By Glen Hansen

The California Supreme Court held in Lynch v. California Coastal Commission (2017) 3 Cal.5th 470, that plaintiff property owners forfeited their challenge to conditions attached to a permit to rebuild a seawall and beach access stairway because the plaintiffs accepted the benefits the permit conferred, even though they simultaneously filed an action challenging the conditions.

In Lynch, plaintiffs owned homes that sit on a coastal bluff that cascades steeply down to the beach and Pacific Ocean. Since 1986, the properties have been protected by a shared seawall at the base of the bluff and a mid-bluff erosion control structure. A shared stairway provided the only access from the bluff-top to the beach below. Plaintiffs applied to the City of Encinitas (“City”) for authorization to replace the wooden seawall and mid-bluff structure and rebuild the lower portion of the stairway. The City approved the project, but final approval required a coastal development permit from the California Coastal Commission (“Commission”). A heavy winter storm then caused part of the bluff to collapse and destroyed part of the seawall, the mid-bluff structure, and the stairway. Plaintiffs sought a new permit to rebuild the damaged structures. The Commission approved a permit that allowed seawall reconstruction and mid-bluff protection, but with special conditions, including the following: (1) reconstruction of the lower stairway is prohibited; (2) the seawall permit will expire in 20 years and prohibits future bluff-top redevelopment from relying on the seawall; and (3) before expiration of the 20-year period, plaintiffs must apply for a new permit to remove the seawall, change its size or configuration, or extend the authorization period. Plaintiffs submitted written objections to those conditions during the review process. But, then plaintiffs complied with the permit requirements and recorded deed restrictions stating that the special conditions of the permit were covenants, conditions and restrictions on the use and enjoyment of their properties. Plaintiffs also filed a petition for writ of administrative mandate challenging the 20-year expiration conditions and the condition prohibiting reconstruction of the lower stairway. While the mandate action was pending, however, plaintiffs satisfied all other conditions, obtained the permit, and built the seawall.

The trial court issued a writ directing the Commission to remove the challenged conditions and held that “by proceeding with the repairs,” plaintiffs “have not necessarily accepted the conditions in question. No action has been taken as to the twenty year condition[,] which can be removed after review of the instant petition.” The Court of Appeal reversed in a split decision. The California Supreme Court granted review and affirmed the Court of Appeal’s decision.

The Supreme Court held that “plaintiffs forfeited their right to challenge the permit’s conditions by complying with all pre-issuance requirements, accepting the permit, and building the seawall. The Court relied on the general rule in the land use context that “a landowner may not challenge a permit condition if he has acquiesced to it either by specific agreement, or by failure to challenge the condition while accepting the benefits afforded by the permit. Generally, challenges to allegedly unlawful conditions must be litigated in administrative mandate proceedings.” That general rule stems from the equitable concept that permit holders are obliged to accept the burdens of a permit along with its benefits. The general rule also serves the public purpose of “promptly alerting the [agency] that its decision is being questioned and allows the government to mitigate potential damages.” In this case, plaintiffs obtained all the benefits of their permit when they built the seawall and “[t]hey cannot now be heard to complain of its burdens.” The Court refused to create a new exception to that general forfeiture rule which would allow landowners to accept the benefits of a permit under protest if the challenged restrictions can be severed from the project’s construction.

The Court recognized that there is a “narrow exception” to the general rule for challenges to permit conditions imposing a fee or similar exaction. The Mitigation Fee Act (Govt. Code, §66000 et seq.) (“MFA”) contains a procedure by which developers may proceed with a project and still protest the imposition of “fees, dedications, reservations, or other exactions.” If a developer tenders payment of the disputed fee and gives written notice of the grounds for protest, local agencies cannot withhold project approval during litigation of the dispute, and local agencies must refund the fee if the challenge is successful. But that MFA procedure does not govern the type of land use restrictions that were imposed by the Commission on the project in this case.

Thus, the plaintiffs in Lynch forfeited their objections by constructing the project. The Court concluded:  “Without an express agreement with the agency providing otherwise, landowners who object to permit conditions not covered by the Mitigation Fee Act must litigate their objections in an administrative mandate proceeding before constructing the permitted project. Landowners who proceed with a project before the merits of their claims have been decided risk a finding that their objections were forfeited.”

Glen Hansen is Senior Counsel at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc., at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., 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.