Putting The Cart Before the Horse - Developer Cannot Pursue Declaratory Judgment Before City Council Passes Final Housing Ordinance

By Leslie Walker and Nathan Jones

The following case exemplifies that a developer cannot instigate litigation attacking a proposed ordinance until a municipal government has passed the ordinance in question. The matter of Stonehouse Homes, LLC. v. City of Sierra Madre (2008) 167 Cal.App.4th 531, more broadly holds that to maintain a declaratory relief action, a plaintiff must be able to demonstrate a present conflict in addition to showing the existence of tangible injury.

Stonehouse Homes LLC (“Stonehouse”) owns a large portion of property in Sierra Madre, California (“City”). A portion of Stonehouse’s property fell within the City’s Hillside Management Zone (“HMZ”). The HMZ imposes special development conditions on covered property. Stonehouse applied to the City for a vested tentative map and conditional use permit to develop some of its land, a portion of which fell within the HMZ. After Stonehouse’s application was filed, the City passed an ordinance extending the HMZ to cover all of Stonehouse’s property. After the ordinance was enacted, the City planned to develop further amendments to the HMZ that would make development more costly.

Subsequently, on January 19, 2006, Stonehouse submitted two additional applications to the City for approval, which attempted compliance with the existing HMZ conditions. On February 15, 2006, the City responded, informing Stonehouse that its applications were not complete and that more information was required. Concurrently, in March 2006, the City planned to amend the HMZ ordinance to address minimum lot size, dimensions, and density standards. Stonehouse submitted additional materials to comply with the City’s request for more information. The City again demanded more information, delaying the approval process further. Stonehouse, attempting to avoid the proposed HMZ conditions, filed a lawsuit for declaratory relief on July 17, 2006. Stonehouse claimed violations of statutory law, constitutional due process, and equal protection. Stonehouse asserted that the City was attempting to deprive it of the safe harbor provision contained in Government Code, section 66474.2(a), as to the application for a tentative map

The City demurred, claiming that the case was not sufficiently ripe for adjudication until it had passed a final ordinance. The City argued that since Stonehouse was essentially seeking an advisory ruling on an ordinance that had not yet passed, no lawsuit had yet arisen. The trial court agreed, finding that the City had not taken any final action and that Stonehouse’s applications had not yet vested. Stonehouse refused to amend its complaint, accepted a dismissal, and appealed the trial court’s ruling.

The Complaint did not Present a Justiciable Controversy

The appellate court first examined what circumstances warrant the use of a declaratory relief action. Courts have discretion to refuse to entertain claims for declaratory relief when its declaration or determination is not necessary or property at the time under the circumstances. (Code Civ. Proc. § 1601.) Under prior case law, a case is only justiciable when the facts are ripe for adjucation. The court employed a two-prong test to analyze Stonehouse’s claims: First, whether the dispute is sufficiently concrete that declaratory relief is appropriate; second, whether withholding judicial consideration will result in the parties suffering hardship. (Pacific Legal Foundation v. California Coastal Commission (1982) 33 Cal.3d 158.) The court found that Stonehouse’s claims failed both prongs of the test.

Regarding the first prong, the court reasoned that to adopt Stonehouse’s argument would require a court to speculate on hypothetical future actions by the City, the city council and the planning commission. Final recommendations had yet to be made by the planning commission. Since the parameters of the dispute between the parties were not known at the time the complaint was filed, the court could not render judgment on hypothetical facts. 

Under the second prong, plaintiff must show “an imminent and significant hardship inherent in further delay.” The mere fact that the parties disagree over the meaning of the present and pending resolutions does not create a controversy. In this case, the court found that since there had been no application of the proposed amendments to the HMZ ordinance to Stonehouse’s subdivision applications, declaratory judgment would be improper based upon the conjecture and present lack of imminent harm.

The appellate court’s analysis of the lower court’s ruling centers on the lack of harm to Stonehouse. Stonehouse did not have an approved tentative map or conditional use permit before the litigation commenced. Since the increased regulations from the proposed HMZ ordinance under consideration were only speculative at the time the lawsuit was filed, Stonehouse’s case against the City was not yet concrete enough for the court to entertain a case for declaratory relief.

Leslie Walker is an associate at Abbott & Kindermann, LLP and Nathan Jones is a law clerk 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 issue.

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