By Leslie Walker and Joel Ellinwood, AICP

Establishing estoppel against the government in land use matters requires additional findings not required against a private party. In Feduniak v. California Coastal Commission (2007) 148 Cal.App.4th 1346, two Pebble Beach landowners found out exactly how difficult that task can be.

In general, the theory of estoppel is that “…where one by his words or conduct willfully causes another to believe the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is [precluded] from averring against the latter a different state of things as existing at the same time;…” To establish estoppel against a government, a court must make additional findings. First, the court must find that estopping the public agency would not nullify a strong rule of policy adopted for the public’s benefit. Then, the court must weigh the injustice to the complaining party without estoppel against the public interest, and find that any effect upon public interest or policy that results from estopping enforcement of the public agency’s orders is justified.

In this case, the Feduniaks purchased a parcel of property in Pebble Beach from the Bonannos in 2000. In 1983, the Bonannos, along with their co-owners, obtained a conditional permit from the Costal Commission (“Commission”) to demolish an existing house on the property and build a larger one. The Commission determined that the parcel contained environmentally sensitive habitat and, as a condition of the permit, allowed only 14 percent of the lot to be developed. The Commission required that the owners dedicate and record an open-space easement over the remaining 86 percent. Further, the Commission required that the landscaping plan for the lot be submitted to a botanist and that a separate coastal permit was required for any additions to the permitted development. 

After obtaining the permit, the Bonannos became the sole owners of the property.  They modified the original landscape plan to include a three-hole “pitch and putt” golf course. However, they did not submit the plan to the Commission or seek a supplemental permit for the additional development before construction of the course. In 1996, the Bonannos’ architect applied to the Monterey County (“County”) for a permit to build a caretaker’s house on the property.  The architect stated that there were no easements on the property.  The County Planning Department issued the permit, finding that the property complied with all rules and regulations pertaining to the use of the property. 

When the Feduniaks purchased the property in 2000, the disclosures listed only a fence encroachment. The title report did not show the recorded easement for open space that was a condition of the earlier permit. In 2002 the Commission informed the Feduniaks that the golf course violated the permit conditions and after an administrative hearing, the Commission issued cease-and-desist and restore orders, directing the golf course to be removed. The Feduniaks sought a writ of administrative mandate to reverse the Commission’s order.

The trial court found that the Commission should be estopped from enforcing its orders against the Feduniaks because the Commission should have known that the golf course violated the easement and permit restrictions. The trial court reasoned that this case was unique because the golf course was easily visible, it had been on the property for 18 years, and the Commission did not inspect the site for compliance until 2002.

The Sixth Appellate District reversed the trial court’s decision, holding that the record did not support elements essential to the application of equitable estoppel against the Commission. The court explained that estoppel may be applied against the government, but that “it must not be applied if doing so would effectively nullify a strong rule of policy adopted for the benefit of the public.”

The appellate court first held that estoppel required the Commission to know that the golf course violated the easement and the permit restrictions. The appellate court found that the Commission did not have the requisite knowledge for equitable estoppel because the Commission had neither actual nor imputed knowledge of the violations. The court said that it found no statutory authority compelling the Commission to inspect properties for compliance with permit conditions. Even though there was ample testimony at the trial court that the golf course was prominently located and easily visible from the highly trafficked 17 Mile Drive, the appellate court found it “unreasonable…to conclude that the mere sight of a golf course should have put the Commission on notice of a violation or at least triggered a duty to investigate.”

Further, the appellate court held that equitable estoppel would not apply because the Commission did not intend for the Feduniaks to take action based on its regulatory inaction. Nor was it reasonable for the Feduniaks to believe that the Commission so intended.  

Finally, and most importantly, the court held that the Commission’s status as a public agency required additional findings at the trial court level. “Here, the [trial] court also had to find that (1) estopping the Commission would not nullify a strong rule of policy adopted for the public’s benefit and (2) the injustice to the Feduniaks without estoppel outweighs, and therefore justifies, any effect upon public interest or policy that results from estopping enforcement of the Commission’s orders.” The court specifically discussed the application of estoppel against the government in land use cases and said:

…[A] party faces daunting odds in establishing estoppel against a governmental entity in a land use case.  Courts have severely limited the application of estoppel in this context by expressly balancing the injustice done to the private person with the public policy that would be supervened by invoking estoppel to grant development rights outside of the normal planning and review process. The overriding concern is that public policy may be adversely affected by the creation of precedent where estoppel can too easily replace the legally established substantive and procedural requirements for obtaining permits.  Accordingly, estoppel can be invoked in the land use context in only the most extraordinary case where the injustice is great and the precedent set by the estoppel is narrow.

Here, the appellate court held that estopping the Commission would only injure the public, “which has a strong interest in a scenic natural coastline with natural vegetation…” The court said that the people of the state, through the Legislature, expressed a preference for the preservation, protection, and restoration of natural coastline. Once the court established that there was a strong public policy goal behind the easement and permit restrictions, then it evaluated whether “the injury to the Feduniaks is so great that justice demands that the Commission be estopped.” The two injuries to the Feduniaks were the cost of removing the golf course and the frustration of their expectation of beneficial enjoyment of the course. However, the court said that the Feduniaks may have remedies against the Bonannos and the title company for the cost of complying with the Commission’s requirements and removing the course. Additionally, the Feduniaks previously offered to fund a restoration project elsewhere, so the court said that “the real injury is that they would no longer be able to own, see, and use a private golf course uniquely situated on the California coast.” Although the court was sympathetic to the Feduniaks’ personal loss, the court held that the loss “does not reasonably justify or compel estopping the Commission from enforcing its orders.”

Leslie Walker is a clerk and Joel Ellinwood 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.