorable to the trial
court, indulging in every reasonable inference in favor of the trial court's findings and
resolving all conflicts in its favor. . . . We uphold the trial court's findings unless they so
lack evidentiary support that they are unreasonable.”’” (City of Crescent City v. Reddy
(2017) 9 Cal.App.5th 458, 466.)
To the extent appellants’ arguments present a matter of statutory
construction we apply a de novo review. (City and County of San Francisco v. Jen
(2005) 135 Cal.App.4th 305, 310.) “The fundamental purpose of statutory construction is
to ascertain the intent of the lawmakers so as to effectuate the purpose of the law.
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[Citation.] ‘We begin by examining the statutory language, giving the words their usual
and ordinary meaning. [Citation.] If there is no ambiguity, then we presume the
lawmakers meant what they said, and the plain meaning of the language governs.
[Citation.] If, however, the statutory terms are ambiguous, then we may resort to
extrinsic sources, including the ostensible objects to be achieved and the legislative
history. [Citation.] In such circumstances, we “‘select the construction that comports
most closely with the apparent intent of the Legislature, with a view to promoting rather
than defeating the general purpose of the statute, and avoid an interpretation that would
lead to absurd consequences.’”’” (Ibid.)
Finally, “[t]o prevail on appeal, an appellant must establish both error and
prejudice from that error. [Citation.] In order to demonstrate error, an appellant must
supply the reviewing court with some cogent argument supported by legal analysis and
citation to the record. Rather than scour the record unguided, we may decide that the
appellant has forfeited a point urged on appeal when it is not supported by accurate
citations to the record. [Citations.] Similarly, we may disregard conclusory arguments
that are not supported by pertinent legal authority. [Citations.]” (WFG National Title
Insurance Company v. Wells Fargo Bank, N.A. as Trustee for Park Place Securities, Inc.
Asset-Backed Pass-Through Certificates, Series 2005-WCW2 (2020) 51 Cal.App.5th 881,
894-895.)
B. Appellants Have Not Established Error
Appellants contend the trial court should have denied the Receivership
Petition because: (1) the City failed to provide notice to the occupants of the real property
pursuant to section 11573.5; (2) the court should have deferred ruling on the petition until
there was “proper discovery” as to whether the evidence presented in the petition was
gathered in violation of appellants’ Fourth Amendment rights; (3) the petition should be
denied because appellants would suffer irreparable injury from the closure of the
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property; and (4) appointment of a receiver was not necessary. We address each
argument in turn.
Section 11573.5 provides that a temporary restraining order (TRO) or
injunction issued pursuant to section 11573 “may include closure of the premises pending
trial when a prior order or injunction does not result in the abatement of the nuisance.”
(§ 11573.5, subd. (b).) Subdivision (c) of section 11573.5 provides: “In making an order
of closure pursuant to this section, the court may order the premises vacated . . . .
However, all tenants who may be affected by the order shall be provided reasonable
notice and an opportunity to be heard at all hearings regarding the closure request prior to
the issuance of any order.” Appellants do not provide any case authority holding that the
notice to tenants pursuant to section 11573.5 applies to an order appointing a receiver
pursuant to section 17980.7. The plain language of section 11573.5 suggests otherwise,
as the notice to tenants is directly related to “an order of closure pursuant to this section,”
i.e., a closure order pursuant to section 11573.5. Thus, appellants have not shown that
the notice requirement of section 11573.5 applies to an appointment order under section
17980.7. For the same reason, even if the notice to tenants under section 11573.5 “rise[s]
to a federal due process interest,” we are not persuaded that the due process interest is
implicated here.
Next, appellants suggest that the trial court should have deferred ruling on
the Receivership Petition until it determined whether the evidence presented in the
petition was gathered in violation of appellants’ Fourth Amendment rights. Appellants
do not present any case authority that illegally seized evidence cannot be used in a
petition requesting appointment of a receiver under section 17980.7. Appellants cite case
law finding nuisance abatement actions akin to criminal enforcement actions, and argue
that “the exclusionary rule would potentially apply should defendants establish Fourth
Amendment violations.” However, the federal Court of Appeals for the Ninth Circuit has
concluded that the exclusionary rule does not apply to nuisance abatement actions. (See
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Conner v. City of Santa Ana (9th Cir. 1990) 897 F.2d 1487, 1493 [in a case where
inoperative vehicles located on appellants property were found to be a public nuisance
and subsequently removed following hearings, the court rejected appellants’ argument
that “illegally seized evidence—the vehicle identification numbers” of the inoperative
vehicles could not be used as evidence in the pre-seizure hearings].) In sum, appellants
have not shown that the exclusionary rule would apply to a section 17980.7 receivership
petition, even assuming there was evidence of improper entry onto the property.
Appellants next argue that the trial court should have denied the
Receivership Petition because it would cause irreparable injury to appellants, depriving
them of their main source of income and Adams of his sole occupation. Appellants,
however, do not provide any case law holding that irreparable injury is a factor to
consider in determining whether a receiver should be appointed pursuant to section
17980.7. Even if irreparable injury is a factor that should be considered, appellants have
not shown why that factor is dispositive here. For example, in the context of a TRO and
preliminary injunction, irreparable injury may be outweighed by the public interest. (See,
e.g., Winter v. Natural Resources Defense Council, Inc. (2008) 555 U.S. 7, 23 [“[E]ven if
plaintiffs have shown irreparable injury from the Navy’s training exercises, any such
injury is outweighed by the public interest and the Navy’s interest in effective, realistic
training of its sailors”].) Thus, even if appellants can show irreparable injury, they have
not persuaded us that the court abused its discretion in determining that the strong public
interest in protecting occupants and the immediate neighborhood from the safety and
health hazards identified in the notices of violations outweighs appellants’ economic
harm.
Finally, appellants argue appointment of a receiver is not necessary because
Adams had “agreed to make corrections to the property, if necessary,” if the City
provided him with his requested documentation. The trial court was not persuaded by
this argument below, and appellants have not shown why the court erred. Indeed, the
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court’s finding that appellants would not correct the code violations and remedy the
safety and health hazards is amply supported by the fact that appellants have not abated
even one of the violations identified by the City despite the passage of over two years
since the first administrative citation was made. In sum, appellants have not shown any
error in the court’s order appointing a receiver for the property.
III
DISPOSITION
The order of the trial court appointing a receiver is affirmed. The
Respondent, City of Costa Mesa may recover its costs on appeal.
DELANEY, J.
WE CONCUR:
SANCHEZ, Acting P. J.
MOTOIKE, J.
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