Lucky Dogs LLC v. City of Santa Rosa

913 F. Supp. 2d 853, 2012 WL 6679677, 2012 U.S. Dist. LEXIS 181304
CourtDistrict Court, N.D. California
DecidedDecember 21, 2012
DocketNo. C 10-03381 CRB
StatusPublished
Cited by4 cases

This text of 913 F. Supp. 2d 853 (Lucky Dogs LLC v. City of Santa Rosa) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lucky Dogs LLC v. City of Santa Rosa, 913 F. Supp. 2d 853, 2012 WL 6679677, 2012 U.S. Dist. LEXIS 181304 (N.D. Cal. 2012).

Opinion

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT;

GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

CHARLES R. BREYER, District Judge.

Plaintiff Lucky Dogs LLC and former plaintiff David Spangenberg brought suit against the City of Santa Rosa and others in connection with the taxes levied on Lucky Dogs and the process by which Santa Rosa imposes tax penalties. See generally FAC (dkt. 26). On September 9, 2011, the Court had an initial hearing on a motion for partial summary judgment, brought by Plaintiff (dkt. 52), a motion for summary judgment, brought by the City of Santa Rosa (dkt. 39), and a motion to [855]*855dismiss, brought by the City of Napa (dkt. 32). See 9/9/11 Transcript. At that hearing, the Court resolved a number of issues — and granted the motion to dismiss— but did not reach the bulk of the summary judgment motions, directing the parties to return after the completion of an administrative hearing. See id. The hearing has now taken place, and the parties have returned to ask the Court to resolve the summary judgment motions. As explained below, the Court GRANTS IN PART Plaintiffs Motion, and GRANTS IN PART Santa Rosa’s Motion.

I. BACKGROUND

Plaintiff Lucky Dogs owns two apartments in Santa Rosa, California. Statement of Undisputed Facts at 1. Former plaintiff David Spangenberg is Lucky Dogs’s agent for process. Id. Non-party. Main Street Management is an apartment rental company based in Napa, with a business license from Napa. Id. at 2. It manages the two Santa Rosa apartments owned by Lucky Dogs. Id.

On May 5, 2010 Spangenberg received in the mail from Santa Rosa an Administrative Notice and Order for a Hearing scheduled for April 21, 2010. Id. at 4. The Notice and Order identified Spangenberg and Lucky Dogs as “Responsible Party.” Id. It stated:

YOU ARE FURTHER ORDERED to appear at an Administrative Hearing to determine whether penalties and costs should be imposed against you. The hearing is scheduled for April 21, 2010 at 1 p.m. in the City Council Chambers at 100 Santa Rosa Ave., 2nd floor Santa Rosa, CA. Any penalties and costs assessed against you at this hearing may constitute a special assessment lien against the real property on which the violation occurred. In addition, your failure to comply with these Orders may result in additional penalties and costs being assessed against you.

Id. (emphasis added). The hearing had already taken place.

The City’s hearing officer, Lynda Millspaugh, issued her Administrative Enforcement Orders in both cases on May 21, 2010. Id. The Order identified Spangenberg and Lucky Dogs LLC as the “Responsible Party.” Id. The Administrative Enforcement Order stated that “A hearing was held on April 21, 2010, before the undersigned regarding violations alleged by the City of Santa Rosa (“City”) ... No one appeared on behalf of the Responsible Party ... The City has complied with all applicable notice requirements.” Id. at 4-5. The Order concluded that there was substantial evidence that the Responsible Party had conducted a business in Santa Rosa without paying business tax for the years 2007-2010. FAC Ex. H at 1. It assessed numerous costs, fees, and fines against Plaintiff, including assessed fees of $689.20 and $565.34, administrative costs of $738.83, and Millspaugh’s costs of $273.82. FAC Exs. H and I.

Millspaugh is a lawyer contracted to furnish hearing officer services to Santa Rosa at $200.00 per hour. Statement of Undisputed Facts at 3. Millspaugh began such work in May 2004. Id. at 3-4. The contract under which she was operating during the events described above ran from July 1, 2008 through June 30, 2010. See Fritsch Decl. Ex. D. The City renewed her contract for a term of July 1, 2010 through June 30, 2012. Millspaugh Decl. Ex. T.1 “In late 2011, [Millspaugh] determined to [856]*856fully retire and end [her] work as a contract Hearing Officer for the County of Sonoma and City of Santa Rosa when [she] completed [her] 2012 calendar for each agency, [she] communicated [her] intentions to City of Santa Rosa Senior Code Enforcement Officer Michael Reynolds well before April 18, 2012.” Millspaugh Decl. ¶ 6.

Plaintiff and Spangenberg brought suit against Santa Rosa, Napa, field collection representative Wayne Gornowicz, and Millspaugh. FAC ¶¶ 5-8. They alleged due process violations relating to Santa Rosa’s process for imposing tax penalties (specifically they complain that they were not given an opportunity to be heard, that Millspaugh has a financial interest in the outcome of the proceeding, that Millspaugh was unilaterally selected, and that no evidence supported the filing and prosecuting of charges against them) and they sought a declaratory judgment as to whether Napa or Santa Rosa is owed business taxes on the Santa Rosa apartment income. Id. ¶¶ 19-47. Plaintiff and Santa Rosa each moved for summary judgment, and Napa moved to dismiss.

At the September 9, 2011 hearing on all three motions, the Court granted the motion to dismiss and addressed some issues in connection with the motions for summary judgment, but held that “the hearing officer may rule in favor of the plaintiffs” and that if that happened, “Lucky Dogs doesn’t have standing to complain about an unfair hearing officer who rules in their favor.” 9/9/11 Transcript at 4, 12-13. The Court found that “the appropriate thing to do ... is for me to stay the action, pending a hearing, which they’ve requested, and the outcome of the hearing.” Id. at 15.

The City scheduled two such hearings before two of its other hearing officers, only to cancel the hearings the day before they were to occur. Spangenberg Deck ¶¶ 2-3.2 The City scheduled the hearing for a date on which Millspaugh was to preside over the hearing. Id. ¶ 3. Millspaugh ultimately held a hearing as to the two Lucky Dogs properties.3 At the hearing, Millspaugh advised Lucky Dogs “that the Hearing Officer previously had determined to retire and cease work in 2012 as a contract Hearing Officer for City of Santa Rosa, and that the Hearing Officer had notified staff that she did not intend to undertake contract Hearing Officer work for City of Santa Rosa in the future.” Millspaugh Deck ¶ 8. Spangenberg maintained Lucky Dogs’s objection to the City’s unilaterally selected hearing officer, but proceeded with the hearing. Spangenberg Deck ¶ 3.

On May 30, 2012, Millspaugh issued Administrative Enforcement Orders on the cases, finding:

The record contains substantial evidence that the Responsible Party, by itself or through its appointed agent, Main Street Management, has been carrying on a business in the City of Santa Rosa, [857]*857' and that the Responsible Party is subject to business taxation by the City of Santa Rosa as it conducts a business within the City making it subject to the provisions of SRCC Chapter 6-04. .

Fritsch Deel. Ex. S at 3. The parties each filed supplemental briefs and now ask the Court to resolve their summary judgment motions.

II. LEGAL STANDARD

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Cite This Page — Counsel Stack

Bluebook (online)
913 F. Supp. 2d 853, 2012 WL 6679677, 2012 U.S. Dist. LEXIS 181304, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lucky-dogs-llc-v-city-of-santa-rosa-cand-2012.