San Pedro Hotel Co. v. City of Los Angeles

The San Pedro Hotel Company, Inc. and its owners, the Fentis family (collectively the “Fentises”), appeal the district court’s dismissal of their action alleging claims under the Fair Housing Act ( 42 U.S.C. §§ 3601-3631 ), 42 U.S.C. § 1983 , state tort law, and tortious interference with prospective economic advantage. The Fentises allege the City of Los Angeles and an individual councilman (collectively the “City”) discriminated against the mentally ill by interfering with the Fentises’ sale of their hotel for the development of housing for the mentally disabled.

FACTS AND PROCEDURAL HISTORY

The Fentises owned a property in the San Pedro district of Los Angeles known as the “California Hotel.” In June 1994, the Fen-tises entered into an agreement to sell the California Hotel to A Community of Friends (“ACOF”), a not-for-profit developer of housing accommodations primarily used to house the mentally disabled. The sale of property was contingent upon ACOF obtaining federal *473 financing and an award of tax credits from the California State Tax Credit Allocation Committee.

Although the money was to come from federal coffers, the City of Los Angeles was ultimately responsible…