By Glen C. Hansen

In Lockaway Storage v. County of Alameda (2013) 216 Cal.App.4th 161, the Court of Appeal for the First Appellate District affirmed a trial court judgment that found that the County of Alameda was liable for $989,640.96 in damages for a temporary taking of plaintiff’s property, where the county stopped work on plaintiff’s project in light of a growth control initiative, even though the project fell within an exemption in the initiative and county officials failed to even consider such exemption, and where the county’s action in stopping the project constituted an unreasonable change from the County’s prior representations made to the property owner.

In 1999, the County of Alameda (“County”) issued a conditional use permit for plaintiff’s property authorizing a storage facility for recreational vehicles (“RV’s”) and boats (“1999 CUP”). The 1999 CUP required that it be implemented within three years of issuance, or it would terminate on September 22, 2002. In May 2000, plaintiff entered into a contract to purchase the property for $800,000, intending on implementing the 1999 CUP to develop a boat and RV self-storage facility. Before plaintiff closed escrow, the County Zoning Administrator confirmed to plaintiff that the property could be used as plaintiff intended under the 1999 CUP.

In November 2000, Alameda County voters enacted Measure D, a growth control initiative. Among other things, Measure D generally prohibited the development of a storage facility in the area of plaintiff’s property, except by public vote. Furthermore, section 19, subdivision (c) of the measure states in part: “Except as required by State law, no subdivision map, development agreement, development plan, use permit, variance or any other discretionary administrative or quasi-administrative action which is inconsistent with this ordinance may be granted, approved, or taken.” However, Section 22 of Measure D limited the application of Section 19, as follows:

(a) This ordinance does not affect existing parcels, development, structures, and uses that are legal at the time it becomes effective. However, structures may not be enlarged or altered and uses expanded or changed inconsistent with this ordinance, except as authorized by State law. [¶] (b) Except to the extent there is a legal right to development, the restrictions and requirements imposed by this ordinance shall apply to development or proposed development which has not received all necessary discretionary County and other approvals and permits prior to the effective date of the ordinance.

Even after Measure D became effective, plaintiff pursued its plan to develop the property and continued its dialogue with the County staff and with County Administrator, who testified at trial that he never told any representative of plaintiff that Measure D’s use restrictions applied to the project. By the end of 2000, plaintiff had expended approximately $70,000 on project consultants and architects. In July 2002, County Administrator and staff acknowledged that plaintiff had already implemented the 1999 CUP. However, in August 2002, the County Administrator stated that, unless plaintiff obtained a new CUP, it could not proceed with its project after the 1999 CUP terminated on September 22. When plaintiff applied for a new permit under protest, the County Administrator and County Counsel expressed the opinion that the project was prohibited under Measure D, without mentioning the possible effect of Section 22 on plaintiff’s right to proceed with the project. The Castro Valley Municipal Advisory Council voted to recommend approval of plaintiff’s application for a new CUP. However, the West County Board of Zoning Adjustments denied plaintiff’s application for a new CUP, The County Board of Supervisors affirmed that decision, and the County stopped the work on the project. 

Plaintiff filed its complaint against the County and others alleging causes of action for inverse condemnation and civil rights violations seeking damages, a writ of mandate and other equitable relief. The Superior Court granted summary adjudication on the mandate cause of action in plaintiff’s favor, finding that Measure D did not apply to the plaintiff project because the project was under the protections of Section 22 of Measure D. After issuing a writ of mandate that authorized the project to proceed, the Superior Court conducted a nonjury trial which resulted in a judgment holding the County liable for a temporary regulatory taking and awarding plaintiff damages of $989,640.96, and attorney fees totaling $728,015.50. The County appealed both the judgment and the attorney fee order. The Court of Appeal affirmed both the judgment and the attorneys’ fee award. 

The court first held that the County failed to establish that the trial court erred when it found that the project was exempt under Section 22 from the use restrictions imposed by Measure D. 

As to the just compensation claims, the County presented two arguments on appeal as to why its temporary suspension of the project did not amount to a constitutional taking. First, the County argued that application of the factors in the balancing test announced by the U.S. Supreme Court in Penn Cent. Transp. Co. v. New York City (1978) 438 U.S. 104 (“Penn Central”) should lead to a conclusion that no taking occurred in this case. However, the court found substantial evidence to support the trial court’s findings that, under the Penn Central factors, the County’s application of Measure D to shut down the plaintiff’s project was a temporary regulatory taking that required the payment of just compensation.

Second, the County argued on appeal that the takings issue should have been decided under the rule announced by the California Supreme Court in Landgate, Inc. v. California Coastal Commission (1998) 17 Cal.4th 1006, rather than the balancing test in Penn Central. In Landgate, the California Supreme Court addressed the issue of “whether a legally erroneous decision of a government agency during the development approval process resulting in delay constitutes a temporary taking of property.” (17 Cal.4th at p. 1018.) The Landgate court concluded that such an error alone does not amount to a taking when it is “part of a reasonable regulatory process designed to advance legitimate government interests.” (Id. at p. 1021.) However, even when a regulation substantially advances a legitimate government purpose, if the agency’s “position was so unreasonable from a legal standpoint as to lead to the conclusion that it was taken for no purpose other than to delay the development project before it,” the action would amount to a taking. (Id. at p. 1024.) In the Lockaway case, the Court of Appeal held that the trial court was correct in finding that the “doctrinal shift” in the County’s interpretation of Measure D “takes the case out of the ‘normal-if-mistaken-regulatory-activity’ paradigm and turns it into a taking.” The evidence did not support the County’s contention that it made an honest and reasonable mistake that led to normal delay, but did support the trial court’s finding that the timing and nature of the County’s change of position took the case outside of the Landgate rule.

Furthermore, the court held that the trial court did not abuse its discretion under Code of Civil Procedure section 1036 in awarding attorneys’ fees incurred by plaintiff in litigating the civil rights claims that were relevant to the inverse condemnation claim.

Glen Hansen is senior counsel 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, or 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.