Garden City, Inc. et al v. City of San Jose et al

Filing 37

ORDER DENYING MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION OF COURT'S ORDER GRANTING-IN-PART DEFENDANTS' MOTION TO DISMISS OR STRIKE PORTIONS OF THE COMPLAINT AND TO ABSTAIN OR STAY THE PROCEEDINGS by Judge Paul S. Grewal denying 35 (psglc2, COURT STAFF) (Filed on 10/3/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

United States District Court
For the Northern District of California

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SAN JOSE DIVISION

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GARDEN CITY, INC., et al.,
Plaintiffs,

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v.

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CITY OF SAN JOSE, et. al.,
Defendants.

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Case No.: 5:13-cv-00577-PSG
ORDER DENYING MOTION FOR
LEAVE TO FILE MOTION FOR
RECONSIDERATION OF COURT’S
ORDER GRANTING-IN-PART
DEFENDANTS’ MOTION TO
DISMISS OR STRIKE PORTIONS OF
THE COMPLAINT AND TO
ABSTAIN OR STAY THE
PROCEEDINGS.
(Re: Docket Nos. 33, 35, 36)

Defendants City of San Jose, et al. (“Defendants”) request leave from the court to file a
motion to reconsider the court’s order of September 5, 2013 – Order Granting-in-Part Defendants’
Motion to Dismiss or Strike Portions of the Complaint and to Abstain or Stay the Proceedings. 1

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Having considered the papers, the court DENIES Defendants’ request.

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See Docket No. 33.
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Case No.: 5:13-cv-00577-PSG
ORDER

I. BACKGROUND

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The September 5 order addressed a variety of Defendants’ objections to the complaint in

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this case. 2 To accommodate the breadth of the objections, the court granted the parties leave to

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exceed the page limits under the court’s local rules. 3 After the court granted-in-part and

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denied-in-part the motion, it granted Plaintiffs leave to amend its complaint by September 30,
2013. On September 20, 2013, Defendants filed the current motion. 4

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Defendants highlight two issues from the court’s prior order that they believe warrant

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reconsideration. First, Defendants challenge the court’s res judicata ruling, because (1) the court

United States District Court
For the Northern District of California

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improperly conflated the primary right at issue with the remedy sought and (2) “overlooked the

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distinction” that California law makes “in ruling on the res judicata defense between petitions for

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writ of mandate that were granted and those that were denied.” 5 Second, Defendants challenge the

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court’s decision not to abstain in light of proceedings now pending in the state court. Defendants
point out that the court erroneously compared the present federal lawsuit to the adjudicated state

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case and not the pending state case that more directly raises due process violations under the
California state constitution. The court addresses each of these issues in turn.
II. LEGAL STANDARD

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“Although Rule 59(e) permits a district court to reconsider and amend a previous order, the
rule offers an extraordinary remedy, to be used sparingly in the interests of finality and

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See Docket No. 17. Specifically, Defendants objected to the merits of Plaintiffs’ procedural and
substantive due process claims as well as Defendants’ class-of-one equal protection claim.
Defendants also claimed that Plaintiffs’ complaint was barred on standing, res judicata, statute of
limitations, conflict of interest, and immunity grounds. Defendants’ additionally argued that one of
the Defendants, Richard Teng, could not be liable for punitive damages and asked the court to
abstain from hearing the case because of a pending state court proceeding. Finally, Defendants
asked the court to strike portions of the complaint. See Docket No. 17.
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See Docket Nos. 16 and 23.

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The court stayed the deadline for Plaintiffs’ to file an amended complaint in light of Defendants’
motion for reconsideration. See Docket No. 36.

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See Docket No. 35 at 2.
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Case No.: 5:13-cv-00577-PSG
ORDER

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conservation of judicial resources.” 6 Civ. L.R. 7-9(b) requires that to obtain leave to file a motion
for reconsideration, the moving party must specifically show:
(1) That at the time of the motion for leave, a material difference in fact or law exists from
that which was presented to the Court before entry of the interlocutory order for which
reconsideration is sought. The party also must show that in the exercise of reasonable
diligence the party applying for reconsideration did not know such fact or law at the
time of the interlocutory order;

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(2) The emergence of new material facts or a change of law occurring after the time of such
order; or

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(3) A manifest failure by the Court to consider material facts or dispositive legal arguments
which were presented to the Court before such interlocutory order.

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“Indeed, a motion for reconsideration should not be granted, absent highly unusual

United States District Court
For the Northern District of California

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circumstances, unless the district court is presented with newly discovered evidence, committed

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clear error, or if there is an intervening change in the controlling law.” 7 “A Rule 59(e) motion may

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not be used to raise arguments or present evidence for the first time when they could reasonably
have been raised earlier in the litigation.” 8 Here, Defendants appear to seek leave to move for
reconsideration based on their belief that the court committed clear error through a manifest failure
by the court to consider material facts or dispositive legal arguments.

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III. ANALYSIS

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In addressing Defendants’ present arguments, the court presumes familiarity with the

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court’s September 5 order.

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A.

Res Judicata

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Under California law, for res judicata to apply, three elements must be present: (1) a “claim

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or issue raised in the present action” must be “identical to a claim or issue litigated in a prior

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proceeding,” (2) the prior proceeding must have “resulted in a final judgment on the merits,” and

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Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (internal quotations
and citations omitted).

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Id.

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Id.
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Case No.: 5:13-cv-00577-PSG
ORDER

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(3) “the party against whom the doctrine is being asserted” must have been “in privity with a party
to the prior proceeding.” 9
First, Defendants argue that in finding the claims at issue in the two cases were not identical

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because they focus on different harms, the court manifestly “did not consider that mandamus and

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damages are forms of relief and not forms of harm for purposes of res judicata. The order mistakes

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the remedy sought in the state case—a writ of mandamus—for alleged harm.” 10 This assertion,

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however, ignores that both the form of relief and the form of harm alleged are not the same. The
harm underlying the state mandamus petition was Defendants’ alleged failure to rule on the

United States District Court
For the Northern District of California

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landowner license and the cardroom permit amendment as required by the gaming ordinance. In

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contrast, the federal complaint alleges that Plaintiffs were harmed not only by Defendants’ belated

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consideration of their cardroom permit amendment, but also by the ultimate denial. Thus, the harm

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at issue in this case is a superset of those at issue in the state action.

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Second, Defendants argue that under California law, the prior proceeding did result in a
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final judgment on the merits. The Ninth Circuit, however, has explicitly and repeatedly held that

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California’s res judicata doctrine does not apply claim preclusion to mandamus proceedings. 11

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This district itself has applied this holding on multiple occasions. 12 While Defendants argue that

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mandamus proceedings still may trigger res judicata where mandamus was denied, the Ninth

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Boeken v. Philip Morris USA, Inc., 48 Cal. 4th 788, 797 (2010).

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See Docket No. 35 at 3.

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See Honey v. Distelrath, 195 F.3d 531 (9th Cir. 1999) (holding that mandamus actions cannot
bar subsequent Section 1983 claims); Weinberg v. Whatcom County, 241 F.3d 746 (9th Cir. 2001)
(citing Honey with approval and finding that a mandamus action cannot be the basis of a later
claim preclusion bar).
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See Grant v. California Bd. of Parole Hearings, Case No. 4:10-cv-02817-PJH-PR,
2012 WL 710470, at *3 (N.D. Cal. Mar. 5, 2012) (mandamus actions do not claim preclusion);
Yaqub, 2005 WL 588555, at *4 (same); Plato.C.LLC v. City of San Jose,
Case No. 5:05-cv-01682-HRL, 2005 WL 1889312, at *5 (N.D. Cal. Aug. 9, 2005) (mandamus
actions are special proceedings that do not bar subsequent Section 1983 claims); Embury v. King,
191 F. Supp. 2d 1071, 1084 (N.D. Cal. 2001) (mandamus proceedings are not deserving of
preclusive effect, in part, because of the limited nature of the proceedings).
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Case No.: 5:13-cv-00577-PSG
ORDER

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Circuit has never recognized such a distinction in the California case law on the subject, and the

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court is bound by those decisions.

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B.

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Abstention
“As a general rule, a federal court has a ‘virtually unflagging obligation’ to adjudicate

controversies properly before it.” 13 In general, “a pending action in state court is generally ‘no bar
to proceedings concerning the same matter in the Federal court having jurisdiction.’” 14 “Against

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this backdrop, the Supreme Court has carved out an extraordinary and narrow exception” that “a
federal court may not interfere with a pending state criminal prosecution absent extraordinary

United States District Court
For the Northern District of California

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circumstances.” 15 Younger abstention has “been extended to limited classes of civil

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proceedings.” 16 In the Ninth Circuit, “abstention is required” if four requirements are met: state

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court proceedings must be (1) “ongoing,” (2) “implicate important state interests,” (3) “provide an

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adequate opportunity to raise federal questions,” and (4) the federal court action must “enjoin the
proceeding or have the practical effect of doing so.” 17 “All four elements must be satisfied to

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warrant abstention.” 18
Defendants argue that the court erroneously compared the present lawsuit to the prior

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adjudicated state case and not the more recently filed state court action. This is a fair criticism.

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But even comparing the federal action with the pending state court action the court is not

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convinced that abstention is required in this case given the Ninth Circuit’s guidance in Montclair

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Logan v. U.S. Bank Nat. Ass’n, 722 F.3d 1163, 1166 (9th Cir. 2013) (citing Deakins v.
Monaghan, 484 U.S. 193, 203 (1988)).

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Logan, 722 F.3d at 1166 (citing New Orleans Pub. Serv. Inc. v. Council of New Orleans,
491 U.S. 350, 373 (1989)).
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Logan, 722 F.3d at 1166-67 (internal quotations and citations omitted).

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Id. at 1167.

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Portrero Hills Landfill, Inc. v. Cnty. of Solano, 657 F.3d 876, 882 (9th Cir. 2011) (internal
quotations omitted).

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Logan, 722 F.3d at 1167.
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Case No.: 5:13-cv-00577-PSG
ORDER