| SAN FRANCISCO - June 20, 2005 -- Owners of the historic San Remo Hotel
in San Francisco point to today's U.S. Supreme Court decision as a signal
that property owners in future cases may gain improved access to the court
system for Fifth Amendment claims against local regulations of private
property.
In deciding San Remo Hotel v. San Francisco, the Supreme Court upheld
a ruling by the Ninth Circuit Court of Appeals that hotel owners, brothers
Tom and Robert Field, were precluded from arguing their property rights
case in federal court because they had previously lost their state law
claims in California courts. The California Supreme Court rejected their
claims in a 4-to-3 decision in 2002.
According to Paul F. Utrecht at Zacks Utrecht & Leadbetter, the
law firm representing the Fields, "Today's decision means state courts
must consider federal takings claims at the same time as state law claims.
This will finally make it possible for other plaintiffs to bring all their
claims in one state court proceeding. The Fields were prevented from pursuing
their federal claims on the merits by a 'Catch-22' -- the state courts
refused to consider federal takings claims and the federal courts rejected
those claims based on the state courts ruling on state law issues."
Although the high court's opinion resolves the Catch-22, the decision
does not help the Fields. "This is a sad day for the Fields because their
federal constitutional claims will never be decided on the merits," says
Utrecht. "But there is hope for other plaintiffs who challenge local property
regulations as unconstitutional."
The Field brothers continue to believe they would have prevailed on
the merits of their case if it had reached a trial stage at a federal level.
San Francisco's Hotel Conversion Ordinance, a controversial law at the
center of the 12-year legal battle, restricts tourist use of available
rooms in hundreds of the city's smaller private hotels. Enacted 20 years
after the Fields purchased the 62-room San Remo as a fully licensed tourist
hotel, the law required the Fields to pay a $567,000 fee to continue renting
available rooms to tourists rather than reserving them for low-income residential
housing.
In addition, the city insisted the Fields offer lifetime leases to existing
long-term tenants who had already been welcome at the hotel indefinitely.
The brothers offered the leases and paid the fee under protest, but sued
the city in 1993 in state and federal court for taking private property
in violation of their state and federal constitutional rights.
In recent years the San Remo saga reached center stage within legal
and public policy circles and captured the attention of leading property
rights groups. Judicial opinions in the case are often cited in lawsuits
over similar issues, and the Fields' claims in state court in 2002 triggered
a frequently quoted dissent by California Supreme Court Justice Janice
Brown: "Private property, already an endangered species in California,
is now entirely extinct in San Francisco."
When the U.S. Supreme Court determined the case deserved review, the
city was required to appear in the high court as a defendant in a takings
case for only the second time in 100 years.
Organizations supporting the hotel included the U.S. Chamber of Commerce,
the National Association of Realtors, the National Association of Home
Builders, the Washington Legal Foundation, the Pacific Legal Foundation
and the Small Property Owners of San Francisco.
 Located
a few blocks from Fisherman's Wharf at 2237 Mason Street in the colorful
North Beach District, the fully restored three-story Victorian hotel was
built by Bank of America founder A.P. Gianinni shortly after the 1906 earthquake
and fire.
The Fields intend to maintain the historic decor and low room rates,
popular with budget-conscious travelers. Building on the hotel's reputation
for service and hospitality, they recently leased the ground floor to Fior
d'Italia, America's oldest Italian restaurant.
Founded in 1886 and currently located six blocks from San Remo, the
restaurant is set to move to the hotel later this year. Fior d'Italia owner
Bob Larive had been searching for new space after extensive fire damage
forced him to close his venerable establishment.
"The timing was just right," said Tom Field. "The hotel's bar and restaurant
had been vacant while we looked for a new tenant that matched our Old World
ambience. We'll be in perfect company with the restaurant, especially since
its owners also challenged regulations they felt were unfair. Like us,
they took their case all the way to the Supreme Court."
Larive and his partners charged the IRS with using arbitrary methods
for estimating Social Security taxes they owed on customer tips to employees.
U.S. v. Fior d'Italia was decided in favor of the federal government in
2002.
SAN REMO HOTEL FACT SHEET
Updated: March 30, 2005
LOCATION: The San Remo Hotel is located in a quiet North Beach
neighborhood at 2237 Mason at Chestnut Street, within walking distance
of Fisherman’s Wharf in San Francisco, California. The hotel’s north wall
faces historic Water Street, an alley that marks the city’s actual shoreline
before landfill began in the 1860s.
DESCRIPTION: The small Italianate Victorian property contains
62-units on two levels, above the hotel’s street-level bar and restaurant,
which is currently closed. Moderately priced cozy rooms have shared baths
and are decorated in a country style with historic touches. Brass fixtures,
antique furniture, historic prints and photos are found throughout the
hotel. Maid service is provided to guests.
RESTORATION: Brothers Tom Field, 57, and Robert Field, 53, purchased
the building in 1970 and restored the property, which had been neglected
in the 1960s. At a cost of more than $500,000 and through years of painstaking
work, they returned the hotel to classic turn-of-the-century mint condition.
The Fields have operated it as a European-style establishment, popular
with visitors from around the world for more than three decades. Because
of its restored architecture and continuous maintenance, the San Remo has
been selected by location scouts as a setting for dozens of motion pictures,
commercials and television series.
STAFF: In addition to their hands-on management, the Field brothers
employ 17 hotel workers: four desk clerks, nine housekeepers, two maintenance
workers and two managers.
ROOM RATES: Nightly rates for tourist rooms are $55 – $75 for
single or double occupancy. Seven long-term residents pay rents of $114
- $180 per month or weekly rents of $39 - $115 per week for residential
rooms.
HISTORY: Built In 1906 by A. P. Giannini, the founder of Bank
of America, the hotel supplied much-needed lodging after the great San
Francisco earthquake and fire that occurred that year. In decades immediately
after the quake, as the city rebuilt and neighborhood commercial vitality
was restored, the San Remo continued to provide convenient lodging for
merchant seaman and waterfront workers. During the last half of the 20th
Century, the hotel’s clientele expanded to include North Beach artists,
poets, journalists and an increasing number of tourists and business travelers.
After the Loma Prieta Earthquake in 1989, the Field brothers offered rooms
without charge to local quake victims whose homes were either destroyed
or damaged.
BATTLE OVER SF HOTEL LAW The Field brothers claim the city relied
on unconstitutional provisions in the San Francisco Residential Hotel Unit
Conversion and Demolition Ordinance, a controversial law enacted in 1981
and amended in 1990 with more restrictive regulations. The hotel ordinance
requires that unless operators of certain small hotels reserve rooms for
low-income residents rather than tourists, they must replace or pay for
housing “lost” as a result of “converting” any of those residential rooms
to tourist use. In 1993 the city demanded the brothers pay $567,000 as
a “replacement housing fee” for all 62 rooms to continue operating the
San Remo primarily as a tourist hotel. City officials also insisted the
Fields offer lifetime leases to long-term residential tenants – who had
already been welcome indefinitely for many years at the hotel. The Fields
offered the leases and paid the fee under protest, but sued the city in
state and federal courts, demanding a refund. Issues in the case center
on the constitutionality of local governments taking targeted sectors of
private property for public purposes and whether courts in individual states,
in this case California, can legally serve as ultimate forums in determining
the extent of private property rights guaranteed under the U.S. Constitution.
U.S. SUPREME COURT After 12 years of litigation in state and
federal court, the Fields petitioned the U.S. Supreme Court to hear their
case on September 7, 2004. The request for a hearing was granted on December
10, 2005, and oral arguments were heard on March 28, 2005. The Fields now
await a decision from the high court. The San Remo case raises key questions
about the proper forum for constitutional “takings” claims — state courts
or federal courts. If property owners challenge an ordinance as unconstitutional,
can federal courts first tell them to seek compensation in state courts
before federal courts will consider their claim? If state courts deny compensation,
can federal courts say that federal claims are barred by the state court
decision? In addition, San Remo attorneys Paul Utrecht and Andrew Zacks
contend there is a split of authority in the nation’s courts as to what
constitutes an unlawful taking under the Fifth Amendment. Organizations
siding with the San Remo in amicus briefs include the Chamber of Commerce
of the United States, the National Association of Realtors, the National
Association of Home Builders, the Washington
Legal Foundation, the Pacific Legal Foundation and the Small Property
Owners of San Francisco Institute. |
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