Is your administrative appeals process fatally flawed?

MUNICIPAL MATTERS

The recent decision in Lippman v. City of Oakland signals the need for local public entities to evaluate their administrative appeals process to ensure that it conforms with state law. If a local public entity utilizes an in-house administrative appeals process to hear citation appeals, the courts may find that the process conflicts with state law and overturn the citations.

In 2009 and 2010, the city of Oakland's Building Services Department issued citations to property owner Thomas Lippman for blight and substandard conditions existing on his rental property. Lippman challenged these citations through the city's administrative appeals process. In 2012, the city's Building Services Department appointed one of its own employees to serve as the hearing officer. The employee heard and ultimately denied Lippman's citation appeals.

Lippman subsequently sought a writ, arguing that the city violated state law because his appeals were heard by a single hearing officer who was appointed by the same entity that issued the citations. Lippman contended that the city's administrative appeals process conflicted with California's 2010 Building Code.

The city prevailed at the trial. The trial court found that no conflict of laws existed. In its decision, the trial court noted that the relevant provisions of the State Housing Law and State Building Code do not preclude the city from authorizing its enforcement agency to appoint a hearing examiner to hear the citation appeals.

However, on appeal, Lippman prevailed. In a 3-0 ruling, the 1st District Court of Appeal found that the city's municipal code conflicted with the Building Code. 2018 DJDAR 838 (Jan. 24, 2018). Specifically, the appellate court held that the Building Code mandates that every city, county and city and county establish an administrative process for hearing and deciding citation appeals. If the established process involves an appeals board, the members of the board cannot be employees of the enforcing agency. Where no outside appeals boards or agencies have been established, the governing body (e.g., the city council) serves as the local appeals board or housing appeals board.

In determining that the city's administrative appeals process was fatally flawed, the appellate court also reviewed the legislative history and concluded that such appeals should be heard and adjudicated outside of the enforcement agency.

Because the appellate court found that the city's municipal code and the state's Building Code conflicted, the appellate court also addressed the city's argument that its right to "home rule" supersedes the Building Code and its related statutory scheme. In rejecting the city's argument, the court noted that due to the statewide interest in uniform building codes, the Building Code's procedural requirements did not amount to a legislative intrusion into a strictly municipal affair, and the court inferred that the legislature intended to preempt this field by giving local entities limited powers to deviate from these requirements. The court reasoned that in light of the state's preemption, local authorities are obligated to follow state law, and not rely on the entity's general police power.

Finally, in comparing the scope of the statute to the statewide concerns at issue, the appellate court held that the administrative appeals process dictated by the Building Code was sufficiently narrowly tailored to ensure a uniform application of law. As the court explained, the state has an interest in "protecting the basic rights of property owners" that is paramount to the impingement upon the city's control over its administrative process.

Larger Implications

Whether for budgetary reasons, convenience or force of habit, many local public entities may find that they are in fact using an "in-house" administrative appeals process for resolving citations relating to the housing code or other municipal code violations. Indeed, many cities will cite landowners for nuisance conditions, and hold administrative hearings to make a factual record and obtain "final and conclusive" findings as part of their overall plan to build a solid case for nuisance abatement and/or receiverships. As the Lippman case demonstrates, however, years of code enforcement efforts and their attendant costs in time, money and energy can be reduced to rubble if a court finds that the administrative process conflicts with state law.

In other instances, a local public entity may have a sound procedure detailed in their codes that conforms with state law, but in practice the entity is either ignoring or substantially deviating from the established procedure. Given how common it is for individuals to challenge citations, any defects in these procedures can unravel the administrative record they worked so hard to create.

Recommendations

Local public entities should work with their counsel to review and evaluate the administrative appeals processes to ensure that these procedures comply with state law. Counsel should evaluate how these procedures are being applied to ensure that the procedures as written are actually being followed. Counsel can make recommendations to amend the municipal code to fortify these procedures as necessary.

In light of the Lippman decision, if appeals of citations related to substandard housing conditions are currently being heard "in-house" (i.e., by employees of the enforcement agency), the entity should consider immediately contracting with someone who is outside of the enforcement agency to hear these appeals. Neither the hearing officer nor the hearing officer's law firm should do other work for that entity. Alternatively, the entity should utilize its governing board as permitted.