Opinion
G061011
07-17-2023
CITY OF COSTA MESA, Plaintiff and Respondent, v. D'ALESSIO INVESTMENTS, LLC, Defendant and Appellant.
Knypstra Zermeno, Bradley P. Knypstra, M. Christopher Hall; Nassie Law and Catherine J. Rowlett for Defendant and Appellant. Jones &Mayer and Amanda A. Pope for Plaintiff and Respondent.
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County 30-2020-01133479, David A. Hoffer, Judge.
Knypstra Zermeno, Bradley P. Knypstra, M. Christopher Hall; Nassie Law and Catherine J. Rowlett for Defendant and Appellant.
Jones &Mayer and Amanda A. Pope for Plaintiff and Respondent.
OPINION
MOTOIKE, J.
When D'Alessio Investments, LLC (D'Alessio) purchased an apartment complex in Costa Mesa, the complex was out of compliance with state and local codes and regulations. The City of Costa Mesa (the City) issued a notice to abate these violations in November 2019, and filed a petition for an order to abate and for appointment of a receiver in February 2020. The trial court granted the petition in October 2021, and appointed a receiver with authority to rehabilitate or raze the property.
D'Alessio filed an appeal from the order appointing the receiver, claiming it was denied due process because it did not have a reasonable opportunity to rehabilitate the property itself. We affirm. The City provided D'Alessio more than a reasonable opportunity to address the identified problems at the property. D'Alessio's constitutional rights were not violated by the appointment of the receiver.
STATEMENT OF FACTS
When the apartment complex was built in 1956, the property had five apartment units in two buildings. D'Alessio acquired the property in 2015, at which time it consisted of 17 units in four buildings.
In January 2019, the City received a complaint from a tenant about substandard living conditions. Code enforcement officers conducted inspections of 10 units at the property and observed numerous code violations. On February 1, 2019, the City wrote to D'Alessio, advising it had "identif[ied] multiple code violations in several of the units," requesting full access to all units for inspection, and asking for a response no later than February 11.
On February 12, 2019, D'Alessio claimed in writing the City lacked probable cause to justify an inspection of every unit on the property and asked the City to provide a list of specific violations to be fixed. The City responded on February 20 that based on the previous inspections there was probable cause for a full inspection and again asked D'Alessio to agree to such an inspection. The City further stated, "[i]t is difficult to specify each fix required unless an inspection is done."
The City obtained an inspection warrant, and code enforcement officers conducted a full inspection in March 2019 along with the City's Chief of Building Inspection, a fire code enforcement officer, and a deputy city prosecutor. They identified multiple violations of the Costa Mesa Municipal Code and the California Health and Safety Code. The City issued a residential notice of violation to D'Alessio on April 16, 2019; the notice of violation specified compliance dates ranging from "[i]mmediately" through May 16, 2019. The notice of violation included reference to the property's violation of zoning, planning, and building regulations, concerning the illegal subdivision of the property's approved units. On May 7, D'Alessio provided a response to each item on the notice of violation. As to the violations based on improper subdivision of the property, D'Alessio stated it needed copies of building documents from the City in order to address these violations.
On May 6, 2019, the City received an anonymous complaint about unpermitted work being performed at the property. After an inspection the same day, the City immediately issued a civil citation and a stop work order, and on May 8 issued a notice of citation requiring compliance by May 18.
After briefing was completed in this appeal and nine calendar days before oral argument, D'Alessio filed a request for judicial notice of various documents supporting a new argument the receiver should never have been appointed because the notice of violation issued by the City was subsequently dismissed by an administrative law judge. This argument was not raised in D'Alessio's appellate briefs nor does it appear to have been made in the trial court. As a general rule, the Court of Appeal will not consider an argument presented for the first time in a reply brief or at oral argument. (Dameron Hospital Assn. v. AAA Northern California, Nevada & Utah Ins. Exchange (2022) 77 Cal.App.5th 971, 982, 997; Rubinstein v. Fakheri (2020) 49 Cal.App.5th 797, 809; City of Palo Alto v. Public Employment Relations Bd. (2016) 5 Cal.App.5th 1271, 1318.) The request for judicial notice is denied.
On August 12, 2019, the City reinspected the property with D'Alessio's consent. The City found some of D'Alessio's corrections had been done improperly. The illegal work that was the subject of the stop work order and citations in May had been completed without permits and the stop work order had been removed from where it had been posted. The City therefore issued and posted a notice to abate on November 13, citing and quoting specific provisions of the City's Municipal Code, the California Building Code, and the Health and Safety Code. The City's notice required the property be brought into compliance by November 16. D'Alessio requested the City "clarify the violations." On November 27, the City responded with a letter containing eight and one-half pages of specific violations of law. The letter noted the majority of these violations had been identified on the notice of violation issued in April 2019. Both the notice to abate and the November 27 letter referenced the illegal subdivision of the property's approved units by citing the applicable zoning, planning, and building regulations. The City provided D'Alessio until December 6 "to bring the Property into full compliance with the law."
On December 11, 2019, the City served on D'Alessio a notice of intent to file a petition for an order to abate and for appointment of a receiver pursuant to Health and Safety Code section 17980.7. D'Alessio again requested a list of specific violations and stated it "want[ed] to cooperate with the City." D'Alessio and the City exchanged multiple communications regarding the violations at the property. On January 24, 2020, the City's counsel wrote to D'Alessio's counsel: "It is clear that your client's view differs from the City's and at this point the City will be proceeding with its case."
PROCEDURAL HISTORY
On February 19, 2020, the City filed a petition for an order to abate a substandard building and for appointment of a receiver. An amended petition, which is the operative pleading, was filed on March 3, 2020.
On August 14, 2020, the court appointed a receiver "for the limited purpose of inspecting the property and reporting back to this Court conditions of such nature that the health and safety of residents or the public is substantially endangered. The report shall also include a ballpark estimate of remediation costs." The limited purpose receiver submitted reports on September 29, 2020 and November 4, 2020.
At a hearing in October 2020, the trial court expressed its opinion D'Alessio had a due process right to have the issue of the number of permitted units decided by a factfinder. At a further hearing the following month, the court requested the parties file supplemental briefs on the issue of D'Alessio's right to a jury trial on the number of permitted units; such briefs were never filed by the parties.
Nevertheless, this issue was addressed in the parties' briefs on the demurrer to the declaratory relief complaint, discussed post.
Instead, in November 2020, D'Alessio filed a declaratory relief complaint against the City, alleging a right to a jury trial on the issue of the number of residential units permitted at the property. (D'Alessio Investments, LLC v. City of Costa Mesa, Orange County Superior Court, case No. 30-2020-01168201.) The trial court sustained a demurrer to the declaratory relief complaint on June 14, 2021, on grounds of abatement because the same cause of action was pending between the same parties in the present lawsuit. An interlocutory judgment was entered on June 21.
This court advised the parties it was considering taking "judicial notice of the following documents from the Orange County Superior Court case entitled D'Alessio Investments LLC v. City of Costa Mesa, case No. 30-2020-01168201: (1) minute order, dated June 14, 2021; (2) order sustaining defendant City of Costa Mesa's demurrer to complaint for declaratory relief, dated June 21, 2021; and (3) interlocutory judgment, dated June 21, 2021." Neither party objected. On our own motion, we will take judicial notice of the foregoing documents.
On October 4, 2021, the court granted the petition for an order to abate and appointed the receiver. A formal written order was signed by the court on November 5, 2021. D'Alessio filed a motion for reconsideration. Before the hearing on the motion for reconsideration, D'Alessio filed a notice of appeal.
DISCUSSION
An order appointing a receiver is reviewed for abuse of discretion. (City of Crescent City v. Reddy (2017) 9 Cal.App.5th 458, 466 (Reddy).) "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.]" (Ibid.) While in other contexts the appointment of a receiver is considered a drastic remedy that should not be used unless other less intrusive remedies are inadequate or unavailable (see Medipro Medical Staffing LLC v. Certified Nursing Registry, Inc. (2021) 60 Cal.App.5th 622, 628), "Health and Safety Code section 17980.7 contains no such requirement. The Legislature presumably concluded that uncorrected substandard building conditions present a sufficient danger to justify appointment of a receiver without regard to less invasive alternatives. [Citations.]" (Reddy, supra, 9 Cal.App.5th at p. 467.)
The purpose of the State Housing Law (Health and Safety Code section 17910 et seq.) is to "protect the health and safety of residents who might be substantially endangered by unsafe building conditions." (City and County of San Francisco v. Jen (2005) 135 Cal.App.4th 305, 311; accord, City of Santa Monica v. Gonzalez (2008) 43 Cal.4th 905, 912 (Gonzalez).) Under Health and Safety Code section 17980.6, the local code enforcement agency may issue an order or notice to repair or abate if a building violates the State Housing Law or the state building standards or other rules and regulations adopted pursuant to the State Housing Law. (See County of Sonoma v. Quail (2020) 56 Cal.App.5th 657, 677.) If the building's owner fails to comply with the terms of the order or notice issued under Health and Safety Code section 17980.6, the local code enforcement agency may request a court order imposing penalties, negating state tax deductions for the property's owner, requiring the property owner to pay for relocation of tenants, or appointing a receiver. (Health &Saf. Code, § 17980.7; see County of Sonoma v. Quail, supra, 56 Cal.App.5th at p. 677.) "Before it appoints a receiver under [Health and Safety Code section 17980.7], the court must determine (1) whether the owner of the property received constitutionally adequate notice and an opportunity to correct the health and safety violations within a reasonable amount of time, and (2) whether the person nominated to be appointed as a receiver has the capacity and expertise to develop and supervise a viable financial and construction plan for the rehabilitation of the property." (City of Desert Hot Springs v. Valenti (2019) 43 Cal.App.5th 788, 790.) Health and Safety Code section 17980.7, subdivision (c)(4) sets forth the specific powers and duties of the receiver.
Notably, the trial court's role in the process is not to determine whether the violations occurred but rather to provide the necessary tools to force the property owner to comply with the notice or order issued by the local enforcement agency. D'Alessio's argument it was entitled to time after the trial court granted the petition to correct the problem of illegal subdivision of units on the Property before a receiver could be appointed misstates the law and misinterprets Health and Safety Code sections 17980.6 and 17980.7. Whether the time to repair was reasonable is judged from the time the City properly issued the notice or order to repair or abate. In this case, the notice to repair was issued on November 13, 2019, and the petition was filed three months later on February 19, 2020. The court ordered the appointment of the receiver on October 4, 2021, 23 months after issuance of the notice to repair.
Even if D'Alessio was misled by the trial court's statement regarding the availability of a jury to decide the issue of the number of permitted units, 11 months passed between the issuance of the notice to repair (November 2019) and the hearing at which the trial court first made that incorrect statement (October 2020), and a further three and one-half months passed after the trial court sustained the demurrer to the declaratory relief complaint (with the demand for a jury trial) (June 2021) and before the receiver was appointed by the court (October 2021). D'Alessio was provided more than a reasonable opportunity to correct the violations at the property before the receiver was appointed.
The trial court's inaccurate statement of law is not the law of the case, as argued on appeal by D'Alessio. (See Newport Harbor Offices & Marina, LLC v. Morris Cerullo World Evangelism (2018) 23 Cal.App.5th 28, 40 [when appellate court states principle or rule of law necessary to its decision, that becomes the law of the case in further proceedings in trial and appellate courts].)
Reddy, supra, 9 Cal.App.5th 458 supports this conclusion. In that case, the notice and order to abate or repair gave the property owner 30 days to correct 76 code violations. (Id. at p. 466.) The city sought appointment of a receiver 18 months later, "unquestionably a reasonable time within which to bring the property into compliance." (Ibid.)
D'Alessio cites Gonzalez, supra, 43 Cal.4th 905 to show the trial court denied him due process because it did not provide him with a reasonable period of time in which to comply before appointing the receiver. That case actually supports our conclusion there was no due process violation. In Gonzalez, the property owner was served with a notice and order to comply regarding outstanding code violations in May 2002. (Id. at p. 914.) Two and one-half years later, in December 2004, when the violations had not been corrected, the City of Santa Monica filed a petition for appointment of a receiver. (Id. at pp. 914-915.) One month later, in January 2005, the court issued an order appointing a receiver and granted him full powers including the power to rehabilitate or demolish the property. (Id. at p. 916.)
While it is true the property in Gonzalez was first the subject of a civil nuisance lawsuit in 1989 and the property owner had been subject to criminal complaints and other legal matters since then, for purposes of determining the due process question, the Court of Appeal held the "relevant time[] beg[an] with the date the City personally served its May 21, 2002 Notice and Order to Comply." (Gonzalez, supra, 43 Cal.4th at p. 929.)
In its reply brief on appeal and at oral argument, D'Alessio argued new legislation regarding applications for permits to create accessory dwelling units means the unpermitted additional units at the property were per se not a nuisance. Accessory dwelling units are not an issue in this case. D'Alessio's request this court take judicial notice of Senate Bill No. 897 (Stats. 2022, ch. 664) and the laws it added and amended. This request is denied as these documents are not relevant to the issues in this appeal. We note that when a building is declared a nuisance, the local code enforcement agency obtains jurisdiction to raze or remove the building 30 days after the notice of nuisance is posted, unless the nuisance is abated within the 30-day period. (Cal. Code Regs., tit. 25, §§ 54, 66.)
D'Alessio does not argue the trial court's decision was not supported by substantial evidence or that its appointment of a receiver was based on an error of law. (See Reddy, supra, 9 Cal.App.5th at p. 466.) The declarations submitted by the City in support of the petition and motion to appoint the receiver fully support the need for a receiver. The declarations submitted by D'Alessio in opposition contradict the City's declarations. Given the substantial evidence standard of review, however, the City's evidence supports the order.
DISPOSITION
The order is affirmed. Respondent to recover costs on appeal.
WE CONCUR: BEDSWORTH, ACTING P. J. GOETHALS, J.