THE EXHAUSTION TRAP:  If you need a road map to follow in frustrating your neighbor’s development plan, McAllister v. California Coastal Commission (12/30/08) provides a fairly easy step by step.  In a case of battling doctors (Dr. McAllister vs Dr. Engel), the first Dr on the land opposed the second Dr’s plan to develop neighboring property.  As in all of these cases, the competing policies are (1) protection of environmentally sensitive habitat against (2) property rights—the right of the owners to develop their property as they desire.   The Court’s challenge is to balance these competing interests in accordance with enlightened views as to the social importance of each. 

Here the environmental concerns identified by Dr. McAllister (Dr. M) involved the “coastal bluff scrub” and the Smith’s Blue Butterfly.  (I know, you’ve never heard of either.)  Dr. M started with a great advantage:  this is Big Sur, where development is supervised by the Coastal Commission.  Two strikes against Dr. Engle (Dr. E).  But she came up to bat and started with a stand-up triple when the Commission approved her application to build her home where Dr. M could see it.[1]  But the game wasn’t over.  Dr. M energized his pitching crew, for one last heroic pitch. 

But let’s go back to the start of the game.  In 2001 and 2003 Dr. E obtained approval of her project from the County over Dr. M’s objections.  When the Planning Commission approved, Dr. M appealed to the Board of Supervisors.  Point number one:  get involved from the beginning and marshal every possible objection to avoid the “exhaustion trap”, “ripeness trap” and issue preclusion.  (See elsewhere in this blog for a discussion of these hurdles.)  In 2004, the Board of Supervisors overruled Dr. M’s appeal.   Since this game is played on the coast, one more appeal was available (and, as it turned out, necessary) to Dr. M, appeal to the Coastal Commission. 

Point number two: don’t miss a chance to challenge agency action in court, every agency action.  Dr. M knew what he was doing and was determined to cover every possible base.  So in addition to filing an action in Superior Court, he wisely appealed the county’s decision to the Coastal Commission to avoid an “exhaustion” trap.  How really smart this was was confirmed by the Appellate Court’s 2007 determination that he couldn’t rely on the fact that the Coastal Commission’s decision superseded the county’s decision to ignore the Commission in the exhaustion game.   The best example of this trap is Kaczorowski v. Mendocino Count (2001) 88 CA4th 564, where the plaintiff did not appeal to the Commission before filing suit against the county, then, by the time the Appellate Court ruled that he failed to exhaust, it was too late and a potentially meritorious claim was lost.  (See Statute of Limitations Trap.)   The point, again, is to cover every exhaustion risk, file suit AND appeal.  Don’t rely exclusively on either. 

In any case, before the Appellate Court acted on the first appeal in 2007, the Commission ruled in favor of Dr E and so Dr. M filed another Superior Court action challenging that.  The point again, he was able to file another suit on the merits only because he both appealed and filed suit—it could have gone either way.  Again, Dr. M did not miss an opportunity to object, and the way the law of exhaustion reads, he really had little choice.  

So, in this second suit against Dr E, the county and Coastal Commission, he raised essentially all environmental arguments against an administrative body’s acts which one can: failure to comply with Coastal Act policies affecting (1) sensitive habitat, (2) visual and scenic resources and (3) water resources.  And then, as to the procedural requirements of CEQA, he argued that the Commission failed to “adequately evaluate or mitigate potentially significant individual and cumulative environmental impacts.”  

So, predictably, Dr. M lost in his second Superior Court action too, but Dr. M was given a pretty good new curve ball to pitch when the Commission did not adopt findings to support its decision granting Dr. E’s application and Dr. M successfully threw that pitch in this appeal. 

Now, the whole game has been sent back to the Coastal Commission to consider its decision and adopt findings to support it.  You can be sure that this time Dr. E’s team will be there when the Commission reconsiders its decision and plug every conceivable procedural hole, including suggesting enough findings to paper a wall.  Findings are critical to agency decisions and, properly done by inventive lawyers, are difficult to defeat.  See Category “findings.” 

But remember, Dr. E is still on third base, we’re close to the ninth inning and there is at least one more pitch to go.  We’ll follow this. 

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In McGuire v. United States (12/24/08), the court considered an unusual “takings” claim.   McGuire leased a huge tract of agricultural tribal land in Arizona.  Uniquely, the leased premises was divided by a bridge between the two almost equal halfs.  McGuire farmed away and the Bureau of Indian Affairs (BIA) decided sometime into the lease that the bridge was not safe and was going to be removed.   That made it impossible for McGuire to farm half of the property because there was no other reasonable access.  McGuire went to the tribe and asked for a reduction in the lease payment, sought accommodation from BIA all to no avail.  In the bankruptcy court he alleged that BIA had “taken” his property, and although that was not the direct issue of the case, the court did not find that the takings allegations fell short.  So we have a leasehold interest, taken when a bridge was removed denying reasonable access.

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The Map Act establishes standards for dividing property.  So if a person owns 10 acres and wants to divide that into 10 parcels and sell them, the Map Act controls how it is done. 

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Land use law, like a number areas of law, is something of a game.  It is a game because land use decisions tend to arise from sometimes irrational motives.  The key is 3 votes (out of 5).   Those votes are not necessarily cast by folks steeped in modern planning philosophy, but usually educated by the culture of growth which has dominated California over the last 50 years.

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The Zoning ordinance determines the use to which ppty can be put:  single family dwellings, multiple family (apartment), commercial (some kind of manufacturing, etc).  The zoning ordinance is supposed to implement the General Plan.  Every piece of property is zoned something. 

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Statute of limitations lovers/haters will relish Arcadia Development Company v. City of Morgan Hill __ CA4th__(12/16/08).  In a tightly reasoned and lucid decision, the Sixth District takes us on a journey through the statute of limitations thicket involving Gov. C. § 65009.  As most interested in reading this know, § 65009 imposes a 90 day limit on challenges to land use decisions.  As statutes of limitations go, 90 days is short.  Not only does §65009 require filing the complaint within 90 days, but the Summons must also be filed within that time, creating another hoop through which the injured must climb.  Since California adds approximately 500,000 new citizens a year and sprawl threatens to exhaust all imaginable infrastructure, the legislature considered short statutes of limitations “essential.”  Gov. C. § 65009(a)(1).  You can plan on a statute of limitations claim in any land use related action filed against a public entity.  It is the favorite defense.   Don’t plan on getting more than 90 days, and fear getting less in these matters. 

            But the property owner in Arcadia didn’t stumble on the 90 day limitation.  The problem was that the City’s action which dramatically reduced the value of the owner’s property was an “extension” of action taken by the city almost 20 years earlier, giving it the argument that the action was 20 years over the 90 day limit.  So the court faced the challenge of applying the competing policies which underlie the statute of limitations to the facts, which are:    Morgan Hill in the 1970’s grew at a rate of 20% per year, a rate of growth capable of consuming all available and imaginable public services off into the future.  And from the City’s point of view, this new growth was the most unhealthy kind—sprawl: the conversion of adjoining farm land into residential subdivisions dependent on the freeway and the car.   From the owners’ point of view, this growth created an economic opportunity in the best spirit of the free-market economy which has produced so much of our country’s wealth and social advancement. 

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“Takings” is a concept that defies precise definition.  But in general when property is damaged by government action, it is likely a “taking.”

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The Zoning ordinance determines the use to which ppty can be put:  single family dwellings, multiple family (apartment), commercial (some kind of manufacturing, etc).  The zoning ordinance is supposed to implement the General Plan.  Every piece of property is zoned something. 

Filed under: The Tools: Zoning Ordinances and Development Code | No Comments »

 The General Plan is a big deal.  It is the constitution of a City’s planning goals.  It’s supposed to embody all the best planning ideas.  It organizes a City’s growth.  In it a City establishes the direction of growth, where green belts are supposed to be, park location, where industry is to be located, etc.

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City and County of San Francisco v. Coyne came down on 12/5/08.  Here the court denied damages based on “goodwill” in a direct condemnation setting.  Traditionally, business “goodwill” was considered too intangible or too speculative to fix.  The legislature was required to move that concept into the 21st Century and did so in CCP 1263.510 in 1975.   Apparently, “goodwill” is still suspect, because, although it can clearly represent lost value relating to the public entity’s taking of property generating it, its loss is not considered “constitutional,” only statutory.   

However, “goodwill” can’t spring into being spontaneously.  By definition, “goodwill” is a reflection of a business’s momentum as generated by its location, reputation and other attributes which draw business including longevity.  Here the owners were not conducting a business on the taken property, although they planned to.   The land owners argued that the land was something of a commodity in their business, which was “development” of commercial property and its loss impaired their compensable goodwill.   Not so, reasoned the court, the compensable goodwill must be more than something on which the goodwill-generating business “depends,” and there was no business on the property when taken.  Not having an ongoing business generating “goodwill” to evaluate, the court broke the process of achieving “goodwill” into steps leading to its likely creation.    Although the owners had both architectural and engineering plans and planning commission approval for retail space and condominiums to be build on the property, they had no building permit and they had not secured construction financing.   The court pointed to their failure to pre-sell any units or do anything normally expected of a business “conducted” on the property, but obtaining the building permit may have been critical.   Obviously uncomfortable with allowing the owners to “project” income, profit and loss (or goodwill), from plans, the trial court refused to allow the owner’s goodwill testimony and the appellate court affirmed.   It’s hard to say if “vesting” with a building permit would have been enough, but having to rely solely on projections from plans left the court with too little comfort.

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