Measure ULA Lawsuit Rejected by Federal Judge

A judge dismissed a legal challenge to Measure ULA in federal court on Sept. 5, making L.A. Superior Court the only current legal venue to decide the fate of the controversial transfer tax.

Judge John Kronstadt ruled that federal court was not the right place for the case Newcastle Courtyards LLC v City of Los Angeles. Federal court is not the correct forum to argue a Los Angeles tax, which the court believed the Newcastle case was arguing. “Federal courts are courts of limited jurisdiction,” Kronstadt wrote. “Accordingly, when a federal court finds that it lacks subject matter jurisdiction, it must dismiss the complaint in its entirety.”

Newcastle Courtyards attorney Keith Fromm said his firm plans to appeal the decision. Fromm said that federal court is the right forum for his case because ULA violates the U.S. Constitution’s equal protection clause. Fromm contends that ULA does not benefit the general public because he believes it has damaged the city’s real estate business.

“It has frozen the very sales from which the ULA expected to obtain its revenue. … It has made it virtually impossible to attract capital and loan financing to build new multi-family housing in L.A., which will ultimately lead to far less affordable housing, not more,” Fromm wrote in an email to TRD.

Kronstadt also rejected Newcastle Courtyards’ argument that Measure ULA had overstepped its boundaries because it could not be defined as a tax. The plaintiff argued that ULA is a charge on a specific group of people. The judge agreed with the City of Los Angeles’ argument that Measure ULA is a citizen-sponsored initiative which was approved by the city’s voters. The court argued that when “the electorate exercises its initiative power, it is acting in a legislative capacity.”

Newcastle Courtyards also is participating in a challenge to Measure ULA in L.A. Superior Court. In April, its case was combined with Howard Jarvis Taxpayers Association and Apartment Association of Greater Los Angeles. The next scheduled date in the case is an Oct. 24 case management conference.