17 Cal. App. 5th 627
Cal. Ct. App. 5th2017Background
- Los Globos operated a two‑story nightclub in Los Angeles; disputes arose in 2011–2013 over unpermitted improvements, occupant loads, and certificates of occupancy issued or revoked by the Fire Department and Department of Building and Safety.
- Fire inspectors initially conditionally approved occupant loads (408 first floor, 330 second) subject to alarm/sprinkler work; Los Globos completed the conditions and posted occupancy cards.
- In December 2012 a fire inspector confiscated those cards and reissued a card limiting the first floor to 49 persons; Los Globos later received a certificate of occupancy which it alleges was then revoked.
- Los Globos filed an administrative claim with the City (denied) and then sued in superior court alleging intentional/negligent interference with prospective economic advantage, negligence, and seeking declaratory relief.
- Defendants demurred on immunity and failure to exhaust administrative remedies; the trial court sustained the demurrer without leave to amend and dismissed. Los Globos conceded it did not exhaust the municipal administrative appeals available.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff could sue in court without exhausting administrative appeals for fire/building determinations | Los Globos: due process was violated (e.g., cards confiscated, certificate revoked) so there was nothing or no adequate process to appeal | Defendants: municipal code provided administrative appeal routes (fire board, building/ planning appeals); exhaustion is jurisdictional | Court: exhaustion is jurisdictional; Los Globos failed to exhaust available remedies, so suit was barred |
| Whether alleged denial of a hearing permits bypassing exhaustion | Los Globos: no hearing was held before revocation/suspension, so no final action to appeal | Defendants: even if hearing denied, plaintiff could still appeal the revocation and challenge procedural defects to the agency | Court: lack of hearing does not excuse exhaustion; plaintiff could have raised due process in administrative appeal |
| Whether futility or unavailability of administrative remedies applied | Los Globos: implied futility because process was allegedly defective | Defendants: plaintiff did not allege or prove futility or unavailability | Court: plaintiff did not claim or show futility; preconception of futility does not excuse exhaustion |
| Whether demurrer should have been sustained without leave to amend | Los Globos: might cure pleading | Defendants: failure to plead exhaustion is jurisdictional and incurable here | Court: no reasonable possibility amendment could cure failure to exhaust; demurrer properly sustained without leave |
Key Cases Cited
- Campbell v. Regents of University of California, 35 Cal.4th 311 (rule that administrative remedies must be exhausted if statute provides them)
- Abelleira v. District Court of Appeal, 17 Cal.2d 280 (exhaustion of administrative remedies is jurisdictional)
- Johnson v. City of Loma Linda, 24 Cal.4th 61 (exhaustion is a jurisdictional prerequisite)
- Sierra Club v. San Joaquin Local Agency Formation Com., 21 Cal.4th 489 (policy reasons for exhaustion: agency opportunity to redress and reduce litigation)
- Westlake Community Hosp. v. Superior Court, 17 Cal.3d 465 (administrative process can narrow disputes and mitigate damages)
- Bockover v. Perko, 28 Cal.App.4th 479 (due process claim does not automatically excuse exhaustion; agency should decide applicability first)
- Carman v. Alvord, 31 Cal.3d 318 (failure to exhaust can justify affirming demurrer without leave to amend)