By Katherine J. Hart

In the last quarter of 2009, three new California Environmental Quality Act (“CEQA”) cases were issued – two by the First Appellate District and one by the Second Appellate District – wherein developers claimed relief from agency inaction pursuant to Sunset Drive Corp. v. City of Redlands (1999) 73 Cal.App.4th 215 (“Sunset”). In sum, both the First and Second Appellate District Courts noted that Sunset does not stand for the proposition that an agency has a mandatory duty to complete and consider an EIR: 1) at all, and 2) not necessarily within the one year time frame provided by CEQA. A brief synopsis of each of the cases follows.

Las Lomas Land Company, LLC v. City of Los Angeles (2009) 177 Cal.App.4th 837

On September 17, 2009, the Second Appellate District issued its opinion in the Las Lomas case. In this case, developer petitioned the court to compel the city to complete an EIR for a 550-acre mixed use project just north of Los Angeles requiring annexation, a specific plan, zoning amendments and entitlements. The City was to annex the land and issued a notice of preparation for the EIR in June 2002. In February 2008, after the developer expended “millions of dollars” in consultant fees to process the environmental review of the project, the City voted to suspend the environmental review process, and then in March 2008, voted to reject the project and cease all work on it. The developer sued the City for violating CEQA, denying it procedural and substantive due process, and denying it equal protection. In denying the developer any relief, the court held, among other things, that the city had no duty under CEQA to process and complete the EIR after rejecting the project. In its defense, developer asserted the Sunset case and argued that an agency has a ministerial duty to complete an EIR in a timely manner. The court distinguished Sunset from the pending case on its facts.

Lake Almanor Associates, LP v. Huffman-Broadway Group, Inc. (2009)178 Cal.App.4th 1194

In late October, 2009, the First Appellate District held that a County’s EIR consultant, funded by the developer, is not liable to the developer for damages if the consultant fails to prepare the EIR within a specific time frame. In this case, the developer submitted a complete application to the County of Plumas in April 2005 for a 1,392-acre mixed use development project. Huffman executed a contract with the county to submit an administrative draft EIR by November 2005. Almost a year later, Huffman produced a draft EIR, but the county rejected it as unacceptable and terminated Huffman. Huffman submitted invoices to the County, which Developer paid. Developer further paid another consultant to prepare an EIR satisfactory to the county. Developer sued Huffman directly under theories that it was a third party beneficiary of the contract between the county and Huffman and that Huffman was negligent in preparing the EIR. Both the trial and appellate courts dismissed Developer’s claims. In ruling against developer on its contract claim, the court held that developer failed to provide any authority the County was liable for damages. In response, the developer tried to assert the Sunset case as authority for the proposition that the County owed a duty to complete the EIR on a timely basis. As a reminder, the court stated that “nothing in CEQA authorizes an applicant to bring an action against a public entity for failure to complete an EIR on time. To the contrary, CEQA includes no cause of action for damages resulting from violation of its provisions. [Citations.] If a public agency fails to comply with CEQA, the appropriate remedy is a petition for writ of mandate seeking compliance with the law. [Citations.]” Id. at 1203.

Schellinger Brothers v. City of Sebastopol (2009) 179 Cal.App.4th 1245

Developer Schellinger Brothers sought an administrative writ of mandamus against the City of Sebastopol to compel the city council to certify a proposed EIR based on Public Resources Code section 21151.5, which requires local agencies to establish time limits of not more than one year for completing and certifying EIRs. In this case, the developer wanted to develop 20 acres into a 182 single-family unit housing project, with upwards of 16,300 square feet of commercial space. The developer submitted its first project application in January of 2001, at which point the city started preparing an EIR. Due to public opposition to the project, the developer continued to revise its project by reducing both the number of residential units and commercial space. In May of 2003, developer submitted a wholly new proposal to the city, which was deemed complete on June 23, 2003. The city recirculated the Draft EIR to incorporate analysis of new ordinances and released that draft of the EIR in August 2004. In November 2005, the Planning Commission recommended conditional approval of the recirculated draft EIR. Again, due to ongoing public opposition, the developer opted to continue the item at the city council level, and then agreed to undergo a mediation of the project controversy. When the project was finally brought back before the city council in June of 2007, the majority of the city council did not favor the project, and decided that the draft EIR needed to be recirculated for further public comment on a number of environmental issues raised by the public. The developer sued to compel the city to approve the recirculated draft EIR. Both the trial court and first district court of appeal held that Section 21151.5 was “directory not mandatory,” and therefore, the city had no duty to process the EIR within the one year time frame outlined in Section 21151.5(a)(1)(A). The courts further indicated that the Sunset Drive Corp. v. City of Redlands (1999) 73 Cal. App. 4th 215 could be distinguished insofar as that case only provides the authority for a court to order an agency to review an EIR if it refuses to do so. The courts found that the City of Sebastopol, unlike the City of Redlands, was continuing to process the EIR in accordance with the many changes proposed by the applicant/developer.

If you’re a developer, these cases merely reiterate what you already know about processing development applications in California – its risky business and there are no guarantees. If you’re an agency, these cases provide you with continued wide discretion as to how you process entitlements in your jurisdiction.

Katherine J. Hart is a senior associate 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.