HOLLAND & KNIGHT LLP
California Supreme Court Sides with Coastal Commission in Case Challenging Permit Conditions – Ruling Holds That Property Owners Forfeit Challenge to Land Use Permit Conditions by Proceeding with Construction
by Holland & Knight LLP
Holland & Knight LLP
“¢ The Supreme Court of California has held that the owners of bluff-top residences along the state’s coast forfeited their right to challenge conditions of approval of a development permit issued by the California Coastal Commission for replacement of a seawall by proceeding with construction while their lawsuit challenging the Commission’s permit conditions was still pending.
“¢ The holding in Lynch v. California Coastal Comm’n extends beyond permit proceedings before the Coastal Commission and will undoubtedly be held applicable to land use permit proceedings and conditions at the local level as well.
“¢ Specifically, the court stated that in the land use context, a landowner cannot challenge permit conditions where the landowner has consented to the conditions either by a specific agreement or by failing to challenge the condition while accepting the benefits afforded by the permit.
In Lynch v. California Coastal Comm’n, __ Cal.5th __, No. S221980, 2017 WL 2871762, 2017 Cal. LEXIS 5054 (Cal. July 6, 2017), the Supreme Court of California held that the owners of bluff-top residences along the California coast forfeited their right to challenge conditions of approval of a development permit issued by the California Coastal Commission for replacement of a seawall by proceeding with construction while their lawsuit challenging the Commission’s permit conditions was still pending. The holding in Lynch extends beyond permit proceedings before the Coastal Commission and will undoubtedly be held applicable to land use permit proceedings and conditions at the local level as well.
Applicants may find themselves faced with the Hobson’s choice posed by the facts in Lynch ““ initiate and pursue to final resolution in court any challenges to objectionable conditions (and continue to bear land carry costs and other expenses during the pendency of such litigation) or proceed with construction and run the very real risk that their objections have been forfeited. In the absence of an agreement to the contrary with the local jurisdiction, Lynch places the odds on the local jurisdiction to prevail in a case where an applicant proceeds with construction while pursuing a legal challenge to permit conditions.
Plaintiffs Barbara Lynch and Thomas Frick own adjacent beachfront properties in Encinitas, with homes sitting on top of a coastal bluff cascading down to the beach and Pacific Ocean. Since 1986, the properties had been protected against landslides by a shared seawall along portions of the bluff. In 2009, the City of Encinitas approved plaintiffs’ application for authorization to construct a concrete replacement seawall, subject to final approval of a coastal development permit by the Coastal Commission. While plaintiffs’ application to the Commission was pending, severe storms caused further landslides and destruction of parts of the seawall.
Ultimately, the Commission approved a permit allowing seawall demolition and reconstruction, subject to various conditions, including two conditions that set a 20-year expiration date on the permit and required the owners to apply for a new permit prior to expiration of the 20-year period if they wished to extend this period. The owners timely filed a writ of mandate action against the Commission challenging the 20-year expiration conditions and another condition prohibiting reconstruction of a stairway to the beach. While the litigation was pending at the trial court, the owners satisfied all conditions to issuance of the development permit, obtained the permit and built the new seawall.
The trial court ruled in favor of the owners and issued a writ directing the Commission to remove the challenged conditions. The Court of Appeal reversed in a split decision, with the majority holding that the owners had waived their claims and that, in any event, the conditions were valid. The property owners then took the case to the California Supreme Court.
California Supreme Court’s Decision
The California Supreme Court held that the property owners forfeited their right to challenge the permit conditions by complying with pre-issuance conditions, accepting the permit and building the seawall.1 Specifically, the court stated that in the land use context, a landowner cannot challenge permit conditions where the landowner has consented to the conditions either by a specific agreement or by failing to challenge the condition while accepting the benefits afforded by the permit.
The court’s decision was based on a long line of California cases involving challenges to permit conditions. For example, in a prior California Supreme Court case,2 the Court held that a successor owner could not challenge a condition placed on a special permit granted to his predecessor (permitting the commercial sale of well water but only within the county) where his predecessor had failed to challenge the condition when imposed, and had thereafter accepted the benefits of the permit and conducted his business accordingly. In another case,3 the Court of Appeal held that a landowner who accepts a building permit and complies with its conditions waives the right to assert the invalidity of the conditions and sue the issuing public entity for the costs of complying with them.
In Lynch, the property owners claimed that their case was unlike these prior cases, because they did challenge certain conditions, and they did not comply with conditions and later seek damages. Nonetheless, the California Supreme Court emphasized that:
The crucial point is that they went forward with construction before obtaining a judicial determination on their objections. By accepting the benefits of the permit and building the seawall, plaintiffs effectively forfeited the right to maintain their otherwise timely objections.
In California, the Mitigation Fee Act (Gov. Code Â§6600 et seq.) creates a narrow exception that allows property owners to challenge permit conditions imposing fees or similar exactions, while still proceeding with a project. The property owner pays the fee “under protest” and if the Mitigation Fee Act challenge is successful, the agency refunds fees paid. In Lynch,the California Supreme Court characterized the landowners’ case as seeking to extend the Mitigation Fee Act to include challenges to land use restrictions. The Court rejected this expansion of the Mitigation Fee Act, which it determined would upset the “delicate balancing of interests” inherent in land use planning decisions and “inject uncertainty” into the planning process. Instead, any such expansion would be up to the Legislature to create.
The Court noted that the owners in this case had potential “options” to avoid forfeiture of their claim. They could have sought a temporary emergency permit for temporary seawall protection of their property to preserve the “status quo” during the litigation. “Although it was likely impossible here,” the owners also may have been able to reach an agreement with the Commission allowing construction to proceed while the court challenge is resolved.
Considerations and Takeaways
As a practical matter, and as the Court concludes in Lynch, without an agreement with the agency that preserves pending challenge rights, landowners who object to permit conditions not covered by the Mitigation Fee Act must first litigate their objections in administrative mandate proceedings before constructing the permitted project.
This also places a premium on careful review and consideration by project applicants of project conditions of approval proposed by agency staff and using all practical efforts to resolve any differences prior to final agency action on the permit application.
1 Because the court held that owners’ claims were forfeited, it did not consider the legality of the Coastal Commission permit conditions that were being challenged.
2 County of Imperial v. McDougal (1977) 19 Cal.3d 505
3 Pfeiffer v. City of La Mesa (1977) 68 Cal.App.3d 74