In Los Globos Corporation v. City of Los Angeles, published November 20, 2017, the Second District Court of Appeal, Division 1 affirmed the dismissal on demurrer of a night club's suit against the defendant city arising out of the city fire department's and department of building and safety's actions concerning the club's approved occupant loads for its two stories. The club alleged that the departments harmed its business by reducing the number of patrons allowed at the club, and did not give it a statutorily-required hearing before doing so. The club had a right under city ordinances to administratively appeal from the departments' decisions. It did not do so. Nor did it challenge the decisions by petitioning for administrative mandamus. After presenting a claim for damages to the city, the club sued for intentional interference with the club's economic advantage, negligence, and declaratory relief.
The appellate court held that the requirement that the club exhaust the administrative remedies available to it–the administrative appeal process–before suing for damages or declaratory relief was jurisdictional, could be raised at any time in the litigation, and was a complete bar to the action. It rejected the club's argument that it was entitled to sue without exhausting the remedies because it was denied a pre-deprivation hearing. The exhaustion requirement applies regardless of whether a plaintiff received pre-deprivation due process. Further, the lack of a pre-deprivation hearing was an issue that the club could have raised in administrative appeals. The club also failed to exhaust its judicial remedies, by petitioning for a writ in the trial court. Therefore, the city's decision has achieved finality and has been established as proper.
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