gold forb I i pma n

attorneys

( 1300 Clay Street, Eleventh Floor

Oakland, California 94612

510 836-6336

/

M David Kroot · August 12, 2010 John T. Nagle

Polly V. Marshall . . •

. . _ __ _ -Ihe�Honorable._ChtefJusttGe.RonaldM"FGeorge-·�- -�-�---�·

Lynn Hutchins The Honorable Associate Justices Karen M. Tiedemann Supreme Court of California

Thomas H. Webber 350 McAllister Street John T. Haygood San Francisco, CA 94102-4797

Dianne Jackson Mclean

Michelle D. Brewer Re: Embassy LLC v. ·city of Santa Monica Jennifer K. Bell Supreme Court Case No. 8184765, Court of Appeal Case No. B217622

_'_ __ ,RobertL Mills -- - - .. -- - Letter Brief in s�upport ofPetition for Review. -Isabel L. Brown

, James T. Diamond, Jr.

Margaret F. Jung

Heather J. Gould

Juliet E� Cox

William F. DiCamillo

Amy DeVaudreuil

Barbara E. Kautz

Erica Williams Orcharton

Luis A. Rodriguez

Xochitl Carrion

Rafael Yaquian

Dear Chief Justice George and Hon. Justices of the California Supreme Court: ' �-

Pursuant �o Rule 8.500(g) of the California Rules of Court, amicus curiae the League of California Cities respectfully requests that this Court grant the City of Santa Monica's . petition for review of the opinion of the Court of Appeal for the Second Appellate District in Embassy LLC et al. v. City of Santa Monica et al. ("Embassy") (June 14, 201 0) 185 Cal. App. 4th 771 (the "Opinion"). This case merits review to settle important questions of law and to secure unif<;>rmity of decision. Rule 8.500(b)(1).

I The Opinion brings uncertainty to affordable housing agreements and other contracts entered into by cities across California by holding for the first time that the provisions ofthe Ellis Act (Gov't Code§ 7060 et seq.), which allow a landlord to go out of the rental housing business, cannot be voluntarily waived unless pursuant to a contract providing a "direct financial contribution." Embassy, 185 Cal. App. 4th at 776-77.

Josh Mukhopadhyay r The contract in question was a settlement agreement entered into in 2000 by the Plaintiffs and the City,of Santa Monipa to settle a dispute about the permitted uses of the Plaintiff's property, where the Plaintiffs agreed to waive their Ellis Act rights for a-

Facsimile portion of their property. But the sweep of the Opinion may extend far beyond one settlement agreement. Many California cities, like Santa Monica,,have entered into 51 0 836-1 035 contracts with developers who have voluntarily promised to provide affordable rental

Sa'n Francisco housing for 30 years or more in exchange for non-monetary consideration. State law, in 415 788-6336 fact, requires local governments to provide non-monetary regulatory concessions to

_ Los Angeles landlords who have voluntarily offere� to provide affordable rental housing for a 30-

213 627_6336 year period. Gov't Code§ 65915. Developers have also voluntarily agreed to provide --- ------- - -------- --- --affordaole rentatnousing in, excfiangeTor statutory development agreements which vest

San Diego rights in development projects;' Gov''t Code § 65864 et seq. The Opinion's holding could 619 239-6336 have the effect of encouraging litigants to seek to void these promises because the

Gofdfarb & Lipman LLP consideration provided in exchange for the promise to-provide affordable rental housing

990903\1071\866701.2

August 12, 20 1 0 Page 2

___ u __ nFJlS nQ[a_'_�direct financial contribution." Should such1itiga1ion. b_e_s.uc_e_essful,_itwilL ___ u __ _ result in the loss of substantial affordable rental housing in the State.

Review of the Opinion is also necessary to secure uniformity of decision. In Lincoln __ �-�C��--C -C Place.T'en_q11J:fAs.S)1 v. CitygfLosjJ._l1geles(2001),J5.5cC_al. App. 4t��25c(::.Lincoln_� _ ___ __ _

Place"), the Court of Appeal for the Second Appellate District considered the validity of alandlord's promise, memorialized in conditions of approval, to mitigate environmental impacts by promising not to relocate tenants involuntarily, thereby inducing,the City of Los Angeles to approve the redevelopment of a rental housing complex. In a lengthy and well reasoned decision, the Court harmonized three important provisions of State law the Ellis Act, the California Environmental Quality Act (Pub. Res. Code§ 21000 et seq.), anq the Subdivision Map Act (Gov't Code§ 66410 et seq.). The Court held that the landlord's voluntary offer was enforceable even though 1

�nfQl"��lllel1t!llJgbt _a.ffe(:t tli� landlQrd's rights underthe ElliS. Act.. .LJne_oln Place, J 55 Cal. App. 4th at 454-55. � . -

The Opinion, however, considers only the bare language of the Ellis Act, with no analysis of other public objectives or statutes, and the Court refused even to take judicial notice of the underlying settlement agreement. Embassy, 185 Cal. App. 4th at 774 n.3. Had the reasoning of the Opinion been applied to Lincoln Place, the Court may well have reached a contrary result.

Finally, the Opinion is of concern to California's cities because of its implications for challenges to any contract entered into by a city. The Opinion allowed the Plaintiffs to challenge the consideration provided for a contract by writ of mandate without any reference to the underlying contract. Id In fact, the Opinion holds that the lawsuit was not even an action on a contract. Id at 778-79. It further holds that the Plaintiff's claim accrued Ofl:lY when the Plaintiffs sought to breach the contract, even though the same claim could have been made on the day that the Plaintiffs entered into the contract. If ever applied to municipal contracts in the generality, the Opinion could allow the provisions ofany municipal contract to be challenged without reference to the underlying agreement or to the statutory or public policy interests at issue and could effectively result in no limitations period, contrary to nUlnerous decisions of this Court.

Thus, the Cqurt of Appeal's decision urgently requires review for three reasons: First, the Opinion will invite litigation to void requirements for affordable rental housing that has been provided in exchange for non-financial consideration .. Second, review is needed to secure uniformity with Lincoln Place. Third, allowing contractual provisions to be challenged by writ of mandate without reference to the underlying contract and without any limitations period jeopardizes the stability of contracts entered into by

- --ealif-ornia-cities;-------- - - ------------ -- ----- --- - -- - - -- - -- -- - -- - - -

990903\1071\866701.2

August 12, 20 1 0 Page 3

_____ __ _ I._ ______ lnteres� of�micus _______ _

The League of California Cities is an association of 474 California cities dedicated to protecting and restoring local control to provide for the public health, safety, and

_____ ___ �""�lf¥� 2f!h�irJ�§icl�J:!!S,_5ll1<:iJQ��nh€tnC_ec!lw _ql,ll!lity_ q[lj(�Jpr. alLCo'!lifQrnian.S._ Ihe League is advised by its Legal Advocacy Committee, which is comprised of 24 city attorneys from all regions of the State. The Committee monitors litigation of concern to municipalities, and identifies those cases that are of statewide-Or nationwide­significance. The Committee has identified this case a� being of such significance.

II. The Opinion Creates Uncertainty Regarding the Validity of Numerous Existing Affordab,le Housing Agreements for Rental Housing Entered Into for Non-Monetary Consideration

The Ellis Act provides generttllythat:-

"No public entity . . . shall, by statute, ordinance, or regulation, or by administrative action implementing a statute, ordinance, or regulation, compel the owner of any residential real property to offer . . . accommodations in the property for rent or lease . . . " Gov't Code§ 7060(a). (emphasis added).

The Opinion holds baldly that, " a contractual waiver [ofEllis Act rights] is unenforceable," 185 Cal. App. 4th at 777. According to the Opinion, a local agency may enforce a contract requiring a landlord to offer accommodations for tent only pursuant to a contract in strict conformance with the Ellis Act, where the owner has agreed to the provision "in consideration for a direct financial contribution." 1 Gov't Code Section 7060. 1 (a). The Opinion further states, without qualification, that "[Ellis Act waivers] may not be enforced in other contracts. " 185 Cal. App. 4th at 776 (emphasis added).

Yet State law requires lo�al governments�o enter into contracts compelling developers to offer accommodations at affordable rents in exchange for regulatory concessions which do not constitute a "direct financial contribution." Further, developers may offer to provide affordable rental housing to induce local governments to enter into statutory development agreements authorized by Government Code Section 65864, which vest the development under current planning and zoning laws. The consideration for the developer's promise, although valuable, is not a "direct financial contribution."

The Opinion creates uncertainty regarding-the validity of these agreements and could invite wholesale and meritless challenges to contracts negotiated at arm's length.

1 A "direct fmancial contribution" includes "contributions specified_in_S_e_ction_659J6_and _any_form-oL _ interest rate subsidy or tax abatement provided to facilitate the acquisition or development of real property." Gov't Code§ 7060.l(a). Government Code Section 65916 expands this defmition to include "cost of infrastructure, write-down of land costs, or subsidizing the cost of construction."

990903\ I 071\866701.2

August 12, 20 10 Page 4

A. The Court of Appeal's Construction of the Ellis Act Brings The Act Into Conflict With Provisions Of Density Bonus Law Requiring Affordable Rental Housingtor Non-Monetary Consideration

. ·=�c:�. ---� .. _ Ih�S_taty's�nsity�b.Qpl.l§ la.w�(QQyJ�Qde_§Q�215.�1��q.)pmyide�Jh.f;lti[an appli��IDt

·---·---

for a housing development project seeks and agrees to construct a specified percentage of housing affordable to very low or lower-incom,e households, a city "shall" grant one density bonus and certain regulatory concessions and incentives. Gov't Code§ ' .

65915(a). The city "shall" ensure the continued affordability of all of the1low- and very low income units for at least 30 years. If the units are rentals, rents for the 30-year period must be affordable as defined in the Health and Safety Code. Gov't Code § 65915(c)(1).

A "density bonus" is an increase in the permitted density of residential development over the maximum otherwise perinitted by the dty. Gov't Cod.ef659f.S(f)).A "concession or incentive" includes various modifications to local development standards, such as reduced setbacks, increased building height, or fewer parking spaces. Gov't Code Section 65915(k). While these regl!llatory incentives are certainly valuable to the developer, they are not "direct financial contributions." Under the reasoning of the Opinion, a qeveloper desiring to stop renting to low-income tenants before the end of the 30-year period could simply file a petition for a writ of mandate without reference to the underlying agreement. Certainly the purposes of the density bonus statute would be defeated .if the Ellis Act permitted the developer to simply stop renting the affordable housing at any time.

B. The Court of Appeal's Broad Reasoning Creates Uncert�inty Regarding the Validity of Affordable Housing Agreements Where Developers Have Elected to Provide Rental Housing

'

Nearly one-third of California jurisdictions now require that some percentage of homes in new residential developments be afforqable to very low, low, or moderate-ir1come households? The constitutionality of thes'e programs- commonly referred to as 'inclusionary housing' programs- has been upheld in two published decisions of the Court of Appeals. Home Builders Ass 'n ofN. Cal. v. City of Napa (2002) 90 Cal. App. 4th 188; ActionApartmentAss 'n v. City of Santa Monica (2008) 166 Cal. App. 4th 456. Since 1999, inclusionary housing programs have created nearly 30,000 affordable units

2 Non-Profit Housing Association of Northern California, Affordable by Choice: Trends in California . lnclusionary Housing Programs (2007) at 5.

990903\107l \866701.2

I

August 12, 201 0 Page 5

statewide.3 Inclusionary housing programs typically require that homes remain affordable from 30 years to perpetuity.4

Although a city cannot require a developer of rental housing to restrict rents unless the; deyeJQP�t:-rec�iY�S_fiUan£LaLQt:J:�gul�1QD'c9§m§t@C�_ft:gmJhe_cjtr�(-Ciy-'-'CJ>d_�§cl954.51 et seq.; Palmer/Sixth Street Properties L.P. v. City of Los Angeles (2009) 175 Cal. App. 4th 1396), a city mqst allow the developer to provide affordable rental housing in lieu of affordable for.,sale housing. Government Code Section 65589.8 provides that:

"A local government which adopts a requirement in its housing element that a hqusing development contain a fixed percentage of affordable housing units, shall permit a developer to satisfy all or a portion of that requirement by constructing rental housing at affordable monthly rents ... ", (emphasis added)

--its a consequence� 71 percent of units-created through iiiciusionary-liousing-programs are rentals. 5 Although the continued affordability of these rental apartments is enforced through contracts, in many cases those contracts were entered into to comply with local planning regulations, 6 not in consideration for direct financial assistance. Local governments could thus find themselves in the position of being forced to allow developers to provide rental affordable housing in place of ownership housing, but with the risk that a more attractive·use will present itself, and, under the reasoning of the Opinion, the developer will petition for a writ of mandate to go out of the rental housing business altogether. This "Catch-22" result could not havy been intended by the Legislature.

c. The Court of Appeal's Broad/Reasoning Creates Uncertainty Regarding the Validity of Affordab�e Housing Provisions Contained in Statutory Development Agreements -/

Like settlement agreements, development agreement� are contracts freely negotiated between cities and developers. They fix the permitted land uses for a development project and are authorized by statute. Gov't Co,de §§ 65864-65869.5. For the landowner, the chief benefit is the vesting of rights to the city's zoning and planning , regulations in place when the project is approved, providing assurance that the project

4 Id at 27.

5 /d. at 15. The report also found that rental units served the lowest income households, while

homeownership units tended to serve moderate-income households. Id

6 As an additional uncertainty, landlords may claim that these planning regulations "compel" them to

remain in the rental housing business, and thus are impermissible under the Ellis Act, eventhough they

have chosen to provide rental housing.

990903\1071\866701.2

August 12, 201 0 Page 6

may proceed as planned regardless of changes in City Councils or local policies, and making the project much more attractive to lenders and purchasers.7 For a city, "one of the main attractions of a development agreement . . . is that [the city] can negotiate for mitigations it could not otherwise exact."8 "[T]here are few conditions, exactions, or

·.c _c.d.edications.th_atalo_caLgovernmentmay.notJegitimatel)Lbargain.fodnnegotiating.such agreements. "9 Local governments have frequently negotiated for affordable rental

' housing projects.10

While the consideration provided to the developer through a development agreement is quite valuable, it is not a "direct financial contribution." Under the reasoning of the Opinion, a developer's promise to provide a rental affordable housing project for a term of many years could be challenged without reference to the underlying development agreement, years after the developer had constructed the project and received the benefits of his bargain. The l11l{;ert�nty 9r�ated by th�Qpinion r�gar(.iingth.e _

-- ----- -- - ------ --- - --- ---- - --

enforceability ofterms requiring affordable rental housing may well lead cities to avoid such conditions altogether.

The Court of Appeal did not even address (much less resolve) the conflicts with other state laws created by its bare interpretation of the Ellis Act. Amicus curiae respectfully requests that this Court grant review and require thatcontractual provisions implicating the Ellis Act be reviewed in a manner that is harmonized with other provisions of state law and the contract's purposes.

III. The Opinion's Invalidation of Ellis Act Waivers Conflicts with the Decision of the Court of Appeal in Lincoln Place and Creates Uncertainty Regarding the Validity of Landlord's Promises to Mitigate Environmental Effects.

The Opinion creates uncertainty about the continued validity of the reasoning of the decision of the Court of Appeal for the Second Appellate District in Lincoln Place Tenants Ass'n v. City of Los Angeles (2007), 155 Cal. App. 4th 425 ("Lincoln Place"),

7 Daniel J. Curtin, Jr., Exactions, Dedications and Development Agreements Nationally and in California:

When and How Do the Dolan/Nollan Rules Apply? (Reprinted from the Thirty-Third Annual Institute on

Planning, Zoning, and Eminent Domain) (2003) at 2-53 to 2-61.

8 Cecily Talbert Barclay, Curtin's California Land Use and Planning Law, 301h Edition (2010) at 307.

9 David L. Callies, Daniel J. Curtin, Jr., and Julie A. Tappendorf, Bargaining for Development (2003) at

111.

10 Institute for Local Self Government, Development Agreement Manual: Collaboration in Pursuit of _ _ Communif)l.lnterests (2002) at. 28. For examples_of staff r�ports dise..ussing_affor.dahle_housing_prmrisions­

in development agreements, see websites below related to the City of Dublin and City of Santa Paula.

http://www.ci.dublin.ea.us/DepartmentSubLevel2.efm?PL=gov&SL=comm&dsplyiD=807;

http://www .ci.santa-paula.ca. us/ eastareaone/D A %20Handout. pdf

990903\1071\866701.2

""

August 12, 20 10 Page 7

where the Court considered the cJaims of another landlord that desired to break its promise to remain in the rental housing business.

) In 2002, to induce the City of Los Angeles to permit the redeveldpment of existing

_l"�!lt�l ilP�rt_l11_�I1ts, _AIMCO Yen,ezie1, L_LC_ (" AlMQ_Q") £l-grtfed th�t n,gsxis1i1lg tm�t _ . .. · -·-wouldbeinvohmtafily-displaced; andthat every existing tenant would be supplied with

an existing unit or new unit "at the owner's cost." /d. at 433. These promises were made by the developer to mitigate the environmental impacts that involuntary displacement of tenants might cause and attached to the project's vesting tentative map as conditions of approval. Id at 435. Nonetheless, AIMCO proceeded with numerous unlawful detainer actions, id. at 437, arguing that neither the vesting tentative map conditions nor the California Environmental Quality Act ("CEQA") could interfere with its rights under the Ellis Act. In a careful analysis that harmonized the purposes of the Ellis Act, CEQA,

_ �d the �\lbdivision _Map Act, the Court of �ppeal agreed that the conditions were enforceable. /d. at 454-55. '

While the Opinion analyzed an Ellis Act waiver contained in a cont�act, rather than o6e proposed by an owner and then memorialized in conditl.ons of approval, the Court of Appeal was clearly suspicious of any regulation requiring landlords to remain in the rental housing business. Ir;t determining that contracts are "administrative actions" that ·

may "compel" the provision of rental housing, the Opinion notes that: ·- I

"[P]ublic entities, at least some of which have been unenthusiastic about the Ellis Act, cannot avoid its prohibitions by acting through contract, rather than

. through regulation. As appellants argued in the trial court, another reading would, for instance, allow a public agency to condition issuance of a necessary permit on a contract which included an �llis Act waiver, thus avoiding the Act." Embassy, 185 Cal. App. 4th at 776-77/ '

·

The conditions of approval in Lincoln Place were regulations imposed through the "administrative actions" of the City of Los Angeles that "compelled" the landlord to remain in the rental housing business for a perioq of many years. Had the facts in Lincoln Place been analyzed under the reasoning of theOpinion, only the provisions of the Ellis Act would have been reviewed, and the conditions would likely have been found to be unenforceable precisely because they were an administrative acti9n "compelling" the landlord to remain in the rental housing business.11 The conflicts between these cases create uncertainty about the continued validity of conditions of approval similar to those analyzed in Lincoln Place.

\\

This issue is not academic. For instance, the owners of the Park Merced complex in San Erancis.c_o,_.which_c.ontains_oyer_J,5_00_rent ... controlled-apartments,ha¥e-sought-appreval­

\_ 11 The Opinion does not cite Lincoln Place at all.

990903\1071\866701.2

I===--::-_.:--

August 12, 2010 Page 8

to redevelop the site, promising as follows (in words reminiscent of AIMCO's promises):

"We will provide all current residents' rent controlled apartments for as long as -�c� - _they JibQQ:i� tQ li\'�.atJ�_I.lfl@�ercedc'c In additiPJl, ifPlll" plCll1jnyQlxesreplacement�� �� __

-of existing buildings at Parkmerced, any existing resident who lives in a building needing replacement will be provided a brand new rental home. The new apartment home will be rented at the same rent-controlled rate as their existing apartment prior to demolition . . .

"These new apartments would be constructed prior to the replacement of existing apartments. This would ensure that affected residents would need to move only once into a new apartment." 12

Bueifthe Opinion is allb'wed to stand, no City could be certain thafthese promises,-� whether enforced by contract or by conditions of approval as in Lincoln Place, could be enforced once the landlord decided to ignore them. Irbnically,\ the Opinion will likely make it more difficult for owners of rental housing to obtain approval to redevelop their 1

properties because no city can be sure that a landlord's proposal to protect tenants is not simply an effort to bait-and-switch.

IV. The Opinion Could Have the Effect of Impairing the Stability of Local Government Contracts by Allowing a Contractual Provision to be Voided by Writ of Mandate With No Apparent Limitations Period and Without Reference to the Underlying Contract

Finally, the Opinion is of concern to California's cities because of its implications for challenges t9 any contract entered into by a city. IQ. the Opinion, the Court of Appeals:

• Found Ellis Act waiver contained in the �ettlement agreement to be unenforceable but refused to take judicial notice of the settlement agreement itself. Embassy, 185 Cal. App. 4th at 774 n.3, 777.

• Allowed the Plaintiffs to accrue their cause of action merely by seeking to breach the contract, effectively giving future plaintiffs absolute power to control the accrual of their cause of action. Id at 779. '

;

If applied to municipal contracts in the generality, the Opinion could allow the provisions of any municipal contract to be challenged without reference to the underlying agreement or to the statutory or public policy interests at issue and could e{fectively _!�ult_ in _n,() !�i!'!!i�ns per�d_f()_r_ Ptl.�!!�_£<?ntract� __,-_

12 Available at: http://www.parkmercedvision.com/housing/index.html#demolish.

990903\1071\866701.2 I .

August 12, 20 10 Page 9

A. The Opinion's Holding that a Term of a Contract May be Voided by Writ of Mandate Without Reference to the Underlying Contract Impairs the Stability of Public Agency Contracts

In th�Qpinion,,tll.� Coll!i_ of At>P£!1-L r�fu�e_dJQ_ tctk� ill-dici£tLllotigeofthe�cllP.cl�rlying _

-settlement agreement containing the Ellis Act waiver, holding that the case was not an action on a contract. !d. at 774 n.3, 779.

But the contested provision �annot be properly analyzed without reference to the contract. As the City of Santa Monica has ably argued, where there is no express ban on waiver in a statute, important public policy considerations are implicated in determining whether a provision may be waived, which require reference to the underlying purpose of the contract. Moreover, the Opinion's failure to review the contested provision in the context of the entire contract creates additional uncertainty for cities, who cannot be

-- -certain whether tlie courts will review provisions requiring long� term affordabil!ty-of rental housing in the"context of legislation authorizing such provisions (such as density bonus law), as was do�e in Lincoln Place, or simply through the strained interpretation of the Ellis Act contained in the Opinion.

Furt]J.er, this holding could potentially be expanded beyond affordable housing contracts implicating the Ellis Act, conceivably by allowing parties to mount wholesale '

challenges to public contracts by. writ actions, without reference to the underlying agreements. Because only the actions of public agencies g1ay be attacked by writ of mandate, if expanded by a future court, the Opinion could impair the stability of public agency contracts in general, and, as discussed in the next section, allow challenges apparently without reference to relevant statutes of limitation.

Finally, the Court's refusal to review the settlement agreement itself leaves its status in limbo. The Superior Court below considered Plaintiffs' claim to be one for rescission of the settlement agreement since it rendered the City of Santa Monica's consideration almost entirely void. But the Opinion does not resolve whether the entire settlement agreement is void (and the dispute reopened) or whether Santa Monica must sue for breach or rescission, or whether the contract remains intact, with only the severed portion removed. Thus, the

icase is not resolved and will likely continue to generate

competing claims, unnecessarily consuming scarce judicial resources.

B. The Opinion's Holding that a Settlement Agreement May Be Subject to an Almost Unlimited Limitations Period for Challenges Impairs the Stability of Settlement Agreements and Other City Contracts.

On its face, the Qt>inion appears to deal with the validity_of_the_term_ofa_written_ settlement agreement. The limi�ations period for an action on such a written document is four years. Civ. Proc. Code§ 337. Since the settlement agreement was entered into in

990903\1071\866701.2

August 12, 2010 Page 10

2000, the Plaintiffs' failure 1to file suit until 2008 seems clearly barred by the statute of limitations. Yet, in discussing this issue, the Court of Appeal held only that,

"this is not an action on a contract. It is a mandamus proceeding .. �there could _ hay�J���_I111()�ill1¥td_a.mg�Rroge�ding,_anci_nQcG.aJ.l�e�Qf,a£tio!l,_U11til_[Plaintiffs].� __ c ___ -sought to remove their tenant units from the rental market." Embassy, 185 Cal. App. 4th at 779.

This sweeping holding, with almost no analysis, would permit any party who is unhappy with an agreed-upon term of a city contract to accrue a new cause of action to challenge the contract, even decades later, simply by invoking some justification for brea�h (as did the Plaintiffs here, when they asked to invoke their Ellis Act rights in breach of their agreed-upon waiver).

When a contract is breached, a cause ()faction noimally accrues for the- non-:defaulting party. But in the OpinioR, the Court of Appeals allowed a new cause of action to accrue for the defaulting party.

In Travis v. County ofSania Cruz (2004), 33 Cal. 4th 757, this Court considered Travis's ·

claim that there is no limitations period for challenges to local ordinances inconsistent with State law, based on Travis's theory that such ordinances become null and void immediately upon becoming inconsistent with State law- a claim analogous to that of Plaintiffs here, who consider the Ellis Act waiver contained in their settlement agreement to have been null (:Uld void ab initio.

In rejecting the claim that there was no limitations period, this Court stated:

"Plaintiffs cite no authority for this approach, and we have discovered none. Nor does it appeal as a matter of logic. A preempted ordinance, while it may lack any legal effect or force, does not cease to exist; if it did cease to exist, any challenge to it would have no object. Plaintiffs here, for example, could not sensibly pray for an order that the County amend or repeal the Ordinance or stop enforcing it, if the Ordinance no longer existed ... [T]he statute of limitations governing the claim that an ordinance has been preempted by a later enacted state law ... applies-despite the further contention that preemption rendered the ordinance void." !d. at 775-76.

Here, the Opinion appears to conclude that the Ellis Act waiver was void and so may be challenged at any time. But like the ordinance challenged in Travis, the Ellis Act waiver did not cease to exist, or there would have been no point in challenging it.

·

_Consequently, th�_four-year statute_()f_limitations for action on a contract anplies despite_ Plaintiffs' contentiqn that the Ellis Act waiver was void.

990903\1071\866701.2

August 12, 20 10 Page 11

As the Ninth Circuit commented, in rejecting a challenge to a settlement agreement on 'takings' grounds filed five years after the agreement was final:

"To allow [plaintiff] to challenge the settlement agreement five years after its . e�ecuti_Q_n, basedc�on.a subse�uentchangejnthe.law,�wou1dinj ect needless . uncertainty and an utter lack of finality to settlement agreements of this kind." Leroy Land Devel. v. Tahoe Regional Planning Agency, 939 F.2d 696, 698 (9th Cir. 1991).

Here there has been no change in applicable law since Plaintiffs voluntarily entered into a settlement agreement with Santa Monica. But allowing the Opinion to stand without review would "inject needless uncertainty and ah utter lack of finality" to public agency contracts.

********

For these reasons, the League of California Cities respectfully requests that this Court grant review of the questions posed by the City of Santa Monica.

Dated: August 12, 2010

Respectfully submitted,

. LEAGUE OF CALIFORNIA CITIES

By: ��� Barbara E. Kautz, Esq. Goldfarb & Lipman LLP Attorneys for Amicus Curiae

990903\1071\866701.2

2

3

4

5

6

7

PROOF OF SERVICE BY MAIL Embassy LLC v. City of Santa Monica

California Supreme Court Case No.: S184765 Court of Appeal Case No.: B217622

I, Cristy ,t. Houchins, certify and declare as follows:

I am over the age of 18 years, and not a party to this action. My business address is 1300 _ .Clay_ Street,.Ninth Floor, City_.Ctmter Flaza, Oakland, Califomia -94612{which is located in �·

the county where the mailing described below took place.

I am readily familiar with the business practice at my place of business for collection and 8 processing of correspondence for mailing with the United States Postal Service. Correspondence

so collected and processed is deposited with the United States Postal Service that same day in the 9 ordinary course of business.

10 On August 12, 2010, at my place of business at Oakland, California, a copy of the following document,

� -----1-r

Goldfarb&

Lipman LLP

l 300 Cloy Street

Ninth Floor

Oakland

California

94612

• AMICUS CURIAE LETTER; 12

was placed for deposit in the United States Postal Service in a sealed envelope, with postage 13 fully prepaid, addressed to:

14 SEE ATTACHED SERVICE LIST

15 and that envelope was placed for collection and mailing on that date following ordinary business practices.

16 I certify and declare under penalty of perjury under the laws of the State of California

17 that the foregoing is true and correct.

18 Executed on August 12, 2010.

19

20

21

22

23

24

25

-� 2U- -510 836�6336

27 510 836-1035 FAX

28

990903\1071\868924.1

'SERVICE LIST

2

3

4

5

Supreme Court Clerk's Office Earl Warren Building 350 McAllister Street San Francisco, CA 94102

_j

- · ··· ·--· ·-· ·· �� � -- ---- - --- -

6 Original and 8 Copies ofiLetter

7

8

9

10

--n

12

13

14

15

16

17

18

19 Goldfarb &

20 Lipman LLP

21 I 300 Clay Street

22 Ninth floor

.. I 2 3 Oakland

24 California

2 5 94612

26-510 836-6336

27 510 836-1035 FAX

28

- -

,Anthony J. Olivia Nancy S. Fong Allen Matkins Leek Gamble Mallroy & N atsis LLP 515 South Figueroa Street, Ninth Floor Los Angeles, CA 90071-3309

1 Copy of Letter

Michaelyn Jones, General Counsel _

Amy J. Regalado, Senior Litigation Attorney Santa Monica Rent Control Board 1685 Main Street, Room 202 Santa Monica, CA 90401

1 Copy of Letter

990903\l 071\868924.1

Clerk of the Court of Appeal Second Appellate District, Division 5 300 South Sprip.g Street 2"d Floor-North Tower

._ Los Angeles, CA 90013

1 Copy of Letter

Superior Court of the State of California County of Los Angeles

J_- --

Honorable James C; Chalfant, Judge, Dept. 85 111 North Hill Street Los Angeles, CA 90012

1 Copy of Letter

Marsha Jones Moutrie, City Attorney Alan L. Seltzer, Chief Deputy' City Attorney City of Santa Monica r

1685 Main Street, Third Fl�or Santa Monica, CA 90401

1 Copy of Letter