LYNCH v. CALIFORNIA COASTAL COMMISSION

Respondents’ Reply to Answer to Petition for Review

Cal.November 21, 2014

IN THE SUPREME COURT OF THE STATE OF CALIFORNIA No. 8221980 BARBARA LYNCH and THOMASFRICK, Plaintiffs and Respondents, v. SUPREME COURT PILED CALIFORNIA COASTAL COMMISSION, Defendant and Appellant. NOV 35 2014 Frank A. McGuire Olerk After an Opinion by the Court of Appeal, Fourth Appellate District, Division One (Case No. D064120) On Appeal from the Superior Court of San Diego County (Case No. 37-201 1-00058666-CU-WM-NC, Honorable Earl MaasIII, Judge) PLAINTIFFS’ AND RESPONDENTS’ REPLY TO ANSWERTO PETITION FOR REVIEW JONATHANC. CORN, PAUL J. BEARD II, No. 156983 No. 210563 Axelson & Corn, P.C. Pacific Legal Foundation 160 Chesterfield Drive 930 G Street Suite 201 Sacramento, California 95814 Cardiff by the Sea, CA 92007 Telephone: (916) 419-7111 Telephone: (760) 944-9006 Facsimile: (916) 419-7747 Facsimile: (760) 454-1886 E-mail: pjb@pacificlegal.org E-Mail: joncorn@axelsoncorn.com E-mail: jft@pacificlegal.org Attorneysfor Plaintiffs and Respondents TABLE OF CONTENTS Page TABLE OF AUTHORITIES . 2.0.0... 0.oesli ARGUMENT.... 2...eeeeeteen e tenes l I. Il. Hi. THE DIVIDED OPINION OF THE COURT OF APPEAL RADICALLY DEPARTS FROM EXISTING PRECEDENTS ON THE IMPORTANTISSUE OF PROPERTY OWNERS’ ACCESS TO THE COURTS TO CHALLENGE UNLAWFUL PERMIT CONDITIONS A. The Divided Opinion Breaks with the Precedents on “Waiver”in the Permitting Context ............. B. The “Waiver” Issue in the Land-Use Permit Context Is Important .............. 0.002 e eee THE DIVIDED OPINION OF THE COURT OF APPEAL CONFLICTS WITH EXISTING PRECEDENTS ON THE IMPORTANT QUESTION OF WHAT LIMITATIONS EXIST ON GOVERNMENT’S POWER TO CONDITION THE RIGHT TO PROTECT PROPERTY .............. THE DIVIDED OPINION OF THE COURT OF APPEAL RAISES AN IMPORTANT QUESTION ABOUT WHETHER LOCAL POLICIES CAN TRUMP STATE-LAW PROTECTIONS FOR COASTAL PROPERTY OWNERS................-5. be eeeee 1 bee eeee I beeen 9 sence 10 bese 12 CONCLUSION ........ 0...eeetenet n eens 14 TABLE OF AUTHORITIES Page Cases County ofImperial v. McDougal, 19 Cal. 3d 505 (1977) ............ 2,5 Edmonds v. County ofLos Angeles, 40 Cal. 2d 642 (1953) ............. 6 Kadrmas v. Dckinson Public Schools, 487 U.S. 450 (1988) ............ 8 Nollan v. California Coastal Commission, 483 U.S. 825 (1987) 2.0...eeeens 4-5, 10- 12 Nollan v. California Coastal Comm’n, 479 U.S. 913 (1986) ........... 5 Ocean Harbor House Homeowners Ass'n v. California Coastal Comm’n, 163 Cal. App. 4th 215 (2008) ............... 10, 12 Pfeiffer v. City ofMesa, 69 Cal. App. 3d 74 (1977) ............. 0005 6 Rossco Holdings, Inc. v. State, 212 Cal. App. 3d 642 (1989) ......... 2,5 Statutes Code of Civil Procedure § 1094.5 2.0.0...eeeeee 6 Pub. Res. Code § 30610(g)(1) 2.2...ccceee eee eee 13 -ii- Petitioners Barbara Lynch and ThomasFrick (“Homeowners”) hereby reply to the Answer of Respondent California Coastal Commission (“Commission”). ARGUMENT! I THE DIVIDED OPINION OF THE COURT OF APPEAL RADICALLY DEPARTS FROM EXISTING PRECEDENTSON THE IMPORTANTISSUE OF PROPERTY OWNERS’ ACCESS TO THE COURTS TO CHALLENGE UNLAWFUL PERMIT CONDITIONS A. The Divided Opinion Breaks with the Precedents on “Waiver” in the Permitting Context The Court ofAppeal’s divided opinion is unprecedented. Priorthereto, no court had ever held that an applicant who exhausted all administrative remedies in the face of unlawful permit conditions, then filed a timely and valid action challenging those conditions, nevertheless could be barred from having her day in court. The majority opinion does just that, creating out of whole cloth a new barrier to property owners’ accessto the courts: Even if an ' The Commission’spetition presents a lengthy factual background concerning issues that are irrelevant to the present petition in an attempt to paint the Homeownersin an unfavorable light. The only relevant background is: The Homeownersapplied for a coastal development permit to build a new seawall to protect their homes, and the Commission conditionedtheir right to do so on (1) requiring the seawall to expire in 20 years and (2) the Homeowners’ forfeiture of the right to rebuild the lowerportion oftheir staircase destroyed by storms. applicant follows every statutory requirement necessary to preserve her challenge, she nevertheless waivesherright to have her challenge adjudicated, if she does not also abandon herright to use (or, in this case, protect) her property pending the outcomeofthelitigation. Respondent California Coastal Commission attempts to reconcile the divided opinion with the long line ofprecedents on “waiver”in the permitting context. According to the Commission, the majority opinion was just a “straightforward application” of those precedents, based on findings that the Homeowners had “recorded deed restrictions, . . . complied with the conditions[,] . . . accepted their coastal development permit[,] and... proceededto construct their project.” Answer at 6. But it is precisely because the court basedits “waiver” holding on thosefindingsthat the majority opinion breaks new ground. The precedents hold that an applicant waivesthe right to challenge a permit condition by (1) “specifically agreeing to the condition or failing to challenge its validity,” and (2) “accept[ing] the benefits afforded by the permit.” County ofImperial v. McDougal, 19 Cal. 3d 505, 510-11 (1977); Rossco Holdings, Inc. v. State, 212 Cal. App. 3d 642, 644-45 (1989) (same). It is important to underscore that the precedents require that waiver be predicated on the satisfaction of two independentcriteria—thefirst ofwhich, in turn, identifies two ways for the applicant to demonstrate acquiescence to offending conditions. Here, there is no dispute that that the Homeowners timely challenged the validity of the seawall-expiration condition and the stairway-reconstruction ban. And there is no dispute that the Homeowners repeatedly objected to the conditions before and at the administrative hearing, and via their timely and valid lawsuit filed shortly after the Commission imposed those conditions. As the superior court and the dissent both found, there is no way, based on these undisputed facts, to accuse the Homeowners ofhaving “specifically agree[d]” to the challenged conditions. This ends the analysis: Without meeting either prongofthefirst criterion, the Homeowners could not be deemed to have waivedtheir right to challenge the conditions. But the Opinion in this case dispenses entirely with the first criterion—and,in particular, the “specific agreement” prongofthat criterion. The Opinion instead relies exclusively on the Homeowners’ actions surroundingtheir construction ofthe permitted seawall—the secondcriterion for waiver that no one disputes has been met(i.e., acceptance of a permit’s benefits). In that regard, the Opinion makes much of the fact that the Homeowners recorded deeds that provide public notice that the Commission approved the seawall permit with conditions and, importantly, recognize that any ofthose conditions could ultimately be invalidated by a court of law. Having to record the deeds waspart and parcel of the construction of the permitted seawall. The Commission forced the Homeownersto record the deeds before receiving a building permit allowing them to proceed with the project. Compliance with the Commission’s condition that they record deeds was not compliance (let alone specific agreement) with the challenged seawall-expiration and staircase-ban conditions. Thus, the majority found waiver on the basis only one of the second of twocriteria necessary to make sucha finding: The Homeownerstookthe benefits ofthe permit. Again, there is no precedentthat supports finding waiver based only on the performance of the work authorized by the permit. Significantly, the United States Supreme Court—ina case against the Commissionthat was very similar to this one—specifically rejected the notion that an applicant had to choose between vindicating his rights in court and proceeding with the permitted project. In Nollan v. California Coastal Commission, 483 U.S. 825 (1987), ahomeownerchallenged the Commission’s condition on his remodel permit, which would have required him to dedicate a public-access easement across his property. During litigation, the homeowneraccepted the permit’s benefits and remodeled his house. Jd.at 829-30. When the case landed in the United States Supreme Court, the Commission movedto dismiss the case on the groundthat the homeowner had waivedhis right to challenge the easement condition, because he had taken the permit’s benefits. See Response of Appellants to Motion of Appellee California Coastal Commission To Dismiss(filed Dec. 9, 1986), U.S. Supreme Court Case No. 86-133, at 7-12.27 The Supreme Court denied that motion.’ Nollan v. California Coastal Comm’n, 479 U.S. 913 (1986) (denying the Commission’s motion to dismiss). The Commission also hypothesizes that, if they needed to build their seawall, the Homeowners could have applied for an emergency permit or permit amendment, or they could have sought judicial relief from having to record the deeds. Answerat 7, 9. But the Commission’s hypotheticals do not answerthe legal problem created by the majority opinion: There is now a split in the courts of appeal as to whether following the legal requirements for preserving a challenge to permit conditions will actually guarantee the applicant’s right to judicial review of those conditions. Moreover, on the merits ofthe Commission’s hypotheticals, they makelittle sense. Particularly with respect to the “emergency permit” argument, no statute or precedent * A relevant excerpt of the brief is attached to the Amici Curiae Letter of Beach and Bluff Conservancy,et al., in support of the Petition for Review (filed Oct. 31, 2014). > In response, the Commission cites Rossco Holdings, Inc. v. State of California, 2| Cal. App. 3d 642 (1989). There, the court ofappeal concluded that Nollan did not abrogate the County ofImperialrule, in part on the grounds that “waiver was neither discussed nor in issue in Nollan.” Jd. at 656. First, while not discussed in Nollanitself, the United States Supreme Court certainly did address the waiver issue whenit specifically rejected the Commission’s argument that merely proceeding with a permitted project constitutes waiver. Second, the High Court’s ruling on the “waiver” issue is consistent with County of Imperial and other state precedents, none of which hold that proceeding with a project—without more—waives a challenge to permit conditions. requires a permit applicant to initiate a new permit proceeding in order to preservethe right to proceed with an already-permitted project while litigating the permit’s conditions. Andthe futility ofsuch a course ofaction is evident: Thereis no reasonto believe that the agency that imposed unlawful conditions in one permit will, in an entirely new and different permit proceeding, authorize the same activity without the offending conditions. Next, the Commissioncites Pfeiffer v. City ofMesa, 69 Cal. App. 3d 74 (1977), and Edmonds v. County ofLos Angeles, 40 Cal. 2d 642 (1953), as supporting the majority opinion’s “waiver” finding. Answer at 7-9. Notso. Theactual holding in Pfeiffer is not that the acceptance of a permit’s benefits constitutes waiver, but that any challenge to a permit condition must be brought pursuant to Code of Civil Procedure section 1094.5 (either before or concomitantly with an inverse condemnation claim). Of course, the Homeowners here complied with the Pfeiffer holding, and filed a timely section 1094.5 writ action challenging the Commission’s unlawful conditions. In Edmonds, this Court emphasizedthat “never once during the entire proceedings” leading up to the permit decision at issue there did the plaintiffs object the conditions. Edmonds, 40 Cal. 2d at 650. The Court explainedthat if the plaintiffs had believed that the conditions were unlawful, “they would have relied on the courts for vindication,” but instead the plaintiffs had proceeded “as ifthey claimedno right” against the conditions. /d. Thefinding of “waiver” was based both on (1) the plaintiffs’ failure to object to the conditions during the permit proceedings, and (2) the plaintiffs’ failure to file suit to challenge them. By contrast, the Homeowners both objected and filed a timely suit; nor did the Homeowners ever comply with the challenged conditions. Drawing a contrast with the Mitigation Fee Act, the Commissionpoints out that the Coastal Act does not contain a provision that allows an applicant to proceed with a permitted project while challenging the permit’s conditions. Answerat 10. But neither point is relevant. The question is not whether there is specific statutory authority that recognizes the right of an applicant to an adjudication ofher challenge to a permit condition, while proceeding with her project. The question is whether this State’s well-established jurisprudence has ever—before the divided opinion this case—extinguished a timely and valid claim challenging an unlawful permit condition, solely on the basis that the claimant proceeded with her project. The answer is a resounding “no.” The majority opinion is the first to so hold, and deviates significantly from established precedents that have required, in addition to proceeding with a project, a finding of specific agreement with orfailure to challenge the permit conditions at issue.* Thatlatter finding could not be madein this case. * The fact that the Mitigation Fee Act applies only to challenges to permit conditions imposed bylocal agenciesis irrelevant. Answerat 11. Almost all (continued...) Finally, the Commission fails to distinguish a United States Supreme Court precedent on waiverthat is on all fours with this case. In Kadrmasv. Dickinson Public Schools, 487 U.S. 450, 456-57 (1988)—and as the Commission recognizes (Answerat 11)—the United States Supreme Court refused to bar a challenge to a statute permitting some school districts to chargea user fee for transportation, even thoughtheplaintiffhad signed a bus contract and paid some of the fees—i.e., accepted the benefits of the statute. The Court “doubt[ed] that plaintiffs are generally forbidden to challenge a statute simply because they are deriving some benefit from it.” The Commission notes that the Court found the fee to be a burden, not a benefit, and that the suit sought equitable relief. Answer at 11. Butthat is true ofthis case as well: The conditions that the Homeowners challenge are a burden on the permit, not a benefit, and the Homeowners simply seek equitable relief—i.e., invalidation of the conditions. 4 (...continued) agencies that issue land-use permits are local, not state, agencies; therefore, it made sense for the Legislature to legislate on local agency exactions. Moreover,the public policy considerations that the Legislature relied upon in enacting the Mitigation Fee Act apply equally to conditions imposedbystate agencies: Applicants should not have to choose between forfeiting their right ofjudicial review of unlawful conditions and forfeiting their right to use and protect their properties. The Commission does not explain why—as a public policy matter— it should befree to force that kind ofa choice onto applicants, while every local agency in the State is not. -8- B. The “Waiver” Issue in the Land-Use Permit Context Is Important The Commission does not address,let alone contest, the importance of the “waiver”issue raised in the Homeowners’ petition. The majority opinion in this case conflicts with a long line of precedents on the issue, and only serves to confuse an already complex area of the law: Beyond following all the statutory requirements necessary to preserve a challenge to unlawful permit conditions, what else must an applicant do? In light of the divided court of appeal’s published decision, that questionis difficult to answer. And, until it is, millions of Californians—inside and outside the coastal zone—will have little guidance from this State’s fractured jurisprudence. The issue’s statewide importanceis buttressed bythefact that a number ofprominent organizations and experienced land-use attorneys from across the State have filed amicuscuriae letters in support ofthis petition. Amici include homeowners associations from up and down California, the California Building Industry Association, the California Farm Bureau Federation, the California Cattlemen’s Association andthe California Association ofRealtors. As against the vast and varied voices in support of the petition, the Commission offers no reason whythe “waiver”issueis oflimited importance. II THE DIVIDED OPINION OF THE COURT OF APPEAL CONFLICTS WITH EXISTING PRECEDENTSON THE IMPORTANT QUESTION OF WHATLIMITATIONSEXIST ON GOVERNMENT’S POWER TO CONDITION THE RIGHT TO PROTECT PROPERTY The Homeownersand amici explain at great length the reasons why the majority opinion conflicts with existing precedents concerningthe limitations on government power to condition the right to protect property. See, e.g., Petition for Review at 21-23; see also Amici Curiae Letter ofBeach and Bluff Conservancy,et al., at 3-6. In short, both the United States Supreme Court and at least one court of appeal have madeclear that only conditions that actually mitigate for identified impacts caused by a project are lawful. Nollan, 483 USS.at 837 (condition must bear an “essential nexus”to identified impacts of the proposed use); Ocean Harbor House Homeowners Ass’n v. California Coastal Comm ’n, 163 Cal. App. 4th 215, 240-42 (2008) (upholdingin-lieu fee that mitigated for identified impacts caused by project). The reason for requiring that a permit condition actually be mitigation is to avoid government agencies from exploiting the permit process to simply exact property interests pursuant to an “out-and-out plan of extortion.” Nollan, 483 U.S. at837. Nevertheless, in spite ofthese precedents andthe plain language ofthe Coastal Act, the majority opinion upholds the Commission’s imposition of a 20-year expiration date on a state-of-the-art seawall expected to last 75 years—a -10- condition meant“‘to allow the potential removal ofthe approved seawall’”’at that time. Dissenting Opinion at 15 (quoting Commission). This, despite the Commission’s admissionthat the seawall ““has been designed and conditioned to mitigate its impact on coastal resources ....’” /d. (quoting Commission). In other words, requiring the seawall to expire in 20 years does not actually mitigate any identified impacts from the seawall (all ofwhich had already been mitigated), but is merely an insurance policy that protects the Commission’s freedom in the future should legislative or judicial changesallow it to ban all seawalls up and down thecoast. The Commission does not dispute that both Nollan and Ocen Harbor House endorseonly actual mitigation for identified impacts ofa proposed use ofproperty. Instead, it argues that the majority opinionis consistent with those requirements, because the 20-year expiration condition is mitigation. But, as the superior court and the dissent recognized,it is not. See, e.g., Dissenting Opinion at 14-15 (The 20-year expiration condition “does not mitigate any impacts the seawall may cause in the future[,]” but “merely gives the Commissionthe option to denythe permit outright in 20 years.”). Importantly, the Commission does not explain the difficulty that the majority opinionraises. If a 20-year expiration condition can be labeled “mitigation,” then any condition can be characterized as such—and the mandate in Nollan thatall -ll- conditions bear anessential nexusto identified impacts caused by the proposed use ofproperty is a deadletter. Reviewis necessary to determinejust how far a government agencylike the Commission can go in imposing permit conditions, without running afoul of Nollan and Ocean Harbor House. It is especially significant here, where the right being conditioned is the constitutional and “inalienable” right of “protecting property.” Cal. Const. art. I, § 1. Can the government impose a 20-year expiration date on that inalienable right? The court of appeal answeredin the affirmative, not only conflicting with precedents that set forth the standards for “mitigation,” but risking the lives and properties of landownersall along the coast. Ill THE DIVIDED OPINION OF THE COURT OF APPEAL RAISES AN IMPORTANT QUESTION ABOUT WHETHER LOCAL POLICIES CAN TRUMP STATE-LAW PROTECTIONS FOR COASTAL PROPERTY OWNERS The majority opinion holds that the Homeowners’ replacementoftheir lower staircase requires a permit, even though the stairway was destroyed by a disaster. Majority Opinion at 16-17. That holding is based on a failed attempt to reconcile a state mandate specifically exempting disaster-stricken structures from a permit and a conflicting local provision. Section 30610(g) of the Coastal Act makes clear that the right to replace a disaster-stricken -12- structure, including a privatestaircase,is a state-statutory right that cannot be trumped by local policy. The Commission does not contest the well-established principle that local policies cannot trumpstate law. But it defends the majority opinion on the basis that the Coastal Act exemptionat issue here somehowpermits a local end-run aroundits protections. That implausible reading ofthe statute would allow endless local exceptions to swallow thestate rule. The Commissionasserts that the Costal Act exemptionis limited by the following sentence in section 30610, subdivision (g): “[t]he replacement structure shall conform to applicable existing zoning requirements.” Pub. Res. Code § 30610(g)(1). The Commissioninterprets this sentence to mean “the replacement of a structure destroyed by a disaster also must conform to applicable zoning requirements.” However,as that sentence makesclear,it is the “structure,” not its replacement, that must conform to applicable zoning requirements. Thus, as Justice Nares aptly putit: [I]t is the structure’s design, aesthetics and dimensions that must comply with local zoning regulations. However, no zoning regulation can be contradictory to the law governing the question of whether a particular replacement project is entitled to exemption. As is made clear in section 30610, subdivision (g)(1), the stairway repair project is exempt. -13- The plain meaning of the Coastal Act’s exemption conflicts irreconcilably with any local policy to the contrary. And the majority’s decision to allow the local policy to prevail raises important state-preemption questions that this Court should resolve. If the decision stands, the Commission will undoubtedly use it to encourage localities to adopt “exceptions” to the few protections that the Coastal Act actually affords property owners, on the groundsthat local policy can trumpstate law. CONCLUSION Forall these reasons, the petition should be granted. DATED: November20, 2014. Respectfully submitted, PAULJ. BEARD II Pacific Legal Foundation JONATHAN C. CORN Axelson & Corn, P.C. By i ae eee j \ UPAUL J. BEARD II Attorneysfor Plaintiffs and Respondents -14- CERTIFICATE OF COMPLIANCE Pursuant to California Rule of Court 8.204(c)(1), I herebycertify that the foregoing PETITION FOR REVIEW isproportionately spaced, has a typeface of 13 points or more, and contains 3,163 words. DATED: November20, 2014. NV PAUL J. BEARDIT -15- DECLARATION OF SERVICE I, Pamela Spring, declare as follows: I am resident of the State of California, residing or employed in Sacramento, California. I am over the age of 18 years and am nota party to the above-entitled action. My business addressis 930 G Street, Sacramento, California 95814. On November 20, 2014, true copies of PLAINTIFFS’ AND RESPONDENTS’ REPLYTOANSWERTOPETITIONFORREVIEWwere placed in envelopes addressedto: Hayley Elizabeth Peterson Office of the Attorney General 110 West A Street, Suite 1100 San Diego, CA 92101 Clerk of the Court Fourth District Court of Appeal, Division One Symphony Towers 750 B Street, Suite 300 San Diego, CA 92101 Clerk of the Court San Diego County Superior Court North County Division 325 South Melrose Drive Vista, CA 92081 which envelopes, with postage thereon fully prepaid, were then sealed and deposited in a mailbox regularly maintained by the United States Postal Service in Sacramento, California. I declare under penalty ofperjury that the foregoing is true and correct and that this declaration was executed this 20th day of November, 2014,at Sacramento, California. PALE PAMELA SPRING