Opposition Brief — Landgate, Inc. v. California Coastal Commission

No. 98-183

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1997

LANDGATE, INC.,

Petitioner,

CALIFORNIA COASTAL COMMISSION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE CALIFORNIA SUPREME COURT

OPPOSITION TO PETITION

FOR A WRIT OF CERTIORARI

DANIEL E. LUNGREN

Attorney General

RODERICK E. WALSTON

Chief Assistant Attorney General

RICHARD M. FRANK

Assistant Attorney General

PETER H. KAUFMAN

Deputy Attorney General

JOSEPH BARBIERI*

Deputy Attorney General

*Counsel of Record

2101 Webster Street, 12th Floor

Oakland, California 94612-3049

Telephone: (510) 286-3822

Counsel for Respondent

~

QUESTION PRESENTED

Where an agency reasonably but erroneously believed that

a lot proposed for development had been created illegally

without an agency permit, whether the delay in use resulting

from judicial clarification of the lot’s legality constituted a

“temporary” taking of property for which damages are avail-

able under the Federal Constitution.

il

PARTIES BELOW

Landgate, Inc. is the only petitioner before this Court. Peter

Bogart and Punty Bogart, who alleged below that they

possessed a life estate in the property during the period of the

alleged temporary taking and who were parties in the

proceedings before the California trial and appellate courts,

did not join the petition. See pp. 7-9 infra.

TABLE OF CONTENTS

Page

So 3 Bg i 5g SIA Se Se a cara eaee A i

SE DEERME a he Se gk Ce. Oe ee kk Pw il

MME a DPS ga 5 pik yee Wp «tng a ws 1

I ir og ss 5-5 aS USE Kee eo Roe Be eR l

ee I, aca nyt ask bom aS peg Ed hc l

TS EERE CRE Sr Oars Se RAR Byer ete ar ge a Bete 3

REASONS WHY THE PETITION SHOULD

Se 8G ae ae eg eS Rh irs fe al gota sys 7

I. LANDGATE, WITH ONLY A_ REMAINDER

INTEREST, DOES NOT HAVE STANDING BECAUSE

ONLY THE LIFE TENANTS HAVE A CLAIM FOR

TEMPORARY TAKING DAMAGES ......... 7

Il. THE CALIFORNIA SUPREME COURT'S

DECISION CORRECTLY APPLIED EXISTING

TAKING DOCTRINE AND DOES NOT

CONFLICT WITH THE RULINGS OF THIS

CAPRI A SING BAPE GAPUMED 65 see ec ee 9

A. The California Permit Process Includes Both

an Administrative Process and an Expedited

Peecees Peeves PHOOEES «ww ke ee ce i)

B. The California Supreme Court Correctly

Applied the Principle That Normal Delay in

the Permit Process Is Noncompensable ..... 10

C. The California Supreme Court’s Decision

Does Not Conflict With the Decisions of

This Court or the Lower Courts ......... 12

iv

TABLE OF CONTENTS (cont’d)

Page

1. There Is No Conflict With the

Decisions of the Lower Courts ...... . 12

2. There Is No Conflict With the

Decitions of This Cowt... ..... 0 0 13

D. None of the Other Reasons Offered by

Ln Te Me se 16

RAE Pd Sp ed ee eee 19

Vv

TABLE OF AUTHORITIES

Page

Cases

Adams v. Robertson, 520 U.S. 83 (1997).......... 9

Armstrong v. United States, 364 U.S. 40 (1960) ..... 3

Buckley v. California Coastal Commission

58 Cal.App.4th 460, 68 Cal.Rptr.2d 146,

mod. 59 Cal.App.4th 39a, Cal.Rptr.2d _,

rev. granted, 72 Cal. Rptr.2d 98, 951 P.2d 841

(1998), trans’d, 1998 Cal.LEXIS 4530 (1998) ..... 18

Cannone v. Noey, 867 P.2d 797 (Alaska 1994) ..... 12

City of Petersburg v. Bowen

OsS 30.20 G26 P.O ae as eI REO. 13

Corrigan v. Scottsdale, 720 P.2d 513 (Ariz.)

cert. denied, 479 U.S. 986 (1986) ............. 8

Eastern Enterprises v. Apfel

Soap ee ee, PEON CASMOE C20 Nk cr 18

First English Evangelical Lutheran Church

v. Los Angeles County

ORAL CUR RMPTR I Cals <6 ae a sk passim

vi

TABLE OF AUTHORITIES (cont’d)

Page

Healing v. California Coastal Commission

22 Cal.App.4th 1158, 27 Cal.Rptr.2d 758 (1994) ... 13

Hensler v. City of Glendale, 8 Cal.4th 1,

32 Cal.Rptr.2d 244,

876 P.2d 1043 (1994), cert. denied,

SES U.S. RES MEARS a ee eu a oe 9

Horstmann v. Sheldon, 202 Cal.App.2d 184,

on CR Re: Fas CA9GE) os er a ae ee 8

In re Riggleman, 215 Ct.Cl. 865 (1977) ......... 8-9

Jacobi v. City of Miami Beach

678 So.2d 1365 (Fla.Pet.App. 1996)........... 12

Kimball Laundry Co. v. United States

Dae Rae EEE oe RCs Peleg oe ee Ge 8

Lucas v. South Carolina Coastal Council

JOS With SR AEE. Ee ee eae as passim

Lujan Home Builders, Inc. v. Orangetown

568 N.Y.S.2d 850 (N.Y.Sup.1991) ...... 0.2... 12

MacDonald, Sommer and Frates v. County of

50M, 477. S; SOT ee keh ck 15

North Coast Business Park v. Mielsen

Construction Co., 17 Cal.App.4th 22,

Sh Ce ae PO MOE Ss Sc kb he ele ee 17

Vii

TABLE OF AUTHORITIES (cont'd)

Page

Ojavan Investors, Inc. v. California

Coastal Commission, 54 Cal.App.4th 373,

62 Cal.Rptr.2d 803 (1997), cert. denied,

i Wee ay 208 Ot. COL,

SP CDs Cee CIO RTD os eres 8 eb CR he iS 9,17

Penn Central Transportation Co. v. New York City

ORES tes: Pe RIN Sino oie cs PO TS Re eee 7

Portsmouth Harbor Land & Hotel Co. v. United States

Be Thies CASE. ESOP i Oh es 16

PruneYard Shopping Ctr. v. Robins

DOT Si PP RIN SN UE CL ee ee 3

Regional Rail Reorganization Cases

Ae ME S's ek a gare ee Sree Cie a Wine 16

Smith v. Town of Wolfeboro

Gas Pie ae ee AE Ss bh eS ee eek 12

Steel v. Cape Corporation

677 A.2d 634 (Md. Ct. Spec. App. 1996) ....... 13

Steinbergh v. City of Cambridge

604 N.E.2d 1269 (Mass.1992), cert. denied,

ee SA Eo ho ek he re ie ale wk 12

Vili

TABLE OF AUTHORITIES (cont’d)

Page

Tabb Lakes, Ltd. v. United States

MD Fk Tae OR MI ei Re. 11

United Community Church v. Garcin

231 Cal.App.3d 327, 282 Cal.Rptr.2d 368 C91) 6. 447

United States v. Riverside Bayview Homes, Inc.

OIF Sch 58 CARO 6 OE CE See 1, 10

Wheeler v. City of Pleasant Grove

DIS F Ae te SO os i ak i eel 8

Williamson County Regional Planning

Commission v. Hamilton Bank of Johnson City

S75 Rate ee) ETN ae COS 15

State Statutes

California Civil Code

DRG ee io ok RS is a ea eae 8

California Code of Civil Procedure

SB on Ca OK OS a a ae 10

SS ite PT Bt ica, wee Set 10

California Public Resources Code

Fe PR atk ORL bi Og Ee ae 4

PEN 6 ee oO Maret, ue. oe Wd a EE, 10

FE Spier h we Re a ye oe ea ail ee 10

1X

TABLE OF AUTHORITIES (cont’d)

Page

Other Authorities

51 Am.Jur.2d, Life Tenants. § 130

Uelmen, Playing Center, California Lawyer,

July 1998 at 45

The California Coastal Commission respectfully requests

that this Court deny the petition for a writ of certiorari.

JURISDICTION

The Court lacks jurisdiction because the petitioner Landgate,

Inc. (“Landgate”), does not have standing to petition for a

writ of certiorari. Landgate asserts Only a remainder interest

in the property alleged to have been taken. The owners of the

life estate, Peter and Punty Bogart, alone have standing to

pursue a Claim for temporary takings damages, and they did

not join the petition. See pp. 7-9 infra.

STATEMENT

A. Introduction

Throughout this litigation Landgate has assumed that every

mistake made by a land use agency which delays the

development of vacant property constitutes a compensable

temporary “taking.” Yet this Court has established that there

is a wide range of government actions that “deny” or delay

the use of property but which do not necessarily constitute

takings. For example, the imposition of a permit system does

not constitute a taking, even though it prohibits the

development of property until the landowner complies with the

permitting process. United States v. Riverside Bayview

Homes, Inc., 474 U.S. 121, 126-127 (1985). The

observation, then, that a particular government action prevents

the use of property marks the beginning of the takings

analysis, not the end of it.

regulatory takings doctrine, the California Supreme Court's

decision in this case applied a principle that was previously

recognized by this Court in First English Evangelical Lutheran

Church v. Los Angeles County, 482 U.S. 304 (1987) (“First

English”): “normal delay” in the permit process does not

constitute a regulatory taking. This principle is compelled by

Riverside Bayview Homes; if the imposition of a permit

requirement itself is not a taking, neither is the delay

2

associated with seeing that process to its completion.

The California Supreme Court here applied the principle of

normal permit delay to a discrete set of facts. Among other

grounds, the Commission, relying on the advice of its legal

counsel, denied Landgate’s application on the ground that the

lot on which Landgate proposed to build was illegal because

its boundarjes had been reconfigured without a coastal permit.

The state court of appeal determined that the Commission

incorrectly asserted permit jurisdiction over the lot line

reconfiguration and that the reconfigured lot was legal. With

the issue of the lot’s legality now resolved, the Commission

for the first time was in a position to make a final use

determination, and it promptly approved the project with

mitigating conditions. The delay encountered by Landgate

during resolution of the lot’s legality was not a taking.

Landgate admits that First English recognized the difference

between temporary takings and noncompensable permit delay.

Landgate Pet. at 13. In order to elevate the California

Supreme Court’s unexceptional application of the normal

permit delay principle into a reviewable issue, Landgate

contends that the principle of normal delay does not apply

where an agency makes a mistake during the decisionmaking

process and development is Postponed while courts review the

agency's action. But neither First English nor Lucas v. South

Carolina Coastal Council, 505 U.S. 1003 (1992), the two

tases upon which Landgate places the most reliance, ever

Suggested that the principle of normal permit delay was

inapplicable where the delay was partly attributable to judicial

review-of “an-agency’s-interim permit error

Moreover, there is no conflict among lower court decisions

on this issue. Federal and state courts throughout the country

have uniformly recognized that delay caused by government

mistakes over preliminary land use issues, such as the scope

of an agency’s permit jurisdiction, are an inherent part of the

even though the error postponed development and even though |

judicial intervention was necessary to correct it. See pp. 10-

Ce |

EEE

3

11 infra. The California Supreme Court properly concluded

that the delay experienced by Landgate while the legality of its

lot was litigated was not a compensable taking.

Finally, Landgate ignores the extraordinary implications of

its argument. According to Landgate, any delay caused by a

government mistake in the permitting process is a per se

taking, without regard to the nature of the disputed regulatory

issue, the impact of the government's action on the value of

the property, or the expectations of the landowner. For

example, if an agency denied a project because an applicant

failed to provide a geological report required by the agency,

and a court later determined that the report was not required,

the delay in use caused by litigation over the necessity of the

report would, in Landgate’s view, constitute a compensable

taking. Landgate seeks, in other words, to convert the takings

Clause into a tort claims statute that would hold government

Strictly liable for any delay in use caused by a government

error in the permit process. No reasonable reading of this

Court’s takings jurisprudence could ever justify such a result.

“[I]t is well-established that ‘not every destruction or injury to

property by governmental action has been held to be a

“taking” in the constitutional sense.’” PruneYard Shopping

Ctr. v. Robins, 447 U.S. 74, 82 (1980), quoting Armstrong v.

United States, 364 U.S. 40, 48 (1960).

Landgate’s petition for a writ of certiorari should be denied.

B. Facts

This land use dispute involves property in Malibu,

California that is located in a scenic area of the Santa Monica

Mountains known as Escondido Canyon. 11 CT (Clerk’s

Transcript) 2637. Prior to the lot line adjustment in question,

there existed two narrow two-acre lots running in a north-

south direction. 5 CT 1193; see 12 CT 2863, 2881.

Landgate’s predecessor constructed a single-family dwelling

on the flat, southerly portion of one of the lots. 5 CT 1194.

After constructing a two-lane road that bisected the two

ee LSE SR TN ee eee E TTT Tf

4

narrow lots, the County of Los Angeles approved a lot line

adjustment that reconfigured the two lots into a single sloped

lot north of the road and a single flat lot (containing the

existing home) south of the road. 2 CT 313; see 12 CT 2863,

2881. On October 12, 1990 Landgate purchased the northern,

sloped lot. 5 CT 1194. Peter and Punty Bogart acquired a life

estate in this property from Landgate, which held the

remainder interest. 8 CT 1836: see pp. 7-9 infra.

In October 1990 Landgate submitted to the Commission a

coastal development permit application to deposit 8,500 cubic

yards of fill and to construct a 9,036 Square-foot single-family

residence, swimming pool, septic system and retaining walls.

12 CT 2862, 2863. Landgate later reduced the amount of fill

from 8,500 to 4,300 cubic yards and reduced the size of the

house to 7,500 square feet. 12 CT 2862-2864.

In processing the application, the Commission’s staff

became aware that a coastal development permit had not been

obtained for the lot line adjustment and reported this

deficiency in its staff report. 11 CT 2638. After a public

hearing, the Commission denied Landgate’s permit application

on three grounds. First, the Commission found that the

project’s massive grading violated the grading and landform

alteration policies of both the Coastal Act and the Malibu

Land Use Plan (LUP) that was adopted as part of the County’s

local coastal program, see Cal.Pub.Resources Code, §§

30500-526. 12 CT 2866. Second, it determined that the

proposed residence was not sited and designed to protect

scenic views and was contrary to the visual resource policies

of both the Act and the Malibu LUP. 12 CT 2888. _Among

_ other concerns, the height of the house was nine feet greater

than the standard contained in the Malibu LUP. 12 CT 2866,

2868, 2901. Finally, acting under advice of its legal counsel

and an earlier opinion of the California Attorney General, 12

CT 2869-70, the Commission asserted permit jurisdiction over

the 1989 lot line adjustment and found that the lot line

adjustment did not conform with Coastal Act policies. /d.

Landgate filed a petition for a writ of mandate and a

5

complaint seeking declaratory relief and damages for an

alleged taking and a denial of civil rights. 1CT 1. The

petition for a writ of mandate was severed, with the takings

issues being reserved for later adjudication. 1 CT 120, 130.

The trial court issued the writ, finding that the Commission

did not have permit jurisdiction over this particular lot line

reconfiguration and that the Commission should reevaluate the

project as if the lot reconfiguration were legal. Pet.App. at

’ 104a-105a. The trial court did not address the validity of the

other grounds for the permit denial. Limiting its decision to

the “peculiar facts” of the Case, the court of appeal affirmed

in an unpublished decision. Pet.App. at 91a, 98a. It directed

the Commission to treat the lot as legal but stressed that “

Commission retains its ability to regulate and approve any

proposed building on the lot.” Pet. App. at 98a.

In February 1993 the Commission reconsidered Landgate’s

Project. By now Landgate had modified the project by

reducing grading to 2,893 cubic Square yards, by reducing

height to 35 feet above existing grade, and by reducing the fill

slope. 1 CT 193, 195. The Commission approved the revised

project with additional conditions to further minimize project

impacts. 1 CT 190-192. Landgate did not challenge the

conditional approval. 1 CT 214.!

Returning to the trial court, Landgate moved for summary

adjudication of its takings claim. 2 CT 268. It contended that

the Commission’s erroneous assertion of permit jurisdiction

over the lot line reconfiguration had prevented it from using

its property and constituted a temporary taking. 2 CT 258- _

266, 288-292. The trial court granted Landgate’s motion,

Pet.App. at 101a, and denied the Commission’s concurrent

motion for summary judgment. 4 CT 846.

1. There is no evidence anywhere in the record to support Landgate’s

statement, Landgate Pet. at 4, that it was unable to build its house because

it expended construction funds on litigation.

6

The Commission moved to dismiss the action on the ground

that Landgate, as the remainderman, had no Standing to pursue

a temporary taking claim. 5 CT 1097. Landgate then

amended its complaint to name the Bogarts as plaintiffs. 5 CT

1104. After a bench trial on damages, the trial court awarded

Landgate and the Bogarts temporary taking damages of

$155,657, plus costs and attorney fees. Both sides appealed.

The court of appeal affirmed the trial court’s determination

that the Commission had engaged in a taking. Pet.App. at

55a. The court of appeal rejected the Commission’s argument

that the delay caused by its erroneous assertion of permit

jurisdiction over this particular lot line adjustment was a

noncompensable mistake in the permitting process: “Nothing

in the record suggests that the lot line adjustment issue arose

out of anything other than the Commission’s ongoing

jurisdictional spat with the County of Los Angeles combined

with a desire to prevent Landgate from building on its parcel

i) le Te

The California Supreme Court granted the Commission’s

petition for review and reversed. The Court found that the

case “falls squarely into the category of a normal delay” that

was identified in First English. Pet.App. at 2a. The legality

of the lot on which Landgate proposed to build was a

“threshold” issue in the permitting process, amd the

Commission could not issue a final decision until the legality

of the lot was resolved. Pet.App. at 32a. Courts are

frequently called upon in the permitting process to resolve

these types of interim regulatory disputes, and the Court found

that nothing in First English contradicted its conclusion that a

~~ ‘judicial detérmination of the validity of certain “preconditions

to development” is a normal part of the development process.

Pet.App. 32a-33a. And, unlike Lucas, which involved a final

Statutory development ban that rendered property valueless,

this case involved a delay in permit Processing caused by a

jurisdictional dispute that prevented the Commission from

issuing a final decision. Pet.App. at 27a-32a. Finally, the

Court admonished that agencies may not delay permit

7

decisions for pretextual reasons. It found, however, that the

Commission’s erroneous assertion of permit jurisdiction in this

case was neither unreasonable nor a pretext to deny all use.

Pet.App. at 24a-25a, 31a.

Justice Chin dissented, based on his view that the

Commission “opposed all development of Landgate’s property

regardless uf the magnitude of the development,” Pet.App. at

37a, a factual characterization with which the majority

disagreed.

Justice Brown also filed a dissent. Justice Brown criticized

this Court’s ad hoc test in Penn Central Transportation Co. v.

New York City, 438 U.S. 104, 123-125 (1978) as “squishy”

and so “amorphous that it is capable of producing virtually

any result.” Pet.App. at 44a. She stated that the majority

reverted to Penn Central at every Opportunity and ignored

Lucas's categorical formulation, which, Justice Brown

asserted, overruled pro tanto Penn Central’s “regulatory

friendly” formulation. Pet.App. at 44a, Sia. Apparently

assuming that the delay in use caused by the Commission’s

erroneous assertion of permit jurisdiction necessarily

constituted a final decision denying all economically viable use

of property, Justice Brown contended that the Case met the

Lucas categorical formulation.

REASONS WHY THE PETITION

SHOULD BE DENIED

I. LANDGATE, WITH ONLY A REMAINDER

INTEREST, DOES NOT HAVE STANDING

ANTS HAVE A

CLAIM FOR TEMPORARY TAKING DAMAGES

Landgate was the sole plaintiff in the original complaint

filed in this case. 1 CT 1. The Commission moved to dismiss

the action on the ground that Landgate, as the remainderman,

had no standing to pursue a taking claim because damages for

a iemporary taking would accrue solely to the life tenants,

Peter and Punty Bogart. 5 CT 1097. In response to this

ooo

eee em

8

motion, Landgate successfully moved to amend its complaint

to include the Bogarts as plaintiffs. 5 CT 1104. The verified

amended complaint stated that the Bogarts owned a life estate

in the property and that Landgate. is “owned and controlled”

by the Bogarts. 5 CT 1191. In his deposition, however,

Peter Bogart testified under oath that he and his wife held no

shares in Landgate and did not control it. 8 CT 1828-1838.

During the damages phase of triai, the trial court referred to

the Bogart-Landgate relationship as a “sham” and as having

an “odor about it.” RT 226.

The judgment jointly awarded damages to Landgate and the

Bogarts. 9 CT 2059. Landgate and the Bogarts each cross-

appealed the judgment, 10 CT 2456, and both were named as

respondents in the Commission’s petition for review in the

California Supreme Court. Only Landgate, however, has

petitioned for review in this Court. This omission is fatal to

Landgate’s petition because Landgate, as remainderman, has

no standing to seek temporary takings damages.

Although there is no set formula for awarding temporary

takings damages, see Corrigan v. Scottsdale, 720 P.2d 513,

518-519 (Ariz.), cert. denied, 479 U.S. 986 (1986), damages

are ordinarily calculated on the basis of lost use or lost profits

during the period of the taking. See, e.g., Kimball Laundry

Co. v. United States, 338 U.S. 1 (1949); Wheeler v. City of

Pleasant Grove, 833 F.2d 267 (11th Cir. 1987). Under

California law, a life tenant has the exclusive right to recover

lost rents during the period of the life estate. See Cal.Civil

Code, § 818; Horstmann vy. Sheldon, 202 Cal.App.2d 184, 20

———-Cal-Rptr.735,-740_(1962);-seealso—51—Am-.Jur.2d,—_Life—

Tenants, § 130. In the only discovered reported decision that

has addressed the specific issue, the Federal Court of Claims

ruled that the life tenant alone had a right to pursue temporary

takings damages arising during the period of the life estate.

See In re Riggleman, 215 Ct.Cl. 865 (1977). Landgate

therefore has no standing to assert a claim for temporary

taking damages that belongs solely to the life tenant.

Moreover, Landgate is in no position to disagree with this

9

statement of California law. Once Landgate amended its

complaint to join the Bogarts, the Commission had no reason

to pursue the standing issue before the California appellate

courts. By waiting until now to revive this issue, Landgate

prevented the California appellate courts from deciding

whether, as a matter of California law, the holder of a

remainder interest has a cognizable property interest in

temporary takings damages. Landgate’s tactic also prevented

the California courts from resolving any factual issues

regarding the Landgate-Bogart relationship. Landgate’s

circumvention of the California courts precludes review in this

Court. See, e.g, Adams v. Robertson, 520 U.S. 83 (1997).

For these reasons alone, Landgate’s petition for a writ of

certiorari should be denied.”

fl. THE CALIFORNIA SUPREME COURT’S

DECISION CORRECTLY APPLIED EXISTING

TAKING DOCTRINE AND IS NOT IN CONFLICT

WITH THE RULINGS OF THIS COURT OR

LOWER COURTS

A. The California Permit Process Includes Both an

Administrative Process and an Expedited Judicial

Review Process

The “California permit process includes both administrative

and judicial review of any conditions to which the landowner

objects.” Hensler v. City of Glendale, 8 Cal.4th 1, 17, 32

Cal.Rptr.2d 244, 255, 876 P.2d 1043, 1054 (1994),

cert.denied, 513 U.S. 1184 (1995). This integrated

2. Landgate does not mention the Bogarts by name once in its 30-page

petition. It may be inferred that Landgate made a tactical decision to avoid

any association with Peter Bogart. See Ojavan Investors, Inc. v. California

Coastal Commission, 54 Cal.App.4th 373, 62 Cal.Rptr.2d 803), cert.

denied, __ U.S. __, 118 S.Ct. 601, 139 L.Ed. 886 (1997) (affirming

award of over $9.5 million in civil penalties against Bogart and Bogart-

owned entities for illegal land sales in violation of the Coastal Act).

10

administrative/judicial process is an expeditious one,

especially where the Coastal Act is involved. A_ public

hearing must be held within 49 days after an application is

accepted for filing, Cal. Pub. Resources Code, § 30621, and the

Commission must act upon an application within 21 days after

the hearing is closed, id. 30622. Any person seeking review

of a Commission decision must file a petition for writ of

administrative mandate under California Code of Civil

Procedure section 1094.5 within 60 days after the decision.

Cal.Pub. Resources Code, § 30801. Administrative mandate

proceedings may be heard on a law and motion calendar once

the administrative record jis prepared. See Cal.Code

Civ.Proc., § 1094.

B. The California Supreme Court Correctly Applied the

Principle That Normal Delay in the Permit Process

Is Noncompensable

The California Supreme Court found that the Commission

could not make its final determination of use until the legality

of the lot on which Landgate proposed to build was resolved.

Although the Commission’s erroneous assertion of permit

jurisdiction over the lot line reconfiguration may have delayed

development, the delay caused by judicial resolution of the

lot’s legality was a “normal delay” in the permitting process

and not a temporary taking for which First English required

compensation. In reaching this conclusion, the California

Supreme Court did not create a new legal principle. This

Court itself in First English recognized that “quite different

questions . . . would arise in the case of normal delays in

obtaining building permits, changes in zoning ordinances,

variances, and the like” than those presented by the outright

development ban alleged in First English. First English, 484

U.S at 321. The conclusion that temporary hardships during

the permit process are noncompensable is compelled by

Riverside Bayview Homes—if the imposition of a permit

requirement is not a taking, neither is the normal delay that

1]

often occurs during the decisionmaking process.

The California Supreme Court correctly determined that the

delay in approving the Landgate application was normal

permit delay within the contemplation of First English. The

Commission faced a threshold boundary line question: were

the boundaries of the Landgate property those that existed

before or after the lot line reconfiguration? The Commission

could not make an informed decision—it could not make a

final decision—about where and how the proposed

development could be sited until it knew the location of the

boundaries of the lot. This is the kind of complex question

that often arises when agencies are confronted with

interpreting statutes and policies, see, e.g., Pet.App. at 33a-

35a, and the permit process in this case had to be delayed

because only a court could provide a definitive legal answer

about the lot’s legality. Once the court of appeal determined

that the Commission could not require a permit for the lot

reconfiguration and that it must recognize the new boundaries,

the Commission was able to make a final use determination.

In these circumstances the California Supreme Court properly

characterized the delay encountered by Landgate during the

judicial resolution of the lot’s legality as one of those

temporary hardships inherent in a permitting process and not

the categorical denial of all use.

The California Supreme Court's analysis is consistent with

that of courts throughout the country that have been

confronted with similar issues. The lower courts uniformly

have agreed that the delay encountered during the permit

Process is noncor :pensable, even-whendelay is caused by an

agency error during the permitting process and even when

judicial intervention is necessary to correct the mistake. E. 2.

Tabb Lakes, Ltd. y. United States, 10 F.3d 796, 800-803

(Fed.Cir.1993) (no taking even though Corps’ erroneous

assertion of jurisdiction “effectively stopped [the plaintiff’ s]

development” of Property until courts corrected the mistake);

Jacobi v. City of Miami Beach, 678 So.2d 1365 (Fla. Pet. App.

1996) (no taking or due process violation where land use agency

12

improperly denied a landowner’s application to reconfigure two

lots even though judicial intervention was required to correct

the error); Smith v. Town of Wolfeboro, 615 A.2d 1252, 1257

(N.H. 1992) (erroneous denial of permit based on agency’s

misunderstanding of lot’s legality not a taking, finding that

judicial correction of errors is part of the decisionmaking

process); Cannone v. Noey, 867 P.2d 797 (Alaska 1994)

(delay caused by erroneous rejection of wastewater treatment

plans not a taking, even though judicial intervention required

to correct error); Steinbergh v. City of Cambridge, 604

N.E.2d 1269, 1275 (Mass.1992), cert. denied, 508 U.S. 909

(1993) (no taking despite delay caused by judicial review of

mistaken legal interpretation); Lujan Home Builders, Inc. v.

Orangetown, 568 N.Y.S.2d 850, 851 (N.Y.Sup.1991) (no

taking despite erroneous decision because “delay in securing

judicial relief” was part of the decisionmaking process).

The California Supreme Court correctly determined that the

delay resulting from judicial resolution of the legality of the

Landgate lot was part of the normal delay inherent in a

permitting process and not a final definitive decision that

categorically denied the use of property.

C. The California Supreme Court’s Decision Does Not

Conflict With the Decisions of This Court or the

Lower Courts

The California Supreme Court’s conclusion that normal

permit delay may include judicial review of an agency's

resolution of preliminary permit issues is not in conflict with

either the decisions of this Court or those of the lower courts.

1. There Is No Conflict With the Decisions of the

Lower Courts

The Landgate decision does not conflict with the decisions

of other lower courts. Federal and state courts throughout the

country have agreed that normal permit delay is

noncompensable, even when the agency has erred in its

i i i

13

resolution of a preliminary issue and even when judicial

review is required to correct it. See pp. 11-12 supra.

Landgate does not cite a single lower court authority to

support its view that the normal permit process may never

include judicial review of preliminary permit issues. Nor does

Landgate cite a single lower court authority that supports its

view that the delay in use caused by an agency’s interim

mistake during the permit process constitutes a per se taking.

Finally, Landgate does not cite a single authority that founa

a taking on a remotely similar set of facts.*

a

2. There Is No Conflict With the Decisions of This

Court.

Landgate asserts that the Landgate decision conflicts with

First English because the Landgate decision treats judicial

resolution of preliminary permit issues as part of the normal

permit process. First English recognized the difverence

between normal permit delays and actual regulatory takings,

see pp. 10-11 supra, and did not hold or imply that normal

permit delay may not include judicial review of interim permit

decisions. Landgate concedes as much when it states that

First English “did not attempt to define the phrase ‘normal

delays."” Landgate Pet. at 13. The California Supreme

Court's application of the normal permit delay principle

3. Landgate relegates to a footnote its Suggestion that “these questions

have divided the lower courts.” Landgate Pet. at 9, n. 7. Of the two

cases cited by Landgate in which a taking was found, neither City of

Petersburg v. Bowen, 675 So.2d 626 (Fla. 1996), nor Steel v. Cape

Corporation, 677 A.2d 634 (Md. Ct. Spec. App. 1996), involved the issue

whether permit delay caused by an interim land use error requiring judicial

review constitutes a temporary taking. The taking discussion in a

California court of appeal decision, Healing v. California Coastal

Commission, 22 Cal.App.4th 1158, 27 Cal.Rptr.2d 758 (1994), was dicta

because the case involved the procedure for litigating takings claims and,

if inconsistent, must yield to the California Supreme Court's decision in

Landgate.

14

therefore did not conflict with First English.

Landgate also asserts that the California Supreme Court’s

decision conflicts with First English because it denies

compensation where there has been a temporary taking.

Landgate Pet. at 14-16. First English, however, only provides

that, if there has been a taking, government must pay

compensation between the time of the taking and the time that

the offending regulation is rescinded. Because there was no

taking in this case, the First English compensation rule never

comes into play. Pet.App. at 25a-35a.‘

Nor does the California Supreme Court’s decision “vitiate”

Lucas, as Landgate argues. Landgate Pet. at 16-17.

Landgate’s argument is based on the faulty assumption that

any delay in use of vacant property resulting from government

error during the permitting process necessarily equates to a

categorical denial of use under Lucas. Lucas understood that

the situations in which government truly denies all

economically viable use are “relatively rare” and

“extraordinary,” see id. at pp. 1016-1017; they involve

situations where an agency—at the end of the regulatory

process—makes an ultimate determination of use decision that

precludes use and renders property “valueless.” Lucas never

Suggested, much less held, that every delay in the use of

vacant property caused by an agency mistake during the

permit process constitutes the categorical taking of property.

4. Landgate argues that the California Supreme Court erred because,

in Landgate’s view, it adopted the dissenting opinion of Justice Stevens in

First English. Landgate Pet. at 21-24. The California Supreme Court did

not adopt Justice Stevens’ dissent in First English; California Supreme

Court accepted the majority view in First English that true temporary

takings are compensable. Pet.App. at 13a. As to the much narrower issue

involved here—whether delay during permit processing might constitute a

taking—the Court in First English did not decide in what circumstances

permit delay might constitute a taking and therefore did not address Justice

Stevens’ concern about the possible overbreadth of the majority decision.

15

Pet.App. at 27a-32a.

This case differs from Lucas in another important respect.

In Lucas the South Carolina courts found that the taking claim

was ripe and the State conceded that the property was

valueless as a result of governmental action. Lucas, 505 U.S.

at 1011, 1020, fn. 9. In contrast, the California Supreme

Court found as a factual matter that the Commission’s decision

was not final and that the Commission contemplated some use

on the property. Pet.App. at 28a-30a. In addition, the

Commission has always disputed Landgate’s claim that the

regulatory delay constituted the denial of economically viable

use of property. See pp. 16-17 infra. The Court in Lucas

indicated that it would have accepted a finding of the South

Carolina’s Supreme Court that the case was not ripe for

review, Lucas, 505 U.S. at 1011, and the Commission

requests here that the Court honor the California Supreme

Court's finding that the Commission’s decision was not a final

determination of use.

Landgate also contends that the California Supreme Court’s

decision conflicts with Williamson County Regional Planning

Commission v. Hamilton Bank of Johnson City, 473 U.S. 172

(1985). Landgate Pet. at 24-26. Landgate’s resort to

Williamson County is self-defeating. In Williamson County the

Court found that, after a seven-year regulatory process, the

plaintiff's taking claim still was not ripe because the plaintiff

had yet not obtained a “final, definitive position” on what use

might be made of the property. Williamson County recognizes

that, as in this case, agencies often “deny” or delay

development in the course of the regulatory process without

reaching a truly “final” decision. Indeed, Williamson County

recognizes that, except in the rarest cases, a taking claimant

must make two or more applications before an agency can

provide its final view on a proposed use. See also

MacDonald, Sommer and Frates v. County of Yolo, 477 U.S.

340, 348 (1986).

In this case the California Supreme Court properly

determined that the Commission had not and could not make

16

a final, def nitive determination of use until the courts had

established the legality of the lot on which Landgate proposed

to build. Landgate’s finality argument reduces to little more

than a disagreement with the California Supreme Court’s fact-

specific finding that the Commission’s decision was not a final

determination of use. That kind of disagreement does not

merit this Court’s review. See Lucas, 505 U.S. at 1011.

In summary, the California Supreme Court’s rejection of

Landgate’s taking claim does not conflict with tne decisions of

this Court or the lower courts.°

D. None of the Other Reasons Offered by Landgate Has

Merit

Landgate offers a number of miscellaneous reasons why the

Court should accept this case. None are meritorious.

First, Landgate asserts that “there is no dispute that the

Commission’s erroneous decision denied it ‘all economically

beneficial or productive use’” of its property. E.g, Landgate

Pet. at 27. This assertion is grossly in error. It is based on

Landgate’s flawed assumption that every delay in use during

the permit process equates to the categorical denial of all

economically viable use, and the Commission has always

disputed that its actions effected a categorical taking.

Moreover, Landgate did not raise this as a factual issue in its

separate statement of undisputed material facts that it filed

with its summary adjudication motion, nor did it present any

evidence with its motion that the Commission’s action

prevented the use or affected the value of the property. 3 CT

5. The Commission’s amici curiae argued before the California

Supreme Court that there was a separate basis for rejecting the taking

claim. There is no taking where the agency has no authority to perform

the act on which the taking claim is based, such as the Commission’s

erroneous assertion of permit jurisdiction. See, e.g., Regional Rail

Reorganization Cases, 419 U.S. 102, 127, n. 16 (1974); Portsmouth

Harbor Land & Hotel Co. v. United States, 260 U.S. 327, 330 (1922).

NE AO AIT RNS CNL A net

17

512. California summary judgment law prohibits

consideration of factual issues and evidence that were not

identified in a party’s separate statement of facts. E.g.,

Ojavan Investors, Inc., supra, 54 Cal.App.4th 373, 390-391,

62 Cal.Rptr.2d 803, 813; United Community Church v.

Garcin, 231 Cal.App.3d 327, 282 Cal.Rptr.2d 368, 373-5

(1991). Thus, there is no support whatsoever in the summary

adjudication record for Landgate’s current assertion that it was

denied all economically viable use of property.°

Second, Landgate contends that the California Supreme

Court’s decision would cause multiple denials and allow land

use agencies to “repeatedly deny development permit

applications on illegal, improper or pretextual grounds . . . .”

Landgate Pet. at 17. That, of course, was not the case here.

The Commission’s interpretation of its permit authority, even

if erroneous, was neither unreasonable nor a pretext to deny

all use, Pet.App. at 24a-25a, 3la, and the Commission

promptly approved the development once the jurisdictional

issue was resolved. As to Landgate’s suggestion that other

agencies will be encouraged to abuse the permit process by

denying development for “pretextual” reasons, the Landgate

decision specifically forbids an agency from fabricating a

dispute or arbitrarily imposing conditions to discourage

6. Lechuza’s separate statement only declared that “The Court of

Appeal found that ‘rejecting the lot configuration results in Landgate’s

being denied any use of its property,’” citing only dicta in the court of

appeal’s unpublished mandate decision as supporting “evidence.” 2 CT

263. The Commission disputed this statement, 3 CT 518, and the trial

court did not rely on it in granting summary adjudication on the taking

issue. 4 CT 809. Thus, having failed to identify the denial of

economically viable use as an undisputed issue of material fact and having

failed to provide any supporting evidence, Landgate is barred by California

law from arguing that it established that it was denied economically viable

use at the time of the motion granting summary adjudication on takings

liability. See North Coast Business Park v. Mielsen Construction Co., 17

Cal.App.4th 22, 30-32, 21 Cal.Rptr.2d 104, 109-110 (1993).

18

development. Jd.’

Third, Landgate argues that the California Supreme Court's

decision allows inquiry into the public interest and thereby

fashions an exception to the categorical taking standard

announced in Lucas. Landgate Pet. at 27-28. This seriously

misinterprets the opinion. The California Supreme Court

considered whether the Commission’s actions advanced a

legitimate public interest in response to the court of appeal’s

subjective evaluation of the Commission’s intent. Pet.App. at

20a-25a. The California Supreme Court found that, from an

objective standpoint, the Commission’s action was based on

legitimate concerns about the project’s impacts, and was not

formalistic or pretextual. Jd. As previously discussed, the

Landgate decision is entirely consistent with Lucas. Pet.App.

at 26a-29a; see pp. 14-15 supra.*

Fourth, Landgate criticizes the California Supreme Court’s

consideration of an agency’s bad faith as a “strawman.”

Landgate Pet. at 6, fn. 6. The California Supreme Court’s

decision allows a limited inquiry into an agency’s motives in

7. As of the date of this opposition brief, no reported decision has

relied on the Landgate opinion. Landgate’s reference to the California

Supreme Court’s remand of Buckley v. California Coastal Commission, 58

Cal.App.4th 460, 68 Cal.Rptr.2d 146, mod. 59 Cal.App.4th 39a, __

Cal.Rptr.2d __, rev. granted, 72 Cal. Rptr.2d 98, 951 P.2d 841 (1998),

trans’d, 1998 Cal.LEXIS 4530 (1998), erroneously suggests that the

California Supreme Court required the court of appeal to reconsider a

finding that the Commission had engaged in a taking. Landgate Pet. at 12.

In fact, the court of appeal in Buckley previously found that the

Commission had mot engaged in a taking.

8. At least one recent Supreme Court decision has questioned the

propriety of using the “substantially advance a legitimate government

interest” formulation in evaluating a regulatory taking. See Eastern

Enterprises v. Apfel, __ U.S.__, 118 S.Ct. 2131 (1998) (Kennedy, J.,

concurring and dissenting). That, however, would not undermine the

California Supreme Court’s conclusion that the court of appeal’s taking

analysis unduly focused on the Commission’s alleged subjective motivation.

SAR ae a Ae

a

order to protect landowners, because an agency may not claim

that its action constitutes “normal delay” when in fact the

agency's actions are taken in bad faith and in effect constitute

a final denial of all use. Pet.App. at 24a-25a, 31a.

Finally, Landgate contends that the Court should accept

review because of the alleged hostility of the California courts

towards the taking doctrine.

Landgate Pet. at 20-21. This

attack on the California judiciary does not merit a serious

response.”

CONCLUSION

The petition for a writ of certiorari should be denied.

August 1998

Respectfully submitted,

DANIEL E. LUNGREN

Attorney General of the

State of California

RODERICK E. WALSTON

Chief Assistant Attorney General

RICHARD M. FRANK

Assistant Attorney General

PETER H. KAUFMAN

Deputy Attorney General

JOSEPH BARBIERI*

Deputy Attorney General

*Counsel of Record

2101 Webster Street, 12th Floor

Oakland, California 94612-3049

Telephone: (510) 286-3822

Counsel for Respondent

9. For an independent review of the California Supreme Court’s

recent decisions, see Uelmen, Playing Center, California Lawyer, July

1998 at 45.