NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS MAY 29 2020

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

AKSHAR GLOBAL INVESTMENTS No. 19-55148 CORP., a California Corporation; AMITKUMAR SHAH, D.C. No. 2:18-cv-04541-MWF-FFM Plaintiffs-Appellants,

v. MEMORANDUM*

CITY OF LOS ANGELES, a municipal corporation; DOES, 1-10 inclusive,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding

Submitted April 17, 2020** Pasadena, California

Before: SCHROEDER and COLLINS, Circuit Judges, and BAYLSON,*** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Michael M. Baylson, United States District Judge for the Eastern District of Pennsylvania, sitting by designation. Plaintiff-Appellant Amitkumar Shah (“Shah”) is the owner and director of

Plaintiff-Appellant Akshar Global Investments Corp. (“AGI”), which owns and

operates the 108 Motel Inn in Los Angeles, California (the “Motel”). The Second

Amended Complaint (“SAC”) alleges that in 2018, the City of Los Angeles formally

revoked the conditional use permit (“CUP”) that allowed the Motel to operate.

Appellants sued the City alleging, inter alia, that 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. § 3604.1 The district court dismissed the

SAC with prejudice. Appellants appeal from that order.

We have jurisdiction under 28 U.S.C. § 1291 and affirm in part, reverse in

part, and remand.

The parties are familiar with the factual and procedural history of this case so

we need not repeat it here.

I.

“We review de novo a district court’s dismissal of a complaint under Fed. R.

Civ. P. 12(b)(6) for failure to state a claim.” Starr v. Baca, 652 F.3d 1202, 1205 (9th

Cir. 2011). “We review for abuse of discretion a district court’s decision to dismiss

1 We will not address the district court’s dismissal of the Fair Housing Act claim because Appellants did not argue it in their opening brief. See Miller v. Fairchild Indus., Inc., 797 F.2d 727, 738 (9th Cir. 1986) (“The Court of Appeals will not ordinarily consider matters on appeal that are not specifically and distinctly argued in appellant’s opening brief . . . .”).

2 19-55148 with prejudice.” Okwu v. McKim, 682 F.3d 841, 844 (9th Cir. 2012). “When ruling

on a motion to dismiss, we accept all factual allegations in the complaint as true and

construe the pleadings in the light most favorable to the nonmoving party.” Knievel

v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).

II.

To state a Section 1983 claim against a municipal actor, Appellants must

allege that (A) they were deprived of a federally protected right and (B) the injury

resulted from “an expressly adopted official policy, a long-standing practice or

custom, or the decision of a ‘final policymaker.’” Ellins v. City of Sierra Madre,

710 F.3d 1049, 1066 (9th Cir. 2013) (citation omitted).

Appellants’ SAC asserts a variety of constitutional claims arising from the

City’s revocation of the CUP and from the conduct of City police officers preceding

that revocation. With the exception of one of Appellants’ claims under the Fourth

Amendment, we conclude that the district court properly dismissed Appellants’

claims with prejudice.2

Fifth Amendment Takings Clause. The allegations in the SAC do not

plausibly suggest Appellants’ Fifth Amendment right to be free from

2 The SAC also asserted violations of Appellants’ First Amendment rights to petition and to freely associate and rights under the Contract Clause. Because Appellants do not discuss these claims in their opening brief, we will not consider them. See Miller, 797 F.2d at 738.

3 19-55148 unconstitutional takings was violated. This Court has recognized four theories of

takings claims: “(1) a physical invasion of property, (2) that a regulation completely

deprives a plaintiff of all economically beneficial use of property, (3) a general

regulatory takings challenge pursuant to Penn Central, or (4) a land-use exaction

violating the standards set forth in Nollan and Dolan.”3 McClung v. City of Sumner,

548 F.3d 1219, 1225 (9th Cir. 2008), abrogated on other grounds by Koontz v. St.

Johns River Water Mgmt. Dist., 570 U.S. 595 (2013).

The SAC lacks facts that support a takings claim under any of these theories.

Further, to the extent the City’s decision to revoke the CUP was based on concerns

about nuisance caused by Appellants’ Motel, the Takings Clause is not implicated

because a locality may act in response to criminal activity. See Keystone Bituminous

Coal Ass’n v. DeBenedictis, 480 U.S. 470, 492 n.22 (1987) (“Courts have

consistently held that a State need not provide compensation when it diminishes or

3 For theory (3), see Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978) (noting that the specific circumstances of each case determine whether a restriction is an unconstitutional taking but that several factors, including the “economic impact of the regulation” and the “character of the governmental action,” are particularly significant).

For theory (4), see Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 837 (1987) (holding that for a development exaction to be constitutional, there must be an “essential nexus” between the valid state interest and the permit condition), and Dolan v. City of Tigard, 512 U.S. 374, 391 (1994) (clarifying that in addition to Nollan’s “essential nexus” requirement, “the required dedication [must be] related both in nature and extent to the impact of the proposed development”).

4 19-55148 destroys the value of property by stopping illegal activity or abating a public

nuisance.”). Appellants therefore have failed to plead a violation of their rights

under the Takings Clause of the Fifth Amendment.

Fourteenth Amendment Equal Protection Clause. The SAC similarly lacks

facts supporting the inference that Appellants’ rights under the Equal Protection

Clause of the Fourteenth Amendment were violated. The equal protection challenge

is presumably a “class of one” claim because Appellants allege that “similarly

situated properties have not been subjected to the actions taken by” the City.

However, the SAC’s allegations of differential treatment are wholly conclusory, see

Pierce v. Cty. of Orange, 526 F.3d 1190, 1225 (9th Cir. 2008), and the SAC likewise

fails to plead facts showing that “there is no rational basis for [any] difference in

treatment,” Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000). As a result,

Appellants have not alleged an Equal Protection violation.4

Fourteenth Amendment Due Process Clause. Appellants’ allegation that

they were deprived of their Fourteenth Amendment right to procedural due process

fails as a matter of law. Appellants had the opportunity (and took advantage of the

opportunity) to appear at the initial revocation hearing before the Zoning

4 Likewise, Appellants’ claim that their substantive due process rights were violated by the City’s “irrational and arbitrary” action fails as a matter of law. See Richardson v. City & Cty. of Honolulu, 124 F.3d 1150, 1162 (9th Cir. 1997) (recognizing that the burden to make out such a claim is “extremely high”).

5 19-55148 Administrator. To the extent that Appellants contend that they did not receive

sufficient actual notice of the subsequent City Council hearings on their appeal of

the revocation, the SAC does not adequately allege that any such deficiency was

caused by an official policy, custom, or practice. Ellins, 710 F.3d at 1066.

Fourth Amendment. The only remaining claim is the alleged violation of

Appellants’ Fourth Amendment right to be free from unconstitutional searches and

seizures. Shah and AGI both allege violations of this right.

(1) Shah claims his Fourth Amendment rights were violated based on the Los

Angeles Police Department (“LAPD”)’s unlawful entrance into his personal

residence.

(2) AGI claims its Fourth Amendment rights were violated based on LAPD’s

unlawful entrance and trespass onto the Motel.

(3) AGI further claims its Fourth Amendment rights were violated based on

LAPD’s unlawful search of AGI’s guest registration records.

Even assuming that the alleged officer conduct described in claims (1) and (2)

violated the Fourth Amendment, Appellants failed, after multiple opportunities, to

adequately allege that such violations were caused by a City “policy, regulation,

custom, or usage.” Chew v. Gates, 27 F.3d 1432, 1444 (9th Cir. 1994). The failure

to allege facts suggesting a causal relationship between any policy described in the

SAC and the Fourth Amendment deprivations related to violations (1) and (2) is fatal

6 19-55148 because the City “is only liable when it can be fairly said that the [C]ity itself is the

wrongdoer.” Collins v. City of Harker Heights, Tex., 503 U.S. 115, 122 (1992); see

also Jett v. Dall. Indep. Sch. Dist., 491 U.S. 701, 737 (1989) (recognizing that Monell

liability under a “practice or custom” theory requires showing that the decisions of

“those officials who have the power to make official policy on a particular issue . . .

caused the deprivation of rights at issue . . . by acquiescence in a longstanding

practice or custom which constitutes the ‘standard operating procedure’ of the local

governmental entity” (citation omitted)); Monell v. Dep’t of Soc. Servs. of City of

N.Y., 436 U.S. 658, 694 (1978) (holding that imposing liability on a municipality is

only appropriate where the government decisionmaker is the “moving force” behind

the constitutional violation).

As pleaded, the factual allegations in the SAC related to claim (3) are not

sufficient to give rise to a Fourth Amendment claim based on the Supreme Court’s

decision in City of Los Angeles v. Patel, 576 U.S. 409 (2015). The SAC’s allegation

that the Motel’s registration records were searched pursuant to a CUP condition that

was imposed by a vote of the City Council provides a basis for municipal liability

based on this “expressly adopted official policy” and this “decision of a ‘final

policymaker.’” Ellins, 710 F.3d at 1066 (citation omitted). However, the SAC lacks

specific facts that would allow an inference or conclusion that the City’s conduct

violated the Constitution. The SAC is silent as to the specific circumstances of the

7 19-55148 searches, when the searches occurred, or whether Appellants had access to

precompliance review. Similarly, there are no allegations as to the damages, if any,

suffered by either or both Appellants for the alleged Fourth Amendment violation.

Even construing the allegations in the light most favorable to Appellants, the SAC

does not state a claim for violation of the Fourth Amendment under Patel with the

specificity demanded by Twombly and Iqbal. Cf. Capp v. Cty. of San Diego, 940

F.3d 1046, 1059 (9th Cir. 2019) (finding that the plaintiffs did not plead a claim

under the Fourth Amendment because the complaint “contain[ed] no facts as to . . .

the specific circumstances” of the conduct that allegedly caused the constitutional

violation).

Although the SAC does not contain sufficient facts to allow this Court to

conclude Appellants alleged a plausible claim under Patel, Appellants’ “allegation

of plausible facts supporting such a [violation] could have cured the deficiency” in

this Fourth Amendment theory. AE ex rel. Hernandez v. Cty. of Tulare, 666 F.3d

631, 637 (9th Cir. 2012); see also AmerisourceBergen Corp. v. Dialysist W., Inc.,

465 F.3d 946, 951 (9th Cir. 2006) (“Rule 15(a) is very liberal and leave to amend

‘shall be freely given when justice so requires.’” (citation omitted)). Therefore, on

remand Appellants will be permitted to amend their complaint to supplement the

8 19-55148 allegations related to the City’s alleged search of the Motel’s registration records. 5

With a clearer picture of the relevant facts, the district court will be able to assess

the factual sufficiency of Appellants’ Patel claim.6

III.

For the foregoing reasons, we REVERSE the district court’s dismissal of

Appellants’ Fourth Amendment claim under Patel with prejudice, and we

REMAND with instructions to the district court to permit an amendment as to that

claim only. We AFFIRM the district court’s dismissal of Appellants’ remaining

federal claims. Given our reversal as to one of Appellants’ federal claims, we vacate

the district court’s dismissal of Appellants’ pendent state-law claim.

5 Appellants’ failure to explicitly raise the issue of the district court’s denial of leave to amend in their opening brief does not prevent this Court from reaching the issue on appeal. See generally Krause v. Sacramento Inn, 479 F.2d 988, 989 (9th Cir. 1973). 6 The district court’s decision to dismiss the SAC without leave to amend was premised on its conclusion that, because the Monell allegations were insufficient, “[f]urther amendment would be futile.” However, the order dismissing the FAC did not “address the parties’ arguments with respect to the sufficiency of [Appellants’] allegations of violations of various constitutional rights . . . .” Therefore, although Appellants were given an opportunity to amend following the dismissal of the FAC, they understandably focused their amendments on the Monell issue that the district court had identified as the basis for its dismissal of the Section 1983 claims. Because we find that Appellants’ Patel claim adequately alleges an official policy under Monell but fails to adequately allege the underlying Patel violation, we find it appropriate to remand to the district court so that it can assess in the first instance whether the latter deficiency can be cured by amendment.

9 19-55148