San Diegans for Open Government v. City of San Diego

• Court: California Court of Appeal
• Decided: March 16, 2016
• Docket: D067578
• Status: Published

Opinion

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

2 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

4 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

5 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.

7 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

8 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.

11 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

12 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.

13 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.

14 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.

15 Filed 3/16/16 COURT OF APPEAL, FOURTH APPELLATE DISTRICT

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;

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.

Copies to: All parties