With Important CA Supreme Court Win for Sacramento Developer, City Faces Damages Payout and Legal Fees

In April and May, California Globe reported that the Superior Court and the 3^rd District Court of Appeals of California unanimously  ruled that the Sacramento City Council, and in particular Councilman Jay Schenirer, violated the 14^th Amendment Constitutional rights and Equal Protection to a fair hearing of Sacramento developer Paul Petrovich over his request for a special permit for an 8-pump Safeway operated fueling station next to a new Safeway store in Sacramento’s Curtis Park neighborhood.

In a rare act, the California Third District Court of Appeals felt so strongly that City Councilman Jay Schenirer had egregiously broken the law, violated the 14th Amendment right to a fair trial of Petrovich, and concluded the Brown Act had been violated, they decided to publish the decision.

Five years ago Sacramento City Council denied Petrovich a fair hearing when he applied to build the gas station next to the Safeway store in his Crocker Village development. Petrovich proved at the time that his deal with Safeway would fizzle unless it the gas station was allowed.

In order to keep the project alive, Petrovich conceded millions of dollars to Safeway to get them to move forward without their fuel station. In all, Petrovich says that between the increased cost of construction on 180,000 square feet of his shopping center since 2015, the increase in interest rates when he finally booked his construction loan, lost income, lost tenancy, interest accrual on his 72 acre project of $10,000 per day, the impact on his ability to sell over 200 single family lots due to perceived bias against the project by the city council, and the lack of the promised first class shopping center, home builders would not purchase the lots, and his damages exceed $100 million.

After the City Council overturned the Sacramento Planning Commission conditional approval of the Safeway gas station, Petrovich sued. And he won. A Superior Court Judge found that City Councilman Jay Schenirer illegally fixed the outcome of the council’s vote on the building permit request for the fueling station. The Judge ruled that the Sacramento City Council’s vote denying construction of the gas station was unlawful and that Councilman Jay Schenirer was illegally “coaching” opponents of the gas station through the political process. The Judge found Schenirer specifically coached the president of the contentious Sierra Curtis Park Neighborhood Association on how and what to say in its opposition to Petrovich’s development.

Despite the costly setbacks, the Safeway store opened on March 6, 2019 in Sacramento’s Crocker Village neighborhood.

Lawsuits and more lawsuits

The City of Sacramento, the State of California’s League of Cities and the State’s League of Counties recently asked the California Supreme Court to de-publish the case so it would not become a new precedent, citing that it would impinge on their ability to deal with their adjudicary process as they have been operating.

However, the Supreme Court took the entire matter up, including the request for de-publishing it and immediately rendered a decision to uphold the Superior Courts original ruling, the  3^rd District Court of Appeal’s unanimous decision and denied the request to de-publish the case.

The COVID-19 statewide shutdown extended the deadlines to appeal this matter to the California Supreme Court. However, almost a month before they said they would provide an answer, the California Supreme Court upheld not only the Superior Court’s and the Appellate Court’s decision; they also affirmed the ruling should remain published as new law.

The new precedent/law has already been put to the test in Ventura, CA as the VC Reporter explains: . 

Ventura Mayor Matt LaVere recused himself from two public hearings recently, based on the May 2020 published ruling of California’s Third District Court of Appeal in Petrovich Development Co. LLC v. City of Sacramento. Because it is a published opinion, the decision sets legal precedent.

In Petrovich, the court found that a city council member acted with proven bias and demonstrated his mind was made up when he advocated against a development project before a public hearing in which the  council served as final decision maker. Text and email evidence in the Petrovich case demonstrated the members’ efforts leading up to the public hearing to ensure the project was not approved.

What impact does this decision and article have on the whole matter? 

Since Petrovich received no financial gain from the now-permanent ruling, and is only to receive a new fair hearing, the new law is considered a public benefit. As such, when someone goes through such a process and its deemed a public benefit, there are provisions in the judicial system that entitle anyone who goes through such a process at their own expense and establishes “public good” law that they are entitled to their legal fees, now in the millions.

Petrovich plans to apply to the court for such reimbursement. Without public good or if he received monetary damages, this would not apply.

The acknowledgment and recusal by the Ventura Mayor puts the city squarely in a position to have to pay Petrovich’s legal fees since he did not receive any personal benefit from the ruling. And his legal fees are in the millions of dollars.

Notably, this does not count what the city has spent on its lawsuits with Petrovich, which is believed to be now in excess of $3.2 million in legal fees. Insurance does not cover unlawful acts.

The whole matter now gets remanded back to the Superior Court which decides the “rules of engagement” for the new hearing with Councilman Jay Schenirer recused. The court mandates when the hearing will occur.

If the court says say “no” again, Petrovich will have to go back to a years-long Writ process. Because in order to turn down an approved use that is only subject to reasonable conditions of approval, there has to be substantial evidence to do so. Substantial evidence for gas stations falls under only one of two categories: Public Nuisance and Human Health.

“Public Nuisance” with gas stations is if the location and stacking affect will impact any public streets. Since the gas station Petrovich proposed is in the far corner of the shopping center and the stacking backs into the shopping center, the answer to public nuisance is “no.” 

“Human Health” has to do with the amount of gallonage that can be pumped before residents within 200 feet are affected since gasoline dissipates to levels that are not harmful to humans in that distance. The exposure only occurs when someone drives off with the hose connected to their car and there is spillage on the ground. The closest house is 700 feet away, so there really is no argument there. 

Damages

The damages apply to the City of Sacramento. The Tort judge’s decision allows Petrovich to hold Councilman Jay Schenirer and former Sacramento Mayor Kevin Johnson personally liable. He can also depose the remaining council members, who now have the potential of being named personally. If the council members saw Schenirer’s script, and any of them followed it or did not bring it to the City Attorney’s attention, they are potentially guilty. 

Petrovich’s damages now exceed $100 million, even before punitive damages are potentially awarded.

This is the case that will stand in perpetuity and be referenced in every court matter involving civil rights and Brown Act violations nationwide. What a legacy for the City of Sacramento.

This article gives background on Petrovich’s case and experience with the City Council.

This article explains the City of Sacramento’s appeal.

For the entire story, read Part l: “CA Appellate Court Unanimously Rules Sacramento City Council Violated Local Developer’s Constitutional Rights,” where the details of the crimes against Petrovich are explained in detail.