Municipal Authority to Settle Litigation in Closed Session

by William W. Abbott

How far can a city council go in closed session in settling litigation involving a land use dispute? We have a better idea after reading Trancas Property Owners Association v. City of Malibu (2005) 132 Cal.App.4th 1245 (rehearing granted October 26, 2005). In the eyes of the Second District Court of Appeal, the city council cannot (1) contract away the police power (the authority to apply later enacted zoning), and (2) make land use decisions which would otherwise be subject to a public hearing process.

The case involves a rather sordid tale of two tentative subdivision maps. Before the incorporation of Malibu, Los Angeles County in 1985 approved two tentative subdivision maps, subject to numerous conditions of approval. After incorporation, the City of Malibu, which now had jurisdiction, refused to consider the final maps on the basis that the tentative maps had expired. That lead to Round I of litigation, resulting in a judicial determination that the tentative map had been extended by virtue of various express provisions of the Subdivision Map Act. The developer pushed forward once again with the final maps, but faced numerous obstacles (including a coastal development permit) established as part of the conditions of approval of the tentative maps. In litigation Round II, the Trancas Property Owners Association, made up of nearby property owners, successfully instituted a lawsuit over the validity of the project's coastal development permit. The City of Malibu resisted further processing of the final maps, triggering Round III of litigation instituted by the developer against the City. While the litigation was pending, the City acted to deny the final maps based on a determination that the developer had not met the conditions of approval of the tentative maps. Acting to salvage what it could, the developer undertook settlement discussions with the City. After a closed session of the city council, the developer, mayor and city attorney signed a short "Deal Memo". This two page document outlined the terms of a settlement. Thereafter, the city council met again in closed session during which the city council approved a 10 page settlement agreement ("SA"). After the closed session, the City Attorney announced the SA and summarized its terms during a closed session. The SA included terms of material benefit to the City including settlement of the lawsuit, donation of significant land by the developer to the City and construction of affordable housing. The developer was benefited as well, because the City agreed that changes in zoning would not apply and that the final map application would be reinstated. The City also agreed to expedite a general plan amendment, if necessary.

As the reader can imagine, the settlement agreement then launched litigation Round IV by casting the homeowners against the City and developer. While numerous legal challenges were made, the appellate court found that only two had merit. First, the City Council could not agree to exempt the development from later zoning. Such an agreement is barred by the seminal case on vested rights, Avco Community Developers, Inc. v. South Coast Regional Commission (1976) 17 Cal.3d 785, although such an agreement could be reached through use of the development agreement statute. (Gov. Code, § 65864, et seq.) Second, the Court of Appeals held that approvals or entitlements which by themselves ordinarily required a public review and hearing process could not be approved in closed session. The broad authority of public agencies to settle litigation in closed session (Gov. Code, § 54956.9) did not trump the role of the public in land use decisions. The court found competing issues here in terms of the broad authority held by public agencies to settle litigation with the separate public participation and hearing procedures associated with land use proceedings. Here, public participation won out.

William W. Abbott is a partner with Abbott and 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.

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