On September 28, 2016, the Court of Appeal for the Fourth Appellate District affirmed a trial court decision denying a petition for writ of administrative mandamus filed by the owner of a nude entertainment business to challenge the City of San Diego’s revocation of her permit. Coe v. City of San Diego, __ Cal.App.5th __ (2016) (Case No. D068814).

The case arose out of a series of covert and overt operations in which San Diego police amassed a wealth of evidence that the business owner had serially violated provisions of the San Diego Municipal Code, including prohibitions on nude entertainers being within six feet of a patron, nude entertainers intentionally touching a patron or a patron intentionally touching a nude entertainer, or fondling specified anatomical areas of another person. The code allows enforcement action against a permittee if a responsible person “caused” or “condoned” a violation of the code or failed to take “reasonable corrective action” after timely written notice of the violation.

The record indicated that at least fifteen separate officers or detectives observed violations of the six-foot rule, no-touch rule, and no-fondling rule, and that more than 40 separate nude entertainers committed the violations. Importantly, the record also indicated that the City notified the owner in writing at least seven different times of multiple violations of the code and that the owner took various steps to prevent additional violations. Nonetheless, violations continued to occur.

Finally, following at least the seventh such notice to the owner, and after the parties met to discuss the violations, the City provided written notice that additional violations, depending on severity, would likely result in the revocation of the nude entertainment permit. Several months later, the City notified the owner that her permit was revoked. The notice of revocation cited twelve additional violations following the City’s final written notice and the parties’ meeting.

An administrative hearing officer upheld the permit revocation following the owner’s administrative appeal. The owner then filed a petition for writ of administrative mandate that challenged the hearing officer’s decision on numerous grounds, including that it was not supported by the evidence and was not based on a fair hearing. It also challenged the decision on the grounds that certain code sections were unconstitutionally vague and overbroad. The superior court denied the complaint and petition.

The Court of Appeal disagreed with the owner’s contention that the finding she caused or condoned violations by nude entertainers was not supported by the evidence and ignored corrective actions she took to prevent violations. The Court noted that the evidence showed a clear pattern of ongoing, blatant violations of the six-foot, no-touch, and no-fondling rules. And even though the owner took some measures to prevent violations, she did not take other potentially more effective measures.

The Court held that because the revocation was based on a persistent pattern of violations and the City repeatedly notified the owner of those violations and the need for corrective action, the City did not deprive her of due process of law. The Court noted that the City’s decision to revoke the permit was not based on a discrete violation but rather on a persistent pattern of violations over an extended time period. The owner had ample notice of the violations because the City sent her multiple warning letters detailing them. In addition, even though the owner, her attorney, and the managers of her business met with police representatives to discuss the violations and to provide training, violations continued to occur. Indeed, “[t]he City did not attempt to revoke [the] permit until it noted continued violations at the business despite the City’s warnings and efforts to assist her.”

The Court also held that the relevant code provisions were not unconstitutionally vague, because perfect clarity and precise guidance have never been required. Instead, all that is required is that the law be reasonably certain so that persons of common intelligence need not guess at its meaning. The Court considered the words “caused,” “condoned,” and “reasonable corrective action” to be understandable, individually and collectively, by persons of ordinary intelligence. Thus, as used in the City’s code and considered in the context of it’s nude entertainment permitting scheme, “these words inform permit holders with the requisite reasonable specify or certainty that they will be held accountable for violations they personally bring about, accept and allow to continue, or fail to take practical, sensible steps to correct.”

Coe underscores the high standard agencies must meet when they seek to revoke a permit that involves a fundamental vested right. In such cases, while courts will exercise their independent judgment, the weight of the evidence must support the agency’s findings. Those findings must be supported by substantial evidence. Here, San Diego did not act upon a single incident but instead amassed a record demonstrating the business’ repeated violations of relevant code provisions and the owner’s pattern of negligently supervising her business despite the City’s many efforts to help her comply.

Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.

For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.