                           NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       OCT 17 2018
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

PARAMOUNT CONTRACTORS AND                       No.    17-55620
DEVELOPERS, INC., a California
corporation,                                    D.C. No.
                                                2:15-cv-06153-FMO-PJW
                Plaintiffs-Appellants,

 v.                                             MEMORANDUM*

CITY OF LOS ANGELES, a California
municipal corporation and DOES, 1-10,
inclusive,

                Defendants-Appellees.

                    Appeal from the United States District Court
                       for the Central District of California
                   Fernando M. Olguin, District Judge, Presiding

                      Argued and Submitted October 9, 2018
                              Pasadena, California

Before: IKUTA and OWENS, Circuit Judges, and GILLIAM,** District Judge.

      Paramount Contractors and Developers, Inc. (“Paramount”) appeals from the

district court’s order granting the City of Los Angeles’s (“City’s”) motion to


      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Haywood S. Gilliam, Jr., United States District Judge
for the Northern District of California, sitting by designation.
dismiss.1 Paramount alleges that the City failed to properly apply its signage

regulations when it denied Paramount’s permit applications for “supergraphic

signs” and “wall signs.” The district court determined that res judicata barred the

claims because of the preclusive effect of Paramount’s prior actions against the

City in pursuit of permits to erect large signs on the same two commercial

properties in Hollywood. We have jurisdiction under 28 U.S.C. § 1291, and

review the district court’s dismissal on res judicata grounds de novo. Furnace v.

Giurbino, 838 F.3d 1019, 1023 n.1 (9th Cir. 2016). We affirm in part, reverse in

part, and remand.2

      Res judicata applies when there is (1) identity or privity between parties;

(2) a valid final judgment on the merits; and (3) identity of claims. See Blonder-

Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 323-24 (1971). Here, the

parties agree that the first two elements are met. The only dispute is over the third

element: identity of claims.

      This court applies four factors to determine whether successive actions have

identity of claims: “(1) whether rights or interests established in the prior judgment

would be destroyed or impaired by prosecution of the second action; (2) whether


      1
           The Folb Partnership was also party to the appeal, but has since
withdrawn. We dismiss the appeal as brought by the Folb Partnership.
      2
            We grant the City’s Motion for Judicial Notice in Support of
Opposition Brief.

                                          2
substantially the same evidence is presented in the two actions; (3) whether the two

suits involve infringement of the same right; and (4) whether the two suits arise out

of the same transactional nucleus of facts.” Costantini v. Trans World Airlines,

681 F.2d 1199, 1201-02 (9th Cir. 1982) (citation omitted). The “same

transactional nucleus of facts” inquiry “is the most important.” Id. at 1202.

      The district court did not err in determining that res judicata barred

Paramount’s claim concerning supergraphics. Paramount alleges that the City

should have granted its permit applications for supergraphics because the

applications qualify for the “grandfathering” exception to the City’s ban on

supergraphics under the 2010 amendment of the Hollywood Signage Supplemental

Use District (“Amended SUD”). See L.A. Ordinance No. 181340 §§ 5(B)(11),

6(K) (amending L.A. Ordinance No. 176172). Paramount asserts that this claim

did not arise from the same transactional nucleus of facts as prior actions because

the current action presents Paramount’s first permit applications since the City

enacted the Amended SUD. We disagree. Paramount already challenged the

Amended SUD in Paramount Contractors & Developers, Inc. v. City of Los

Angeles, 516 F. App’x 614 (9th Cir. 2013) (“Paramount II”). Moreover,

Paramount argued in Paramount II that its permit applications for supergraphics

should be considered “grandfathered” under the Amended SUD, and the district

court rejected this argument. See Paramount Contractors & Developers, Inc. v.


                                          3
City of L.A., 805 F. Supp. 2d 977, 1002 (C.D. Cal. 2011), aff’d, 516 F. App’x. 614.

Thus, we affirm the district court’s dismissal of Paramount’s claim concerning

supergraphics.

      However, the district court erred in determining that res judicata barred

Paramount’s claim concerning wall signs. Paramount’s challenge to the alleged

wrongful denial of its permit applications for wall signs did not arise from the

same transactional nucleus of common facts because the prior actions did not

involve any dispute over wall signs. Paramount applied for wall sign permits for

the first time after the prior actions concluded. Wall signs are distinct from

supergraphics because the Los Angeles Municipal Code expressly defines

supergraphics as a type of sign that “does not comply” with the parameters for wall

signs. L.A. Mun. Code § 14.4.2 (cross-referencing § 14.4.10, “Wall Signs”). In

other words, wall signs cannot be supergraphics. In addition, the Amended SUD

bans supergraphics, with limited exceptions, but not wall signs. See L.A.

Ordinance No. 181340 § 5(B). Therefore, we reverse the district court’s dismissal

of Paramount’s claim concerning wall signs, and remand.

      Because Paramount withdrew its constitutional claims on appeal, the only

remaining claim is a purely local one. Thus, the district court has discretion to

either exercise supplemental jurisdiction over this claim or remand the action to

state court. See 28 U.S.C. § 1367; Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343,


                                          4
350 (1988).

      Each party shall bear its own costs on appeal.

      AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.




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