9th Cir. Court of Appeals Holds Municipal Decision to Revoke CUP that was Based on Concerns About Nuisance Caused by Motel Did Not Implicate Takings Clause

This post was authored by Matthew Loescher, Esq.

Plaintiff-Appellant Amitkumar Shah was the owner and director of Akshar Global Investments Corp. (“AGI”), which owned and operated the 108 Motel Inn in Los Angeles, California. The Second Amended Complaint (“SAC”) included allegations that in 2018, the City of Los Angeles formally revoked the conditional use permit (“CUP”) that allowed the Motel to operate. In this case, appellants claimed that that the actions taken in connection with the revocation of the CUP were actionable under the Civil Rights Act, 42 U.S.C. § 1983, and the Fair Housing Act, 42 U.S.C. § 3604. The district court dismissed the SAC with prejudice.

On appeal, the court first found that the allegations in the SAC did not plausibly suggest Appellants’ Fifth Amendment right to be free from unconstitutional takings was violated. Additionally, to the extent the City’s decision to revoke the CUP was based on concerns about nuisance caused by Appellants’ Motel, the Takings Clause was not implicated because a locality may act in response to criminal activity – which it did so here.

The SAC also failed to present any facts supporting the inference that Appellants’ rights under the Equal Protection Clause of the Fourteenth Amendment were violated. The equal protection challenge was presumably a “class of one” claim since Appellants claimed that similarly situated properties had not been subjected to the actions taken by the City. The court determined that the SAC’s allegations of differential treatment were conclusory, and the SAC failed to plead facts showing that “there is no rational basis for any difference in treatment,.” As to Appellants’ contention that they did not receive sufficient actual notice of the subsequent City Council hearings on their appeal of the revocation, the SAC did not adequately allege that any such deficiency was caused by an official policy, custom, or practice.

For the aforementioned reasons, the factual allegations in the SAC related to claim were not sufficient to give rise to a Fourth Amendment claim. On remand, Appellants were permitted to amend their complaint to supplement the allegations related to the City’s alleged search of the Motel’s registration records.

Akshar Global Investment Corp v City of Los Angeles, 817 Fed. Appx. 301 (9th Cir. CA 5/29/2020)