In Sunset Skyranch Pilots Association v. County of Sacramento (2008) 164 Cal.App.4th 671, the Court of Appeal, Third Appellate District addressed two separate issues: 1) does the State Aeronautics Act (“SAA”) preempt the County’s decision to deny renewal of Sunset Skyranch Pilots Association (“Airport”) conditional use permit (“CUP”), and 2) does the denial of the CUP renewal constitute a “project” under the California Environmental Quality Act (“CEQA”)? The appellate court held that the SAA did not preempt the County’s decision, and denial of the renewal of the CUP did constitute a project under CEQA.

Preemption

First, the Airport argued that the SAA preempted the County’s denial of the CUP renewal. The appellate court disagreed. The court began by pointing out that the Airport did not have a vested right to continue airport operations because the CUP had a specific expiration date and the Airport was put on notice that the uses in the surrounding area may be changed. The court then found that although the SAA encourages aviation and the availability of airports, it does not mandate that the airports remain open. According to the court, the language of the SAA makes it clear that jurisdiction over the operation of any airport remains with the local agency. The court concluded that nothing in the SAA requires “existing airports to keep on existing.” The power to grant or deny a CUP lies with the local agency, and therefore, the County has the authority to deny the Airport’s CUP renewal.

Project under CEQA

Second, the Airport argued that the County had failed to perform any environmental review as required by CEQA. Under CEQA, every “project” must undergo environmental review unless one of the exemptions applies. The issue here was whether denial of a permit renewal constituted a project under section 15378(a) of the CEQA Guidelines. In finding that the denial constituted a project, the appellate court looked not only at the denial but the inevitable result of the denial, which was closure of the Airport and “transfer of pilots to other airports.” Although “CEQA does not apply to projects which a public agency rejects or disapproves,” denial of a CUP renewal is not a “mere denial of the project.” Instead, the court found that the “whole of the action” in this case (i.e., closure and transfer of pilots) “has the potential for physical change in the environment.” Therefore, CEQA was triggered. The court emphasized, however, that merely because CEQA was triggered did not mean that an environmental impact report was required.

In the end, the Airport lost its main battle over the preemption issue, but it succeeded in obtaining another opportunity to convince the County to renew its CUP. Since the County failed to engage in the proper environmental review, the denial of the CUP renewal is not valid. The County essentially has a “do-over” and maybe the political milieu has changed such that the elected officials will find merit in continuing airport operations at Sunset Skyranch.

Diane Kindermann is a partner at Abbott & Kindermann, LLP, and Cori Badgley is an associate with the firm. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

A byproduct of modern planning is the proliferation of property owner associations, mostly centered on residential developments. At the time of formation however, associations are subject to minimal oversight by the State of California, and then only for residential development projects subject to review by the Department of Real Estate. One of the challenges facing associations is continued active participation by the owners in association matters. For associations facing apathetic owners, it may be difficult to obtain the necessary level of votes to take actions on behalf of the association, and in situations in which association documents require a super-majority vote to pass resolutions for certain actions, a stalemate may readily occur.   In 1985, the legislature, recognizing the important role that associations play, enacted statutory provisions which allowed interested parties to file a court action to reduce the required voting percentage in compelling circumstances (Civ. Code § 1356). The recent case of Mission Shores Association v. Pheil (September 5, 2008) 2008 Cal.App.Lexis 1395 illustrates how this works in real life.

Undaunted, the Board petitioned the trial court seeking a court order reducing the requisite amendment threshold to that of a majority of votes actually cast for both classes. Pheil opposed the petition on three grounds. First, Pheil objected to the minimum lease requirement on the grounds that it violated the representation made by the developer at the time of Pheil’s purchase. Second, Pheil claimed that the results of the election were not properly reported as required by statute. Finally, Pheil claimed that the amendment impaired the security of the mortgage holders, and thus required a stated level of approval by the holders of debt. 

Civil Code section 1356 authorizes the court to grant a petition if it makes a number of findings, including that the amendment request was reasonable.  Pheil argued that the Board was controlled by the developer, and while not entirely clear from the legal opinion, that the developer, through the Board, should not be able to act inconsistent with the prior representation to the Pheils as to rental use.   The court however, focused on the statutory reasonableness test. The Association’s stated purpose in enacting the amendment was to avoid a hotel like character within the development. The evidence showed that the minimum stay requirement was common in many other association documents as well as in city and county zoning regulations. Reviewing the arguments presented by the Pheils, both the trial and appellate courts agreed with the Association that such a requirement was reasonable, when considered in light of all of the circumstances.

The trial and appellate courts similarly rejected Pheil’s second and third arguments. As to the second claim, the court found de facto statutory compliance with required voting procedures (Civ. Code § 1363.03(g).). As to the third objection, the court held that there was no impairment to security interests thus lender consent was unnecessary.

Bill Abbott is a partner at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

In response to low production of affordable housing units, the City of Santa Monica adopted new and amended ordinances to increase the supply of affordable housing in June, 2006. These enactments were challenged by a coalition of multifamily residential developers on multiple grounds, with two issues going to the Court of Appeals: do the holdings of Nollan and Dolan apply to the ordinance enactment (as compared to the application of an ordinance to a given individual), and were the enactments subject to approval by the Department of Housing and Community Development (“HCD”) pursuant to its review powers of Housing Elements? As to both issues, the appellate court ruled in the negative. Action Apartment Association v. City of Santa Monica (August 28, 2008) 2008 Cal.App.Lexis 1372.

The Association’s second challenge asserted that these enactments were subject to review and approval by the Department of Housing and Community Development. Here, the court ruled that the HCD’s review was limited to the housing element adopted as part of the general plan. The state agency had certified the City’s housing element, and this certification remained in effect. The appellate court determined that no statute granted HCD’s review and approval authority over affordable housing ordinances, and as a result, the plaintiff failed to state a claim.

Bill Abbott is a partner at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

In County of Humboldt v. McKee (August 15, 2008) 2008 Cal.App.Lexis 1248, the Court of Appeal, First Appellate District examined the state’s Williamson Act. The court determined that Humboldt County (“County”) Williamson Act guidelines, adopted in 1978 (the “1978 guidelines”), governed a Williamson Act contract signed in 1977. This holding meant that the new owners, Buck Mountain Ranch Limited Partnership, and the McKee’s, (collectively “Mckee”) of Tooby Ranch, consisting of over 10,000 acres, violated the Williamson Act by dividing it into parcels of 160 acres in size. This size of parcel was allowed under the County’s previous guidelines (the “1973 guidelines”).

In this case, Arthur Tooby and the County entered into a WA contract in February 1977. The 1973 guidelines provided that land under contract could not be divided into parcels of less than 160 acres. Subsequent to the Tooby contract, the County adopted the 1978 guidelines which changed the minimum parcel size to 600 acres. In 2000, the Tooby Ranch was sold to McKee, who created 44 parcels. Some of the resulting parcels were sold to third parties and McKee retained control of roughly 3,000 acres. Although none of the new parcels were smaller than 160 acres, many were smaller than 600 acres in size. McKee did not file a notice of non-renewal of the contract and he continued to receive the tax breaks under the WA. The County filed suit against McKee for breach of the contract in December 2002. The trial court found that McKee did not violate the Williamson Act, and the County appealed.

First, the appellate court held that the 1978 guidelines, upon adoption, were intended to apply to all contracts, even those previously enacted. The County pointed out that the 1973 guidelines were rescinded upon adoption of the 1978 guidelines. If the 1978 guidelines were not intended to apply to the pre-1978 contracts, then there would be no valid guidelines at all. The court accepted this reasoning, despite McKee’s argument that the County itself advised him in letters that 160 acre parcel sizes were permissible. The court said that the letters did not reference either version of the guidelines and they instead directed McKee to the County’s zoning code. The court said, “A county’s agricultural preserve guidelines are separate from, and may be more restrictive than, it’s zoning regulations.” McKee asserted that he relied upon the County’s letters, but the court held that he could not demonstrate that this was an extraordinary case which justified application of the very narrow governmental estoppel doctrine.

Then, the court held that upon renewal of the WA contract, the 1978 guidelines were incorporated into the contract. The court said:

Each year, a landowner bound by a Williamson Act contract has a choice: give timely notice of nonrenewal, which preserves the current 10-year contract, or decline to give notice of nonrenewal, which renews the contract for a new 10-year term. By choosing not to give notice of nonrenewal, the landowner gains both the burdens and the benefits of a new 10-year contract. The landowner remains burdened by restrictions on the use of the contracted land for the balance of the new 10-year term, but also benefits from the preferential tax assessment guaranteed for enforceably restricted agricultural land. This preferential tax assessment is not available once the landowner gives notice of nonrenewal: upon notice of nonrenewal, taxes gradually return to the level of taxes on comparable non-restricted property. Thus, the decision not to give a notice of nonrenewal binds the landowner to a new 10-year contract.

When the contract was automatically renewed in 1979, all laws then in effect (including the 1978 guidelines) were made part of the new contract. If either of the landowners, Tooby or McKee, objected to the new rules, the court reasoned that they could have submitted notice of non-renewal. This would have begun the winding down of the WA contract and the landowner would stop receiving the preferential tax treatment. However, without non-renewal, the contract was still in force.

Thus, the court held that the 1978 guidelines were incorporated into the contract upon renewal and the division of parcels smaller than 600 acres was a breach of the Williamson Act. A petition for rehearing was subsequently filed on September 2, 2008, by defendants, Buck Mountain Ranch.

A landowner whose land is covered by a Williamson Act contract should carefully examine the applicable County guidelines because the appellate court made it clear that even later adopted rules may apply to all previously entered into contracts.

We note that the facts of this case are unique given that the County permitted the subdivision of the property and then later argued non-compliance with the Williamson Act. The point, however, remains as to other counties that later adopted guidelines may apply to pre-existing contracts.

Kate Hart is a senior associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595. Janell Bogue assisted with this article.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

This mid-summer review of real estate cases covers three interesting matters of potentially broad application. The first case Goldstein v. Barak Construction, deals with the precarious position of unlicensed contractors. The second, Lange v. Schilling, reinforces the significance of the mandatory medication provision of the standard CAR purchase agreement. Finally, Steiner v. Thexton, wrestles with the penultimate flexible purchase agreement, and how a buyer may lose the deal absent adequate consideration.

Rob Hofmann is an associate with Abbott & Kindermann, LLP, and is a member of the City of Davis Planning Commission, and a member of the San Joaquin Valley Air Pollution Control District Hearing Board.  For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

In Skoumbas v. City of Orinda (2008) 165 Cal.App.4th 783, Konstantine and Alexandra Skoumbas claimed that damage caused by a storm drain, a portion of which was owned by the City of Orinda (“City”), amounted to a physical taking of their property. Agreeing with the City, the trial court granted the City’s motion for summary judgment on the grounds that a taking could not have occurred where the City did not own the entire storm drain. The Court of Appeal, First Appellate District reversed the trial court’s ruling and held that the fact that the City only owned a portion of the storm drain did not preclude the conclusion that a physical taking occurred. Instead, the court ruled the question is “whether the City acted reasonably in its maintenance and control over those portions of the drainage system it does own.”

Since this involved a summary judgment motion brought by the City, the court was merely concerned with whether there were any triable issues of fact remaining in the case. According to the City, a physical taking could only occur if the City owned the entire pipe, and therefore, since the City owned merely a portion of the pipe, there were no factual issues left to dispute and the City wins. 

The court of appeal denied the City’s motion, finding that there were triable issues of fact still left to be decided. The court held that “the City’s ownership and control of a portion of the drainage system makes the City potentially liable for damage substantially caused by the City’s unreasonable diversion of water through the City-owned portions of the system.”

Takings cases alleging that water flowing onto plaintiff’s property constitutes a physical taking differ from other physical takings cases. When the plaintiff has alleged a physical taking due to water flow, the plaintiff must show that the public agencies:

. . . conduct posed an unreasonable risk of harm to the plaintiffs, and that unreasonable conduct is a substantial cause of the damage to plaintiff’s property. The rule of strict liability generally followed in inverse condemnation is not applicable in this context. (Citing Locklin v. City of Lafayette (1994) 7 Cal.4th 327.)

In applying this rule, the court found that “it is immaterial that the City may not own the entire section of drain . . .” The court ruled that partial ownership is not a complete defense to a taking caused by surface water. Instead, this case must go through a factual evaluation related to the reasonableness of the City’s conduct. Since that issue could not be decided on summary judgment, the court denied the motion, potentially forcing the City to go to trial or settle with the plaintiffs.

Cori Badgley is an associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

On May 28, 2008, the Third Appellate District for the Court of Appeal hammered home that technical form over substance rules in real property purchase transactions, irrespective of the parties’ original intent. At issue was a run of the mill purchase and sale transaction, overseen by attorneys on both sides, which granted the buyer a due diligence period to inspect the property and the ability to cancel the transaction if the buyer concluded the property ultimately did not meet its specifications. In this instance, however, the seller chose to cancel the deal during the due diligence period despite the jilted buyer having already spent some $60,000 obtaining a parcel split and related entitlements. The court not only rejected the buyer’s request to enforce the contract but also required the out-of-luck buyer to pay the seller’s $80,000-plus in attorneys’ fees incurred in defense of the buyer’s challenge of the deal cancelation. Steiner v. Thexton (2008) 163 Cal. App.4^th 359.

The Court of Appeal upheld the trial court’s conclusion that the agreement between the parties was not a purchase contract, but instead an option agreement (unilateral contract) to enter into a purchase contract. The agreement empowered the buyer to purchase the property at a set price for a set period of time but did not require the buyer to perform. The option agreement was void, however, because the buyer did not tender any consideration for the option. 

Interestingly, the distinction between a unilateral contract and a bilateral contract is one of the first concepts aspiring lawyers learn in law school. Specifically, a unilateral contract only requires the promise to perform by one of the parties to a transaction. A bilateral contract, on the other hand, is a promise for a promise that requires performance by both parties. Since the language of the contract at issue gave the buyer ‘absolute and sole discretion’ to cancel the agreement at any time during the due diligence period, with no affirmative obligation to do anything, the court concluded that the contract was in fact an (unilateral) option agreement. Nevertheless, “(t)o be enforceable, an option, like any contract, must have consideration.” The Court of Appeal agreed with the trial court that, here, no consideration was tendered. Therefore, no enforceable option existed and the seller, like the buyer, was free to walk away at any time.

The REAL ESTATE PURCHASE CONTRACT

The document executed by the parties on September 4, 2003, entitled “REAL ESTATE PURCHASE CONTRACT”, provided, in relevant part:

“Martin A . Steiner and/or Assignee, hereinafter called ‘Buyer,’ offers to pay to FAS Family Trust, Paul Thexton, hereinafter called ‘Seller’, the purchase price of Five Hundred Thousand Dollars ($500,000.00) for 10 acres of a 12.29 acre property situated in the County of Sacramento … hereinafter … the ‘Property’ …

TERMS OF SALE:

            1. Upon Seller’s acceptance escrow shall be opened and $1,000.00 … shall be deposited by Buyer, applicable toward the purchase price.

            2. During the escrow term, Seller shall allow Buyer an investigation period to determine the financial feasibility of obtaining a parcel split for development of the Property. Buyer shall have no direct financial obligation to Seller during this investigation period as Buyer will be expending sums on various professional services needed to reach the financial feasibility determination …

            10. If any condition herein stated has not been eliminated or satisfied within the time limits and pursuant to the provisions herein, or if, prior to close of escrow, Seller is unable or unwilling to remove any exceptions to title objected to … then this Contract shall … become null and void …

            CONTINGENCIES:

            7. It is the intent of Buyer that the time period from execution of this contract until the closing of escrow is the time that will be needed in order to be successful in developing this project. It is expressly understand that Buyer may, at its absolute and sole discretion during this period, elect not to continue in this transaction and this purchase contract will become null and void.

            CLOSE OF ESCROW:

            Upon successful completion of subdividing the 10 acres from the existing parcel, Buyer will pay Seller the balance of the purchase price to escrow and close immediately.”

The seller notified the title company to cancel the escrow in October 2004. 

Consideration Arguments Not Persuasive

The buyer argued that the seller incurred a benefit from the buyer’s work done and expenses incurred to obtain the parcel split which, therefore, constituted sufficient consideration to support an option. However, the court did not deem any of this effort or cost to confer actual benefit on the seller. Further, the court concluded that consideration “must be measured as of the time the contract is entered into” – a time at which the contract imposed no affirmative obligations on the buyer and the buyer could unilaterally cancel. Thus, the court concluded no consideration was tendered. 

The buyer also argued that the $1,000 deposit constituted the consideration necessary to support an option. Again, however, the Court was not persuaded because these funds were to either be applied to the purchase price or, if the deal was not consummated, returned to the buyer. The funds were not tendered in exchange for the option to purchase.

How Does a Buyer Avoid this Result?:

A majority of those commenting on the Steiner decision have appropriately looked to the buyer’s lack of affirmative obligations and unilateral ability to cancel as key drafting areas to address so as to avoid a similar result. Unfortunately, there are a large number of form agreements in circulation that have analogous due diligence inspection periods, including an optional provision of the California Association of Realtors (CAR) form, that are potentially subject to being deemed void (lacking consideration) option agreements. This is understandable because Buyers frequently desire exactly these types of provisions to limit what is expected of them and to give them the greatest flexibility to get out of the deal. Like anything else, however, the only sure way to get what you want is to pay for it. In Steiner, the buyer’s misfortune could likely have avoided by simply requiring forfeiture of the $1,000 initial deposit in the event the buyer canceled the escrow during the due diligence period. 

The stakes are too high in most real estate transactions to rely on a one size fits all approach with the corresponding documentation. Relying on form real estate contracts, or cut and paste compilations from the documents used in prior transactions, is tantamount to playing Russian roulette. All it takes is one deal to go awry to more than wipe out any time or expense benefits gained by using old forms. The best protection against a devastating result like Steiner is to involve experienced attorneys that takes the time and effort to thoroughly understand the transaction at hand and that properly prepare the appropriate documentation. This will ensure the transaction comes to fruition in the manner the parties originally intended.

Rob Hofmann is an associate with Abbott & Kindermann, LLP, and is a member of the City of Davis Planning Commission, and a member of the San Joaquin Valley Air Pollution Control District Hearing Board.  For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

Plaintiffs Amanda Goldstein and Eric Mizrahi contracted with Ami Weisz and ‘his company’ Barak Construction (“Defendants”) to build a new garage and related remodeling at the projected cost of $363,000. Neither Defendant was a licensed contractor at the time the parties entered into the contract nor when work on the project commenced. Although it is unclear whether Plaintiffs were initially aware of Defendants’ licensure status, Defendants concede they were not licensed until some three months into the project. Plaintiffs contend that Defendants subsequently abandoned the project prior to completion and with material defects despite having allegedly already been paid $362,660.50.

The appeals court upheld the trial court’s conclusion that the CSLL appropriately provides “the basis for a right to attach order since an agreement for the performance of services lies at the heart of such claim.” The claim is “fundamentally contractual in nature since it is based on an unlicensed contractor’s agreement with the beneficiary to provide services, and the beneficiary’s agreement to pay for the same.” Further, the contractor must be fully licensed at all times during performance of the contract otherwise the contractor is not entitled to recovery for work performed, “even when the person for whom the work was performed has taken calculated advantage of the contractor’s lack of licensure.” Although the trial court respected Barak Construction as a distinct legal entity, its order to Weisz not to sell, encumber, or diminish the value of his residence until further order of the court was also upheld.

Goldstein reemphasizes the strong public policy in favor of protecting against unlicensed contractors, despite the potential for arguable “injustice to the unlicensed contractor.” An unlicensed contractor may still be protected if the licensure deficiency only existed at the time the contract is entered into. Upon the commencement of work, however, the unlicensed contractor proceeds entirely at its own risk. 

Goldstein v. Barak Construction (2008) 164 Cal.App.4th 845

Rob Hofmann is an associate with Abbott & Kindermann, LLP, and is a member of the City of Davis Planning Commission, and a member of the San Joaquin Valley Air Pollution Control District Hearing Board.  For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

As development continues to occur in areas outside of urbanized areas, developers are encountering more threatened or endangered species issues in their environmental review process under the California Environmental Quality Act (“CEQA”). A fundamental question which must be addressed is whether there are threatened or endangered species present in the project area and whether the project will affect those species. This is not always a simple question to answer, as it is not clear what studies are necessary in order to adequately analyze biological resources under CEQA. What standards are appropriate to measure the significance of the effects on endangered species? Furthermore, once threatened or endangered species are determined to be affected by the project and potentially significant impacts to biological resources are identified, how does one provide for adequate mitigation in order to mitigate those impacts to a less than significant level? This article discusses several CEQA cases dealing with these questions and provides insight on how to address endangered species concerns in order to comply with CEQA.

San Joaquin Raptor Rescue Center v. County of Merced (2007) 149 Cal.App.4th 645

San Joaquin Raptor Rescue Center (“Raptor”) filed a petition for writ of mandate to set aside the County of Merced’s (“County”) grant of a conditional use permit and approval of an EIR for a mining project. Raptor claimed that the EIR improperly deferred mitigation for impacts to vernal pool species, rendering it inadequate under CEQA.

The EIR discussed potential impacts to the vernal pool species. Although none of the species were found, the EIR presumed they would be impacted by the development. As mitigation, the EIR called for buffers and pre-construction surveys to be completed. If the surveys showed the presence of any of the vernal pool species, a state-approved management plan would be developed by a qualified biologist. Although the EIR gave various options for specific activities to be included in the plans (i.e., periodic mowing, rotational grazing, and weed abatement), the development and implementation of the plans were left until after performance of the survey and long after the EIR was approved. 

Raptor argued that the deferral of the plan development violated CEQA Guidelines section 15126.4(a)(1)(B), which states:

Where several measures are available to mitigate an impact, each should be discussed and the basis for selecting a particular measure should be identified. Formulation of mitigation measures should not be deferred until some future time. However, measures may specify performance standards which would mitigate the significant effect of the project and which may be accomplished in more than one specified way.

Raptor argued that the deferral resulted in a failure to adequately inform the public and the decision makers of the effectiveness and the full extent of the proposed mitigation. The County disagreed with Raptor and instead argued that this was not improper deferral. The County claimed that the mitigation measure was merely an example of using performance standards as allowed under the Guidelines. 

The court agreed with Raptor and held that mitigation was improperly deferred. The measures in question did not state any specific criteria or standard of performance. The EIR instead stated a generalized goal of preserving habitat for the vernal pool species, then “left the reader in the dark about what land management steps will be taken…” Permissible deferral would have included a list of alternative mitigation measures, with a specific selection to be made after further study or surveys. The court concluded by stating:

We recognize there are circumstances in which some aspects of mitigation may appropriately be deferred. Deferral of the specifics of mitigation is permissible where the local entity commits itself to mitigation and lists the alternatives to be considered, analyzed and possibly incorporated in the mitigation plan. On the other hand, an agency goes too far when it simply requires a project applicant to obtain a biological report and then comply with any recommendations that may be made in the report. If mitigation is feasible but impractical at the time of a general plan or zoning amendment, it is sufficient to articulate specific performance criteria and make further approvals contingent on finding a way to meet them. Here, however, no reason or basis is provided in the EIR for the deferral to a future management plan (or plans) of these particular mitigation measures, even though the EIR expressly presumes that special-status species will be present in the vernal pool or swale areas. Accordingly, we conclude that the analysis of mitigation measures with respect to special-status species in the vernal pool areas was inadequate, since it improperly deferred formulation of land management aspects of such mitigation measures. [italics added]

Endangered Habitats League v. County of Orange (2005) 131 Cal.App.4th 777

Endangered Habitats League (“EHL”) filed a petition for writ of mandate to set aside approvals for two area plans in Orange County. Among other problems, EHL claimed that the EIR was insufficient because it used an incorrect legal standard for evaluating the significance of the project’s impacts on biological resources. The appellate court agreed with EHL and held that since the project approval was flawed, the writ of mandate setting aside the approval should be granted.

CEQA Guidelines section 15065 lists certain conditions which are considered to be mandatory findings of significance. This means that the lead agency must find that a project may have a significant effect on the environment and thereby require an EIR for the project. One such condition that automatically triggers an EIR is if “[t]he project has the potential to substantially degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause population to drop below self sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of an endangered, rare, or threatened species . . . .” (Guidelines, § 15065(a)[1].) Guidelines section 15380 defines the terms “species,” “endangered,” “threatened” and “rare.” It is important to note that even if a species is not a California or federally listed species it still may be considered endangered, rare or threatened, if the species can be shown to meet the criteria in section 15380. CEQA also specifically addresses endangered species at Public Resources Code section 21104.2 which provides that a lead agency shall consult with and obtain written findings from the Department of Fish and Game (“DFG”) in preparing an EIR on the project.

In this case, the EIR stated that a significant impact would be found when there was a substantial effect on certain biological resources. Substantial effect was defined as “significant loss or harm of a magnitude which…1) would cause species or a native plant [or] animal community to drop below self-perpetuating levels on a statewide or regional basis; or, 2) would cause a species to become threatened or endangered.” The court held that the standard iterated in the EIR was too narrow and lenient. It would effectively restrict analysis of effects on endangered species when a broader analysis was required by law. The court held that because of the limitation, the certification of the EIR was improper.

Defend the Bay v. City of Irvine (2004) 119 Cal.App.4th 1261

Defend the Bay, an environmental group, argued that the EIR for a specific plan incorrectly concluded that there was no significant impact on biological resources because it improperly deferred mitigation of significant impacts to three species. The court correctly identified that the CEQA Guidelines provide that any project that substantially reduces the habitat of a wildlife species, or reduces the number or range of an endangered, rare or threatened species, is deemed to have a significant impact on the environment as a matter of law.  (Guidelines, § 15065(a).)

The case concerned three species, a bird, a plant and a toad. The bird and plant where conditionally covered under the Habitat Conservation Plan (“HCP”) and Natural Communities Conservation Plan (“NCCP”) adopted for the project area. The plans required a specific mitigation plan if the two species were affected. The EIR concluded that with the proposed mitigation measures, the biological impacts of the project would be reduced to a less than significant level. According to the EIR, the bird’s habitat would be impacted by the project and would require mitigation. The type of mitigation turned on the classification of the habitat. If the habitat was of “‘lesser long term conservation value,’ a special mitigation plan must be adopted in consultation with the U.S. Fish and Wildlife Service (“USFWS”) and DFG. On the other hand, if the area had ‘long term conservation value,’ a permit would be required from USFWS, absent which the impact on the bird would be significant.” The EIR concluded that the data put the area in the lesser conservation value category, but the final determination was to be made by USFWS and DFG. Various mitigation measures were provided, including one requiring that prior to the approval of a tentative map, the landowner must: (1) consult with the USFWS and DFG; (2) conduct surveys during the breeding season to determine if the birds are in fact present; (3) obtain a determination regarding the long-term value of the habitat area; (4) obtain permits from the USFWS and DFG; and (5) coordinate avoidance measures as required by USFWS and DFG.

Defend the Bay argued that the failure to obtain a determination of the long-term conservation value of the bird’s habitat constituted improper deferral of mitigation. The court stated that “[d]eferral of the specifics of mitigation is permissible where the local entity commits itself to mitigation and lists the alternatives to be considered, analyzed and possibly incorporated in the mitigation plan.” But on the other hand, an agency fails its CEQA duties when it simply requires a project applicant to obtain a biological report and then comply with any recommendations that may be made in the report. The court said:

[F]or the kinds of impacts for which mitigation is known to be feasible, but where practical considerations prohibit devising such measures early in the planning process (e.g., at the general plan amendment or rezone stage), the agency can commit itself to eventually devising measures that will satisfy specific performance criteria articulated at the time of project approval. Where future action to carry a project forward is contingent on devising means to satisfy such criteria, the agency should be able to rely on its commitment as evidence that significant impacts will in fact be mitigated.

Based on the case of Sacramento Old City Association v. City Council (1991) 229 Cal.App.3d 1011, the appellate court held that there was no improper deferral of bird mitigation. Regardless of which category the habitat fell into, prior to the approval of the tentative map, the developer was required to consult with the agencies, obtain permits and adopted specific avoidance measures in coordination with the agencies.

Similarly, with regard to the plant species, the court held that although the mitigation was deferred it was not improper because the EIR committed the City of Irvine (“City”) to such mitigation and listed what would be required in the mitigation plan. Plant mitigation measures meeting the requirements of the HCP were stated in the EIR and included: (1) design modifications that minimize impacts to habitat; (2) conducting an evaluation of salvage, restoration and management of the same plant species to offset impacts; (3) provide monitoring and management; (4) coordinating with USFWS and DFG. However, the actual mitigation plan was not set out in the EIR.  The court found that the City Council made the appropriate findings adopting the mitigation measures set out in the EIR. 

Finally, with regard to the toad, Defend the Bay maintained that there was deferred mitigation because there was no timetable for conducting surveys and there was no attempt to avoid impacts. Toad mitigation measures included a mitigation plan if toads were found and the mitigation plan would require the construction of breeding pools to the satisfaction of the USFWS and DFG. The court did not find that there was improper deferred mitigation because the City itself committed to mitigation if the toad was found in the project area, and it had a plan to build satisfactory breeding ponds on nearby protected land. Furthermore, the EIR required that the surveys be undertaken prior to issuance of any grading permit, thus constituting a sufficient timetable.

Association of Irritated Residents v. County of Madera (2003) 107 Cal.App.4th 1383

Association of Irritated Residents (“AIR”) challenged the grant of a conditional use permit to construct a dairy in the County of Madera (“County”). Prior to preparing the initial study the County sent DFG a copy of the application and requested review and comment. The DFG responded that it was not aware of any listed species on the site. However, DFG did also state that surveys had not been completed and a qualified biologist may be needed to determine if there were any listed or threatened species at the dairy site.

Biologists for the environmental consultant conducted reconnaissance level biological field survey on the dairy site by driving the existing roadways and by walking portions of the fields to identify the potential presence of special status species. Prior to conducting the field survey, the California Natural Diversity Data Base (“CNDDB”) maintained by DFG was consulted to determine if sensitive species had been previously reported on or near the site. The CNDDB indicated that several special status species were present in areas near the proposed project. After conducting the field survey, the biologist wrote that she did not observe any special status species and that the dairy site did not support habitat for any special status species. In particular, she specifically noted that no kit foxes or their sign were observed, though she did note that alfalfa fields on the dairy site provided foraging habitat for raptor or carnivore species such as Swainson’s hawk and kit fox and provided suitable prey species. The biologist concluded that if improvement of the area in and along irrigation canals were avoided and the alfalfa fields remained, that no significant impacts to threatened or endangered species or their habitats were expected as a result of the project.

The biological resources section of the EIR was based entirely on the biologist report and repeated the report virtually verbatim. DFG did not comment on the EIR. However, the Center for Race, Poverty and the Environment (“CRPE”) and the USFWS commented. CRPE stated that the EIR’s conclusion that biological resources would not be significantly impacted by the dairy lacked substantial evidence because the field study did not follow survey guidelines for sensitive species that were issued by DFG. It asserted that the County was required to conduct a protocol level study that complied with the survey guidelines. A field survey was not one of the methods included in the survey guidelines. In response to CRPE’s comment, the EIR stated that during the field survey no sign of threatened or endangered species was observed and that was the basis for concluding that protocol surveys were not warranted at that time. 

The court held that the field study constituted substantial evidence supporting the board of supervisor’s finding that the dairy would not have a substantial impact on the kit fox. The court expressly rejected the argument that CEQA compels compliance with the DFG survey guidelines. “The survey guidelines are not codified in the Public Resources Code, the Fish and Game Code or the California Code of Regulations…” CRPE failed to establish that the survey guidelines were meant to be applied where a reconnaissance level study did not detect either quality habitat or any sign of the species. Nor did DFG refer to the survey guidelines or comment negatively on the methodology utilized in the field survey employed in the EIR. The court held that the County is not required to conduct a protocol level study merely because it was requested in a comment.

CEQA does not require a lead agency to conduct every recommended test and perform all recommended research to evaluate the impacts of a proposed project. The fact that additional studies might be helpful does not mean that they are required. The agency has discretion to reject a proposal for additional testing or experimentation.

In this case, the response to CRPE’s comment adequately explained why a protocol level study in conformity with the survey guidelines was not conducted; no quality habitat was present, no sensitive species or their sign was detected during the field survey and the CNDDB query showed only one kit fox sighting a decade ago and it was over eight miles away from the dairy site. Thus, the biological report constituted substantial evidence which supported the determination reached in the EIR and the finding adopted by the board of supervisors.

The USFWS commented that construction of the dairy would result in the take 158 acres of kit fox habitat and that it may issue an incidental take permit after the applicant completed a satisfactory conservation plan. The USFWS also requested that the EIR should include a mitigation measure requiring consultation and the avoidance of listed species and provide compensation for any loss of habitat associated with the project. In response to the USFWS comment the EIR stated modification of habitat alone does not constitute a take. Nonetheless, the EIR added a mitigation measure requiring the applicant to comply with the requirements of the ESA, including obtaining an incidental take permit, if it is determined that a take would occur.

AIR argued that CEQA required the dairy to obtain an incidental take permit. The court correctly noted:

CEQA neither requires a lead agency to reach a legal conclusion regarding ‘take’ of an endangered species nor compels an agency to demand an applicant to obtain an incidental take permit from another agency. The finding that the dairy would not significantly impact biological resources did not limit the federal government’s jurisdiction under the ESA or impact its ability to enforce provisions of the statute.

The court held that disagreement on an issue does not compel invalidation of an EIR. The board of supervisors was free to reject the USFWS position on the take issue because “[w]hen evidence on an issue conflicts, the decisionmaker is ‘permitted to give more weight to some of the evidence and to favor the opinions and estimates of some of the experts over the others.”

What are the lessons to be learned from these cases?

Endangered Habitats League shows that the proper legal standard must be used in determining the significance of impacts on biological resources. Modifying a published CEQA standard should be undertaken with the utmost caution. 

San Joaquin Raptors and Defend the Bay demonstrates that deferral of the specifics of mitigation is acceptable where the local entity commits itself to mitigation and lists the alternatives to be considered, analyzed and possibly incorporated in the mitigation plan. The bottom line is to have a plan and a project applicant should first consult with the appropriate agencies and determine if species are present. If they are, a mitigation plan should be in place to coordinate avoidance measures. An applicant should be prepared to provide replacement habitat and provide monitoring and management of the impacted area. When specific mitigation measures cannot be locked in at the time of the EIR certification, the lead agency needs to identify probable mitigation measures and make a commitment on the record to their implementation. 

Association of Irritated Residents provides several insights to the CEQA process. It points out that CEQA does not require that every recommended or possible study be done. As long as there is substantial evidence to support the conclusion and the board’s findings bridge the analytical gap between the evidence and the decision, a court will not intervene. CEQA does not mandate compliance with the DFG survey guidelines. The case also makes it clear that CEQA does not require a lead agency to resolve federal ESA requirements. The federal government retains its jurisdiction under the ESA and its ability to enforce provisions of the ESA regardless of a finding that a project may not significantly impact biological resources. Underground study requirements informally promulgated by regulatory agencies are important, but not necessarily the final word on impact analysis. CEQA is not the forum for deciding whether or not a take permit is required under the state or federal ESA. Applicants are duty bound to comply with these statutory requirements even when the CEQA document is silent on the topic.

In Association of Irritated Residents and Defend the Bay, the record contained site specific studies providing an evidentiary basis to support the lead agency’s decision in the EIR. In contrast, San Joaquin Raptors deferred to a post-approval study and allowed the development of mitigation to be postponed until after the study was complete. This provided no evidentiary support and did not serve to inform the public or the decisionmakers about the mitigation. Notable is the fact that all these projects were also based on EIRs, and unlike a negative declaration, there is room for disagreement amongst experts in an EIR.

Bill Abbott is a partner at Abbott & Kindermann, LLP, and Janell Bogue is an associate for the firm. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

On July 21, 2008, the California Supreme Court again pointed out the potential for devastating consequences when the terms in a boilerplate contract provision are triggered. Specifically, the Court upheld a fairly typical construction contract indemnification provision that required a subcontractor to defend the general contractor for claims and arising out of the subcontractor’s work, even though a jury absolved the contractor was subsequently absolved of any liability. This even included the general contractor’s costs of suit against the subcontractor to resolve the dispute over the scope of the indemnification provision. Crawford v Weather Shield Mfg, Inc. (2008) 44 Cal.4th 541

The indemnity provision at issue was contained in a construction subcontract prepared by the developer, builder, and general contractor of a large Huntington Beach residential project, J.M. Peters Co. (“JMP”), for the services of Weather Shield Mfg. Inc. (“Weather Shield”) to manufacture and supply the project with wood-framed windows. Specifically, the provision required Weather Shield to “to indemnify and save [JMP] harmless against all claims for damages … loss, … and/or theft … growing out of the execution of [Weather Shield’s] work, and … at [its] own expense defend any suit or action brought against [JMP] founded upon the claim of such damage, … loss, … or theft.” (Emphasis added.) In late 1999, the owners of 122 of the project’s finished homes sued JMP, Weather Shield, and other parties involved in the construction of the project for a variety of construction defects. 

Subcontractor Weather Shield Not Liable to Homeowners But Still on the Hook

The homeowners’ suit set forth theories of negligence, strict liability, breach of warranty, and breach of contract, based on claims of “improper design, manufacture, and installation” of the windows in the homes, including those windows supplied by Weather Shield. JMP filed cross-complaints against Weather Shield and other subcontractors seeking declaratory relief that the subcontractors owed to JMP (1) the “present” duty to defend against the homeowners’ complaints, and (2) the duty to indemnify JMP for any liability arising out of the liability of the respective subcontractors. JMP and all of the other subcontractors, except Weather Shield and one other, settled with the homeowners before trial for a minimum payment of $2.25 million, with a guaranteed additional sum of $1.45 million against any recovery from the Weather Shield and the other nonsettling subcontractor.   

Weather Shield sought and received a dismissal of the homeowner’s strict liability claims based on prior case law. At trial, the jury returned an approximately $1 million verdict against the other nonsettling subcontractor, but found in favor of Weather Shield.

Developer Still Demands to be Indemnified and Defense Costs

Despite the jury’s determination of no liability on the part of Weather Shield, JMP continued to pursue both its (i) indemnity claim for amounts paid to the homeowners in the settlement and (ii) attorneys’ fees and expenses incurred to defend itself against the homeowner’s lawsuit.   The trial court concluded that the jury’s favorable verdict absolved Weather Shield of any indemnity liability to JMP. However, the trial court held that the subcontract provision required Weather Shield to pay for “JMP’s legal defense against the homeowners’ claims, insofar as those claims concerned the windows supplied by Weather Shield, regardless of whether Weather Shield was ultimately found negligent.” This amounted to a damages award against Weather Shield in the amount of $131,274. Weather Shield appealed.

The minority of the divided Court of Appeals argued there are strong policy grounds “against allowing the builder or developer with superior bargaining power to impose contractual defense obligations on a nonnegligent subcontractor.” The appellate majority, however, agreed with the trial court that Weather Shield’s duty to defend arose immediately upon the filing of claims based on its work and “could not depend upon the outcome of issues to be litigated in the very action Weather Shield was obliged to defend.”

Duty to Defend Distinct from Duty to Indemnify

The Supreme Court relied heavily on Civil Code section 2778 which, absent a more specific statute, provides the obligations “deemed included in every indemnity agreement.” The statute both “specifies that a basic contractual indemnity against particular claims, demands or liabilities embraces the costs of defense against such claims, demands, or liabilities [duty to indemnify] … (and) … separately specifies the indemnitor’s duty actually to defend [duty to defend].” Thus, absent the parties’ express agreement to the contrary, “a contractual indemnitor has the obligation, upon proper tender by the indemnitee, to accept and assume the indemnitee’s defense against claims encompassed by the indemnity provision” irrespective of the determination of the indemnitor’s ultimate liability. “Here, the subcontract at issue not only failed to limit or exclude Weather Shield’s duty to defend JMP, as otherwise provided by subdivision 4 of section 2778, it confirmed this duty. In language similar to that of the statute, the subcontract explicitly obligated Weather Shield both to indemnify JMP against certain claims [which would have only been triggered if Weather Shield was ultimately found at fault], and at its own expense to defend JMP against any suit or action … founded upon such claims [which arose before, and regardless of, any finding of fault in the litigation].” (Emphasis and parentheticals added.)  This included the expenses incurred by JMP in its cross-complaint against Weather Shield.

Superior Bargaining Power Policy Concerns

Although sensitive the key policy concerns raised, e.g., large builders and developers using their superior bargaining power and self-drafted contract terms to unfairly shift the financial consequences of their own legal liability to faultless subcontractors, the Court concluded that these concerns are in large part addressed by statutes effective January of 2006 and 2008, respectively. In combination, these laws void any term in a residential construction contract “that obliges a subcontractor to indemnify certain other project participants, including the cost to defend, against construction defect claims to the extent the claims arise out of, pertain to, or relate to the negligence of other entities.” Despite the concern that these prospective-looking statutes do not protect against the provisions of contracts that still may be at issue due to the 10-year statute of limitations for construction defects, the Court declined to conclude as a matter of law that a contract provision “which expressly obliges a subcontractor to defend … against claims ‘founded upon’ the subcontractor’s negligent work, but says nothing further about the scope of duty, means only that the subcontractor must reimburse the promisee, after the fact, for the promisee’s legal indemnity ultimately owed by the subcontractor to the promisee.” The Court concluded that “an express duty ‘to defend’ another against claims ‘founded upon’ the promisor’s acts or omissions” was sufficient and, due to the language of Civil Code section 2778, did not require any additional affirmative language to impose the defense requirement.    

Boilerplate Provisions Frequently Not Transferrable

Although the ramifications of this case are somewhat limited as a result of subsequent legislation, this case emphasizes the potential impact of boilerplate contract provisions. Boilerplate provisions are encountered in some form or another in almost every written agreement, but the parties rarely focus on them. Instead, such provisions are widely viewed as well vetted interchangeable parts. To the contrary, however, each such provision should be individually tailored to the specific agreement (except for the most basic cookie cutter transaction like the sale of new subdivision homes). Any attorney worth her/his her salt will review and appropriately modify each and every contract provision, including ‘the boilerplate’ with every transaction. Otherwise, a provision included to address a perceived run of the mill issue may fall well short of what a party expected, and at times have devastating consequences.

Rob Hofmann is an associate with Abbott & Kindermann, LLP.  For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

Ms. Walker, an associate at the firm, primarily practices in the areas of land use and environmental law with a particular focus on climate change. She is a member of the State Bar of California, the Environmental and Real Property Sections of the Sacramento County Bar Association, and admitted to practice before the state courts in California and the U.S. District Court, Eastern District of California.

Ms. Walker is a Building Industry Association, BUILD (Building Universal Industry Leadership & Development) Recruit and a member of the American Planning Association Sacramento Chapter, and the Urban Land Institute.

In Los Altos Golf and Country Club v. County of Santa Clara (June 30, 2008) 2008 Cal.App.Lexis 1149, plaintiffs brought a class action demanding a refund from the City of Los Altos of sewer service charges paid by plaintiffs on the grounds that the fees violated Article XIII D of the California Constitution and the Health and Safety Code. Instead of allowing plaintiffs to make any substantive arguments, the City and the County ("Respondents") claimed that the case should be dismissed because the plaintiffs had failed to pay the fees under protest, as required by the Health and Safety Code. The Court of Appeal, Sixth Appellate District agreed with the Respondents and dismissed the case. Sewer service charges must first be paid under protest in order to later request a refund.

The crux of this case involved the detailed statutory interpretation of various provisions of the local municipal code, the Health and Safety Code, and the Revenue and Taxation Code. Sewer service charges are generally governed by Article 4, Chapter 6, Part 3, Division 5 of the Health and Safety Code. Section 5472 of Article 4 states:

After fees, rates, tolls, rentals or other charges are fixed pursuant to this article, any person may pay such fees, rates, tolls, rentals or other charges under protest and bring an action against the city or city and county . . .

If this was the only sentence you read, you would easily conclude that payment under protest is required. However, that section later states:

Payments made and actions brought under this section, shall be made and brought in the manner provided for payment of taxes under protest and actions for refund thereof in Article 2, Chapter 5, Part 9, of Division 1 of the Revenue and Taxation Code. . .

In addition, section 5473.8 of the Health and Safety Code makes all laws applicable to the levy, collection and enforcement of general taxes applicable to sewer-related charges. Neither Article 1 nor Article 2 of Chapter 5 in the Revenue and Taxation Code contain provisions for payment under protest. In fact, the payment under protest provisions were previously repealed by the legislature.

Relying on the applicability of the Revenue and Taxation Code to sewer-related charges, plaintiffs argued that although sewer service charges may be paid under protest, it was not required pursuant to the scheme laid out for general taxes. The court had a different perspective. When the legislature repealed the protest procedures for property taxes under Articles 1 and 2 of Chapter 5, the legislature chose not to repeal the protest requirement under section 5472 of the Health and Safety Code. Therefore, the court reasoned that the legislature thus intended that anyone desiring a refund must first pay the charge under protest.The specific requirement in the Health and Safety Code trumped the generally applicable requirements in the Revenue and Taxation Code.

Because plaintiffs failed to protest their charges upon payment, they were barred from now coming before the court to request a refund, no matter how valid their substantive claims were.

Cori Badgley is an associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

The recent decision by the Court of Appeal for the First Appellate District in Urban Habitat Program v. City of Pleasanton (2008) 164 Cal.App.4th 1561, vividly illustrates the conflict that can arise between the desire by local voters to limit housing growth, the local jurisdiction’s obligations under state law to allow construction of low and moderate income housing, and the local officials’ reluctance to thwart the voters’ desire in order to meet those state obligations. That conflict invariably leads to litigation, even years after a no-growth initiative is passed by the voters.  

In 1996, the voters approved the “Housing Cap” initiative, which amended the City’s general plan to provide that the City maintain a maximum housing buildout and permits, and which provided that a vote of the people was needed to amend the Housing Cap. Meanwhile, the City’s share of Allocation of low and moderate housing was established by the Association of Bay Area Governments. Then, in 2003, the City belatedly enacted its housing element, which recognized: 1) that the City would fall 871 units short of high-density, lower income housing; and 2) that 30 to 40 acres of land needed to be redesignated from non-residential use to high-density residential no later than June 2004. This action date continued to slide until the City announced in January 2007 that the rezoning would not be completed until December 2007 or later.

For years the City asserted that the number of units that could permissibly be built under the Housing Cap was sufficient to meet its Allocation. However, in April 2006, the City Manager wrote a memorandum to the City Council that stated that the City’s unmet portion of its Allocation was 2,889 units. The lawsuit was brought on the ground that, under the Housing Cap, the remaining residential potential was only 1,686 units, and therefore the City allegedly could not meets its Allocation. As alleged in the Complaint, the Housing Cap “poses an immediate regulatory barrier to the construction of new affordable housing,” which prevents the City from meeting its statutorily mandated Allocation. Furthermore, the 2003 Housing Element contained a provision that allowed the City Council to override the annual housing allocations of the Growth Management Ordinance in order to grant approvals to projects so the City could meet its Allocation requirements. But the City Council never did that. The complaint alleged that the City concealed the conflict between those ordinances and the Allocation until the April 2006 memorandum. Thus, the failure to provide state-mandated low income housing was the result of both the voter-approved initiative and the lack of political will on the part of the City to complete the rezoning.

In its decision in Urban Habitat, the Court of Appeal addressed a dispute between the petitioners and the City regarding the applicable notice and statute of limitations provisions that applied to this lawsuit. The Court initially held that, under Government Code section 65009, subdivision (d), a party bringing an action under a variety of land use planning statutes in order to encourage the development of low-income housing has 90 days from the date a legislative action is taken or approval is given to notify the local land use authority of any claimed deficiencies in such action or approval. That party then has 60 days after that notice is given within which to file a lawsuit. 

However, many of the claims in the complaint in Urban Habitat did not challenge any “action or approval” that was taken by the City. Petitioners complained that, with the passage of time, the City’s Housing Cap and Growth Management Ordinance came into conflict with the City’s obligations under state law to meet the Allocation requirements. Petitioners’ claims challenged a local government’s decision based on events that occurred after that decision took place and, therefore could not have been brought during the statutory time limits governed by section 65009. In Travis v. County of Santa Cruz (2004) 33 Cal.4th 757, the Supreme Court held that a challenge to an ordinance claiming it is preempted by state law are not governed by section 65009. Those challenges are subject to the three year statue of limitations in Code of Civil Procedure section 338, subdivision (a), for “[a]n action upon a liability created by statute, other than a penalty or forfeiture.” The Urban Habitat court took the next step. The Court of Appeal held that section 338, subdivision (a), also applies where a local ordinance conflicts with statutory or constitutional provisions already in effect when the ordinance is adopted. Many of the petitioners’ claims in Urban Habitat fell under that rule because they did not attack a specific land use planning decision but, rather, relate to events that occurred after that decision. In other words, a violation of a state housing element law can, in many circumstances, be brought well after enactment of a land use policy or regulation.

In addition to clarifying those statute of limitations issues, the Urban Habitat case exemplifies the litigation that can arise when a voter-approved initiative thwarts a local jurisdiction’s obligations under state law to allow construction of low and moderate income housing. (See e.g., Building Industry Assoc. of San Diego, Inc. v. City of Oceanside (1994) 27 Cal.App.4th 744, [held, local initiative impeded “the important state policy” in the Government Code to promote the construction of low income housing, and local jurisdiction’s attempt to lessen the harshness of that impediment was insufficient.]) Local officials should always give careful attention to the practical impact that a slow or no-growth initiative has on a local jurisdiction’s statutory obligation to provide low income housing. The Urban Habitat case demonstrates that such attention is warranted not only during the political process when the initiative is being considered by the voters, but also many years after the initiative is enacted.   

Glen Hansen is a senior associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

The 2003 California Supreme Court decision of Gardner v. County of Sonoma (2003) 29 Cal.4th 990 left unanswered the status of pre-1929 subdivision maps. The California Court of Appeal, First Appellate District in Witt Home Ranch, Inc. v. County of Sonoma (July 29, 2008) 2008 Cal. App. Lexis 1160 has now tackled one aspect of this issue in the context of a 1915 subdivision map.

In Gardner, the Supreme Court reviewed a similar subdivision dispute from Sonoma County and determined that an 1865 recorded map preceded California’s first subdivision statute adopted in 1893. The recording of that map had no legal effect because without something more than the recording itself, such as a conveyance, there was no subdivision of land. Therefore, the recorded map on its own did not establish a legal subdivision for purposes of the grandfather clause. The Gardner court acknowledged but did not rule on the question of whether or not pre-1929 maps operated to legally divide property[1]

The Ranch argued that the Subdivision Map Act (“SMA”) in 1915 authorized cities and counties to regulate “design” and “improvement”, thus potentially validating a subdivision map under the “grandfather statute” (Gov Code, § 66499.30(d).)  This code section provides:

Subdivisions (a), (b), and (c) do not apply to any parcel or parcels of a subdivision offered for sale or lease, contracted for sale or lease, or sold or leased in compliance with or exempt from any law (including a local ordinance), regulating the design and improvement of subdivisions in effect at the time the subdivision was established. [italics added]

The appellate court first reviewed the timeline of the grandfather clause. The Ranch argued that legislative history should be used to interpret the clause and that the statute, as it appears today, merely codified the inclusive language used prior to 1943. The pre-1943 versions recognized maps that were recorded in compliance with the laws as they existed at that time. However, in 1943, the more modern version appeared with the “design and improvement” language. The court assumed that the Legislature purposely chose this language to narrow the scope of the grandfather clause. The court held that since the language of the statute was clear, that there was no reason to examine the legislative history materials. “Resort to legislative history is proper only if the statutory language is ambiguous--that is, is susceptible to more than one reasonable construction.” Therefore, the court was bound to determine the meaning of the grandfather clause on the basis of its plain language.

After reviewing the plain language of the statute and applying it to the Ranch’s map, the court held that the 1915 laws did not regulate the design and improvement of subdivisions. The court said that the local government had no authority to impose constraints on configuration of the subdivision, the number of lots, the minimum size, or on installation of drainage and sewer improvements. Instead, the landowner determined those factors and the local government was limited to ensuring that those features were depicted on the map. Further, the court said that in 1915, the local government’s authority to approve the map was limited to ensuring that the map was accurate and prepared by a licensed professional. While it was noted that the local government could require the subdivider to make roads of a certain width, the court held that this was insufficient to satisfy the “design and improvement” requirements of the grandfather clause. Therefore, the court held that since the 1915 laws did not regulate the design and improvement of subdivisions, the map could not be recognized as valid under the grandfather clause.

The court also noted that public policy supported its conclusion. Holding that the 1915 map was valid would authorize development without regard to current regulations, mitigation fees, and without giving notice and an opportunity to be heard to neighboring residents and interested citizens. The purpose of the grandfather clause is to protect those who detrimentally relied upon an earlier version of the law. Here, the court could not find any detrimental reliance on the recorded map. The Ranch held and managed the property as a single unit for over 70 years and never attempted to take advantage of the recorded map before this instance. Therefore, the court affirmed the Board’s decision in denying the certificates of compliance.

A number of other cases involving older maps are presently in litigation. Whether all of the court decisions will fall in line with Witt Ranch remains to be seen.

Bill Abbott is a partner at Abbott & Kindermann, LLP, and Janell Bogue is an associate for the firm. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

In the area of prescriptive easements, courts and practitioners have been challenged by the issue of who has the burden to prove “adverse use.” “The elements necessary to establish an easement by prescription are open and notorious use of another’s land, which use is continuous and uninterrupted for five years and adverse to the land’s owner.” Some courts have held that by providing evidence that the use is open, notorious and continuous, a presumption arises that the use is also adverse, and therefore, the defendants, and not the plaintiffs, must prove that the use is not adverse. The Court of Appeal, Second Appellate District in Grant v. Ratliff (July 16, 2008) 2008 Cal.App.Lexis 1063, disagreed with these courts and held along with the other California courts that even if the plaintiff provides evidence of open, notorious and continuous use, the plaintiff still bears the burden of producing evidence to show that the use was adverse. The burden does not shift to the defendant.

We agree with the view, supported by numerous authorities, that continuous use of an easement over a long period of time without the landowner’s interference is presumptive evidence of its existence and in the absence of evidence of mere permissive use it will be sufficient to sustain a judgment.

At first glance, this statement would appear definitive on the issue of the presumption of adverse use. However, in an earlier decision, the California Supreme Court spent two paragraphs in its opinion on O’Banion v. Borba (1948) 32 Cal.2d 145 discussing why no presumption of adverse use existed. According to the Supreme Court in O’Banion, the inquiry is “whether the circumstances proven do or do not justify an inference showing the required elements.” The court emphasized that facts of open, notorious and continuous use could justify an inference of adverse use, but the burden still lies on the plaintiff to provide sufficient facts to make that inference.

The appellate court in the Grant case closely evaluated both Warsaw and O’Banion and found that O’Banion was the controlling case. The court pointed out that Warsaw never explicitly overruled O’Banion, and Warsaw did not focus on the issue of whether a presumption arises that shifts the burden to the defendant to prove adverse use. According to the appellate court, the one statement in Warsaw referring to the presumption was mere dicta, and its use of the word “presumptive” may have merely described the inference discussed by the court in O’Banion.

Because O’Banion had not been overruled and O’Banion had clearly addressed the exact issue of whether a presumption arises when the plaintiff produced evidence of open, notorious and continuous use, the appellate court held that no presumption arises and the burden still lies on the plaintiff to prove all elements of a prescriptive easement. 

Cori Badgley is an associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

Generally, when a plaintiff challenges the action of a government agency, the plaintiff has the burden to overcome the presumption that the government agency acted lawfully. In regards to special assessments falling within the protections of Proposition 218, the burden shifts. When a plaintiff challenges a special assessment, the government agency has the burden to prove that it acted lawfully, and the court reviews the agency’s decision de novo.

The Santa Clara Open Space Authority (“OSA”) decided that the “tax” fell under the definition of “special assessment” pursuant to Proposition 218, and thus, the tax could be imposed if it was passed by a majority of the property owners, instead of two-thirds as required when a special tax is imposed. The Silicon Valley Taxpayers Association, Inc. (“SVTA”) along with the Howard Jarvis Taxpayers Association and individual taxpayers brought suit alleging that the tax had not been properly balloted and passed pursuant to Proposition 218. Specifically, they alleged that the “notice and balloting procedures did not comport with Proposition 218 and the Government Code” and the assessment was actually a special tax, requiring two-thirds voter approval. The trial court and the court of appeal ruled in favor of the taxpayers, and the California Supreme Court agreed to review the case on appeal.

Before addressing the substantive issues of the case, the Supreme Court spent the majority of the opinion discussing the standard of review that applies in challenges brought under Proposition 218. Prior to this case, the Court of Appeal, First Appellate District ruled that “case law decided prior to passage of Proposition 218, under which legislative-like determinations by public improvement agencies are reviewed under an abuse of discretion standard, continues to apply in the post-Proposition 218 legal environment.” (Not About Water Committee v. Solano County Board of Supervisors (2002) 95 Cal.App.4th 982, 994.) Similar to the rule applied in Not About Water, the Court of Appeal, Sixth Appellate District in this case also applied an abuse of discretion/substantial evidence standard of review:

A special assessment finally confirmed by a local legislative body in accordance with applicable law will not be set aside by the courts so long as the local legislative body demonstrates, by reference to the face of the record before that body, that the property or properties in question will receive a special benefit over and above the benefits conferred on the public at large and that the amount of any contested assessment is proportional to, and no greater than, the benefits conferred on the property or properties in question. In all other respects, such an assessment shall not be set aside by the courts unless it clearly appears on the face of the record before the legislative body, or from facts which may be judicially noticed, that the assessment constitutes a manifest abuse of discretion.

After reviewing the language of Proposition 218 and its legislative history, the California Supreme Court overruled both courts of appeal. 

Section 4, subdivision (f) of Article XIIID states:

In any legal action contesting the validity of any assessment, the burden shall be on the agency to demonstrate that the property or properties in question receive a special benefit over and above the benefits conferred on the public at large and any contested assessment is proportional to, and no greater than, the benefits conferred on the property or properties in question.

The court found that the word “burden” was imprecise, and it was unclear whether “burden” meant that the burden shifted to the agency. However, after looking at the legislative history, the court found that the purpose of subdivision (f) was to shift the burden to the local agency. Therefore, “courts should exercise their independent judgment in reviewing local agency decisions that have determined whether benefits are special and whether assessments are proportional to special be