Opposition Brief — Ojavan Investors, Inc. v. California Coastal Commission

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No. 97-621 NOV 4 1997

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In The 2

Supreme Court of the United States

October Term, 1997

&

OJAVAN INVESTORS, INC., et al.,

Petitioners,

VS.

CALIFORNIA COASTAL COMMISSION, et al.,

Respondents.

+

On Petition For A Writ Of Certiorari

To The California Court Of Appeal

Second Appellate District, Division Seven

& ——

RESPONDENT CALIFORNIA COASTAL

COMMISSION’S BRIEF IN

OPPOSITION TO PETITION

+

DaniEL E. LUNGREN

Attorney General

Roperick E. WALSTON

Chief Assistant Attorney General

RICHARD M. FRANK

Assistant Attorney General

GorDON R. OveRTON

*DaNiEL A. OLIVAS

Deputy Attorneys General

300 South Spring Street, Suite 5212

Los Angeles, California 90013

Telephone: (213) 897-2705

Attorneys for Respondents

California Coastal Commission, et al.

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

1. Do Petitioners’ 73 separate knowing and inten-

tional violations of the California Coastal Act support the

civil fines imposed by the court?

2. Are the California Coastal Act’s injunctive and

monetary remedies civil in nature when they are

designed and intended to protect the public’s interest in

the state’s coast, obtain compliance with the Act and

remediate environmental degradation within the coastal

zone?

3. Do enforcement actions brought pursuant to the

California Coastal Act sound in equity such that there is

no right to a trial by jury?

4. By virtue of the final decision of Ojavan Investors,

Inc. v. California Coastal Com., 26 Cal.App.4th 516, 32

Cal.Rptr.2d 103 (1994), cert. denied, 513 U.S. 1148 (1995),

are Petitioners barred by the res judicata doctrine from

renewing their challenge to the underlying coastal devel-

opment permits?

ii

TABLE OF CONTENTS

Page

CHUESTIORNS PREGRMIMO 5 occ n cies sada yeewnsnss i

TABLE OF CURU Ee aon eos Sy sivcccethenay cies ii

TABLE OF. RUT PI Ge « 00 bs sn bss tuaexaseeecens iii

RELATES PRUs e ee bm kona ses\ ba cee cie ves cenaees 1

REASONS FOR DENYING THE WRIT............. 1

STATEMENT OF 39min CARE.) oo. cccccswessusivss an 4

A. The Undiewigint Bae qo on sekccc cs cecssescess 4

ee eg ee ee eee 8

C. The Instant Appellate Decision .............. 13

PIGUET os scien niunaecnsdcabedeubeseseeeaeal 14

I. THE COASTAL ACT FINES ARE PROPOR-

TIONAL TO PETITIONERS’ COASTAL ACT

VIR ATI oan cine sss pases 14

Il. THE COASTAL ACT REMEDIES ARE NOT

CRIBEINAL EN NATUMS 5 iss «<0 <e cd cueepiess 16

Ill. THERE IS NO RIGHT TO A TRIAL BY JURY

BECAUSE COASTAL ACT ENFORCEMENT IS

PURELY EQUITABLE........ BEA ee 18

IV. PETITIONERS ARE BARRED BY THE RES

JUDICATA DOCTRINE FROM RENEWING,

AT THIS LATE DATE, THEIR CHALLENGE

TO THE UNDERLYING COASTAL DEVELOP-

DEIOES FMEA ies oe nek use eecd nuns seeens 23

CX FREE LADIES 5 45 ad 0 Gah eee 24

iii

TABLE OF AUTHORITIES

Page

Cases

Benton v. Maryland, 395 U.S. 784 (1969).............. 20

Bogart v. California Coastal Com., Sup. Ct. Docket

PN PONE Sa EN has <5 144 G05 PE Ne oe POR RRS 4, 22

C & K Engineering Contractors v. Amber Steel Co.,

Inc., 23 Cal.3d 1, 151 Cal.Rptr. 323 (1978)...... 18, 21

CEEED v. California Coastal Zone Conservation

Com., 43 Cal.App.3d 306, 118 Cal.Rptr. 315

Eo: SEND PE ter ee mmr eee 16, 20, 21

County of El Dorado v. Schneider, 191 Cal.App.3d

Say Mae MME. Od (RPE). os oes eee ceceescecs 20

Goddard v. Security Title Ins. & Guar. Co., 14 Cal.2d

er baring ss os rehiins bes hebee se cae ae 24

International Union, United Mine Workers of America

G Meeeen, Siz Vio. Bll CIGPE) os oo cc cee c cess 21

Leslie Salt Co. v. San Francisco Bay Conservation etc.,

Com., 153 Cal.App.3d 605, 200 Cal.Rptr. 575

(1984) OE Sane SD a See RN ee Ee ere TT Re Eee 16, 21

Ojavan Investors, Inc. v. California Coastal Com., 26

Cal.App.4th 516, 32 Cal.Rptr.2d 103 (1994), cert.

PNR re Bie. SO CI oi kos oss eo kes ics 4

Palko v. Connecticut, 302 U.S. 319 (1937)............. 20

People v. Witzerman, 29 Cal.App.3d 169, 105

Ri I IE TAO Blas ce cb necked CaN eg andnccdechcs as 18

Suitum v. Tahoe Regional Planning Agency, __ U.S.

__, 117 S.Ct. 1659, 137 L.Ed.2d 980 (1997)........ 23

Tull v. United States, 481 U.S. 412 (1987)............. 19

iV

TABLE OF AUTHORITIES - Continued

Page

United States v. Halper, 490 U.S. 435 (1989) .......... 17

Walker v. Sauvinet, 92 U.S. 90 (1875)................. 20

UnNitTep STATES CONSTITUTION

rT See. Ream terre nite Rett en teres Uae eIgae Tene Men caren 23

PIM FT ik 6S Ra Fe CRRA Rei eee

nee DS ack. PE a SS Ba ee 14

PIO. FG oc ia is chs eb i hha eho RE a ee ee

UNiteD STATES SUPREME CourRT RULES

eet Gas By WP cos os co ee ha be ear 2

CALIFORNIA CODES

Public Resources Code

DORSAL eee oe Ob iss eee een gniss ee a, 1

CIN SEI oa eo Ss nhc CLARE a he 4

SOT I adh rk a ows Choke xh ek Oe Ee 5

COTE ne has So hes eee Se eee ee es 17

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i

RESPONDENT CALIFORNIA COASTAL

COMMISSION’S BRIEF IN

OPPOSITION TO PETITION

Respondent California Coastal Commission (“Coastal

Commission”)! respectfully requests this Court to deny

the petition for writ of certiorari seeking review of the

opinion of the California Court of Appeal.

¢

RELATED PETITION

Simultaneously with the instant petition, Petitioners

filed a petition for writ of certiorari in related litigation.

(Peter D. Bogart, et al. v. California Coastal Com., Supreme

Court Docket No. 97-622.) The petitions are related

because they both arise from the same factual circum-

stances,

REASONS FOR DENYING THE WRIT

The writ should be denied because: (1) the state court

has not decided an important federal question in any way

that conflicts with the decision of another state court of

last resort or of a United Scates court of appeals; (2) the

1 As noted at page ii of Petitioners’ brief, the Coastal

Commission was the respondent, appellee and cross-

complainant below. The individual Commissioners, in-house

counsel, and enforcement staff, all of whom are delineated in

Petitioners’ caption, were initiaily sued by Petitioners. They

were dismissed by the trial court and Petitioners eventually

abandoned that portion of the litigation. Accordingly, only the

Coastal Commission appears as respondent before this Court.

state court has not decided any important federal ques-

tion that has not been, but should be, decided by this

Court; and (3) the state court has not decided an impor-

tant federal question in any way that conflicts with rele-

vant decisions of this Court. (Sup. Ct. R. 10, subd. (b),

(c).)

First, the Coastal Act fines imposed by the court are

proportional to Petitioners’ 73 separate knowing and

intentional Coastal Act violations. During trial, all parties

stipulated — without reservation — that the criteria for

determining the amount of civil fines would be confined

to five specific factors now codified in the California

Coastal Act of 1976, Public Resources Code sections 30000

et seq. (“Coastal Act”). In applying the criteria, the trial

court explicitly considered the mitigating factors, as well

as those facts that established the seriousness of the vio-

lations. Thus, the state court correctly noted that the

aggregate “amount is large only because [Petitioners]

violated the Coastal Act 73 times and refused to remedy

their violations.” (Opinion of the state court reproduced

in the Petition, Appendix A (“Pet., App. A”) at p. 41a.)?

Second, the state court properly held that Coastal Act

injunctive and monetary remedies do not fall within this

Court's civil forfeiture line of cases. That body of case law

arises under the Double Jeopardy Clause where a defen-

dant who already has been punished in a criminal pros-

ecution may not be subjected to an additional civil

sanction to the extent that the second sanction may not

2 All citations to the state court decision will be to the

opinion as it is reproduced at Appendix A to the Petition for

Writ of Certiorari.

TT

fairly be characterized as remedial, but only as a deter-

rent or retribution. The remedies in this case are civil in

nature because they were designed and intended to pro-

tect the public’s interest in California’s coast, obtain com-

pliance with the Coastal Act and remediate

environmental degradation in the coastal zone. Conse-

quently, Petitioners’ forfeiture theory does not apply.

Third, the state court properly held that Petitioners

were not entitled to a trial by jury. There is no right to a

jury trial in an action sounding in equity. Where, as here,

the civil fines are tied to the injunction in that the same

alleged misconduct is the basis for all the types of relief

sought, the issues are equitable in nature. Moreover, the

Seventh Amendment jury trial guarantee has not been

incorporated in the Due Process Clause of the Fourteenth

Amendment and, therefore, is not binding on the states.

Thus, with respect to the Seventh Amendment, the states

are left to regulate trials in their own courts in their own

way. In civil actions brought in California, the defendant

has no right to a jury trial under the Seventh Amend-

ment.

Finally, the state court properly rejected Petitioners’

renewed attacks on the underlying coastal development

permits as barred by the res judicata doctrine. In an earlier

related case, the state court determined that the permits

and their conditions were enforceable and this Court

denied Petitioners’ subsequent petition for writ of cer-

tiorari. That determination, therefore, is final and may

not be relitigated here.

STATEMENT OF THE CASE

Though the Statement of the Case is lengthy and

complex, it is nonetheless necessary for a complete

understanding of Petitioners’ unsuccessful and frivolous

six year battle against the Coastal Commission and the

Commission’s successful litigation under the Coastal Act.

Furthermore, many of the relevant legal and factual

issues have already been determined in the Coastal Com-

mission’s favor in the related case of Ojavan Investors, Inc.

v. California Coastal Com., 26 Cal.App.4th 516, 32

Cal.Rptr.2d 103 (1994), cert. denied, 513 U.S. 1148 (1995)

(hereinafter “Ojavan I”). Thus, the state court held that

“[s]ince Ojavan I is a final decision on the merits and

concerned the same permits, deed restrictions and issue

of whether the Commission’s cease-and-desist order is

enforceable against Ojavan Investors, the res judicata

doctrine prohibits relitigation of matters already deter-

mined in Ojavan I.” (Pet., App. A at p. 12a.) Petitioners do

not challenge this holding in their petition for review.

Accordingly, where appropriate, the Coastal Commission

will base factual references on the appellate record and/

or the related Ojavan I decision.

A. The Underlying Facts

The California Legislature has declared that the Cali-

fornia Coastal Act “shall be liberally construed to accom-

plish its purposes and objectives.” (Pub. Resources Code

§ 30009.) One such objective is to “ ‘[p]rotect, maintain,

and, where feasible, enhance and restore the overall qual-

ity of the coastal zone environment and its natural and

a RT

artificial resources.’ ” (Ojavan I, supra, 26 Cal.App.4th at

520, quoting Pub. Resources Code § 30001.5, subd. (a).)

To satisfy this objective, the Coastal Commission

established the Transfer of Development Credits Program

(“TDC Program”) whereby new subdivisions and devel-

opment projects in Malibu and the Santa Monica Moun-

tains are approved “on the condition that the project

proponents arrange to extinguish, either by direct pur-

chase or through involvement in government programs,

the development capacity of other lots.” (Ojavan I, supra,

26 Cal.App.4th at 520.) “The TDC Program thus condi-

tions the issuance of coastal development permits on the

extinguishment of development rights as to other build-

ing sites in the coastal zone, either by offering to dedicate

a scenic easement or by filing declarations of restrictions,

thereby waiving development rights and unifying sepa-

rate lots into one parcel.” (Ibid.) This petition arises from

the Coastal Commission’s enforcement of two coastal

development permits issued under the TDC Program.

On December 19, 1979, and May 10, 1990, the Coastal

Commission issued coastal development permits to

David Leanse and Larry Thorne (“permits”), respectively,

for condominium and housing developments in the Mal-

ibu area within the coastal zone. (Ojavan I, supra, 26

Cal.App.4th at 521.) Messrs. Leanse and Thorne are not

and have never been parties to any litigation between

Petitioners and the Coastal Commission. (Id. at 523.)

These two projects were not related to each other, but the

Coastal Commission found that both projects created

risks of adverse cumulative environmental impacts on

coastal resources. (Id. at 521.) To mitigate such impacts,

the Coastal Commission conditioned permit approval on

the applicants’ participation in the TDC Program. (Ibid.)

Accordingly, as a condition precedent to issuance of the

permits, the applicants agreed that they would provide

evidence to the Coastal Commission that development

rights for residential use had been extinguished on a

specified number of building sites in the coastal zone

near the proposed projects. (Ibid.)

The permit applicants fulfilled the TDC condition by

purchasing, in the private market place, the right to have

other, unrelated landowners record documents restricting

development on privately owned lots. (Ojavan I, supra, 26

Cal.App.4th at 521.) One restriction, known as an Offer

To Dedicate a Scenic Easement, extinguished the building

rights on the subject lots by transferring such rights to the

permit applicants’ own properties. (Ibid.) The other

restriction was embodied in four Declarations of Restric-

tions which “recombine[d] and unif[ied] the Subject lands

into a single parcel for all purposes . . . including but not

limited to sale, conveyance, development, taxation or

encumbrance [so that] the proposed development is in

conformity with the [Coastal] Act. ... ” (Ibid.) These

declarations expressly state that any violation of the

restrictions “shall render the landowners or their suc-

cessors liable pursuant to the provisions of [the Coastal

Act].” (Id. at 522.) Pursuant to their respective agreements

with the permit applicants, Petitioners’ predecessors in

interest recorded the Declarations of Restrictions on their

lots between July 1981 and June 1990. (Id. at 521.) The

result was that the 77 former individual lots were recom-

bined into 2 larger lots. (Id. at 522.) Thus, either or both of

the 2 newly recombined lots could be sold, but the former

77 lots could not be sold-off individually. (Ibid.) Ulti-

mately, the deed restricted lots arising from the separate

Leanse and Thorne permit transactions came to be held

by a common owner, Dan Bochner. (Ibid.)

In February 1991, without the knowledge or approval

of the Coastal Commission and in violation of the per-

mits’ restrictions (Ojavan I, supra, 26 Cal.App.4th at 522,

525), Petitioners purchased a total of 54 of the 77 deed

restricted lots from Mr. Bochner (Clerk’s Transcript

(“CT”) 2234-2243, 2671-2672). Between April 2, 1991, and

January 26, 1992, Petitioners then proceeded to sell a total

of 19 deed restricted lots to third parties. (CT 2672,

2244-2261.) In the auction brochure, Petitioners stated:

“Unbelievably cheap, due to restrictions on

development. Economists tell us the govern-

ment is broke, and only development money can

fill the bureaucrats’ maws. They'll have to

develop!” (Ojavan I, supra, 26 Cal.App.4th at

522, emphasis original.)

Based on this representation, as well as assurances

from Petitioners, the third party purchasers were led to

believe that they could build on the lots despite the

previously-recorded restrictions on development.

(Reporter’s Transcript (“RT”) 275, 322-324, 344.) After

being alerted to these illegal purchases and sales of the

deed restricted lots, Coastal Commission enforcement

staff attempted to convince Petitioners to halt their illegal

activities and voluntarily correct their violations of the

Coastal Act. (CT 23-25; Ojavan I, supra, 26 Cal.App.4th at

522.) When these efforts proved unsuccessful because

Petitioners were intractable, the Coastal Commission was

forced to issue cease and desist orders to prevent a fur-

ther breach of the Declarations of Restrictions. (Ibid.)

B. Litigation History

In July and October of 1992, Petitioners filed two

complaints for damages and one petition for administra-

tive mandamus in the Los Angeles County Superior

Court challenging the permits’ deed restrictions, and the

Coastal Commission’s issuance of cease and desist orders

thereon, alleging numerous constitutional and tort

claims. (CT 1-22; Ojavan I, supra, 26 Cal.App.4th at 523.)

The crux of their allegations was that the Declarations of

Restrictions were invalid and could not be enforced.

(Ibid.) On the Coastal Commission’s motions, the trial

court dismissed all three of Petitioners’ actions holding

that: (1) the suits were barred by the Coastal Act’s 60-day

statute of limitations; and (2) the suits were barred by the

doctrine of waiver. (CT 797-800; Ojavan I, supra, at 523.)

Petitioners appealed the two dismissals in the related

actions, but the Court of Appeal unanimously affirmed

the trial court’s judgments of dismissal. (Ojavan I, supra,

26 Cal.App.4th 516.) Finally, this Court denied Peti-

tioners’ petition for a writ of certiorari. (Ojavan I, supra,

513 U.S. 1148.)

_——._——«s‘iIn response to the first of the three suits filed by

Petitioners, the Coastal Commission filed a cross-com-

plaint against Petitioners, Mr. Bochner, the third party

purchasers and others, for violations of the Coastal Act

seeking both injunctive and civil fines. (CT 170-188.)

Specifically, the Coastal Commission prayed for a perma-

nent injunction that would require Petitioners to “undo

each violation of the terms and conditions” of the permits

and for civil fines “for each individual violation of each

[deed restriction] and any other violation of the Coastal

Act.” (CT 182, 186.) The Coastal Commission also alleged

that the corporate Petitioners were “sham” and that they

were “the alter egos, instrumentalities, conduits of, and

mere shells for, certain individuals including, but not

limited to, [Petitioner] PETER D. BOGART. ... ” (CT

173-174.)

Between July 8, 1993 and July 26, 1994, the Coastal

Commission negotiated and obtained stipulated judg-

ments with Mr. Bochner and all of the third party pur-

chasers. (CT 892-895, 901-904, 910-913, 1210-1213,

1232-1235, 1242-1245, 1255-1258, 1379-1382, 1388-1391,

1397-1400, 1406-1409, 1479-1482, 1593-1596, 3665-3671.)

With respect to the settlements with the third party pur-

chasers, the Coastal Commission waived all civil fines

and, in return, all third party cross-defendants agreed to

cooperate with the Commission in obtaining injunctive

relief that would undo the illegal sales transactions. (CT

892-895, 901-904, 910-913, 1210-1213, 1232-1235,

1242-1245, 1255-1258, 1379-1382, 1388-1391, 1397-1400,

1406-1409, 1479-1482, 1593-1596.) The Coastal Commis-

sion did not waive civil fines as to Mr. Bochner because

he was aware of the deed restrictions when he initially

sold 54 of the 77 former lots to Petitioners; therefore, Mr.

Bochner agreed to pay a civil fine of $10,000 and supply a

letter of credit in the amount of $92,634.30 to be used to

effectuate the rescission of the sales. (CT 1593-1596.) In

contrast to the actions of the third party purchasers and

Mr. Bochner, Petitioners did not settle despite the

numerous attempts made by the Coastal Commission.

10

(CT 23-25; RT 154-155; Ojavan I, supra, 26 Cal.App.4th at

522.)

On March 3, 1994, the trial court granted the Coastal

Commission’s motion for issue and monetary sanctions

based on Petitioners’ violation of a previously-issued dis-

covery order. (CT 2492-2494.) Specifically, despite being

ordered to produce documents regarding the Coastal

Commission’s alter ego allegations, Petitioners refused to

do so. (CT 2451-2454.) Thus, the court found that Peti-

tioners abused the discovery process and ruled that the

Coastal Commission was “relieved from producing any

further evidence in support of its alter ego claim, and

[Petitioners] are precluded from presenting any evidence

in opposition to the Coastal Commission’s alter ego

claim.” (CT 2493.) Specifically, the corporate Petitioners

were held to be “sham corporations” and the “alter egos,

instrumentalities, conduits of, and mere shells for [Peti-

tioner] Peter D. Bogart.” (CT 2493.)

The Coastal Commission litigated its cross-complaint

after the corporate veil was pierced and Petitioners’ three

lawsuits were dismissed. A judgment in the Coastal Com-

mission’s favor was obtained in two phases. First, the

Coastal Commission filed a motion for summary adjudi-

cation of the issue of Petitioners’ liability under the

Coastal Act. (CT 2182.) In that motion, based on the

Declarations of Restrictions, grant deeds and Petitioners’

admissions to their purchases and sales of the restricted

lots, the Coastal Commission contended that Petitioners’

54 purchases and 19 sales of the deed restricted lots

violated the Coastal Act. (CT 2200-2205.) Petitioners

opposed the motion by making three arguments: (1) the

11

Coastal Commission had no power to enforce the Decla-

rations of Restrictions; (2) the Coastal Commission sub-

mitted no evidence of the underlying permits; and (3)

Petitioners acted in good faith. (CT 2500-2519.)

On March 23, 1994, after hearing oral arguments, the

trial court granted the Coastal Commission’s motion find-

ing that “there is no triable issue as to [Petitioners’]

liability under the Coastal Act,” and that, accordingly,

“no further proof on [Petitioners’] liability under the

Coastal Act, as pled in the first through fifth causes of

action, shall be required at the trial of this action... . ”

(CT 2670, 2672.) The summary adjudication order did not

address the amount of civil fines or other relief speci-

fically reserving such remedy issues for a separate trial.

(CT 2673.)

On July 15, 1994, prior to trial on the remedy : hase of

the litigation, the Coastal Commission filed two motions

in limine. (CT 3564, 3574.) One motion was for an order

precluding a jury trial on the remaining issues because

the Coastal Act claims are grounded in equity and, as

such, both the Coastal Commission and Petitioners were

not entitled to a jury trial. (CT 3564-3571.) The Coastal

Commission’s other in limine motion was for an order

precluding Petitioners from attempting to relitigate in the

remedy phase matters already determined in the Coastal

Commission’s favor, such as Petitioners’ liability under

the Coastal Act, the Coastal Commission’s right to litigate

this enforcement action, and the alter ego issue. (CT

3574-3587.) Petitioners opposed both motions in limine.

(CT 3752-3760, 3790-3803.) The court granted both

motions. (CT 3867-3869, 3872-3873.) At the same hearing,

the court issued a third order denying Petitioners’

12

request to allow Petitioner Bogart to use trial counsel

separate from that used by the corporations because, as

the Coastal Commission argued, the court had previously

pierced the corporate veil and, therefore, Petitioner

Bogart and his corporations were to be treated as one

entity. (RT 70-79.) The court, however, allowed additional ’

counsel to associate with existing counsel to represent the

corporate entities as well as Petitioner Bogart. (RT 77.)

For the remedy phase of the litigation, the matter was

transferred to a different judge for a bench trial. (CT

3918.) On the first day of trial on August 11, 1994, Peti-

tioners improperly moved for reconsideration of the prior

judge’s two in limine orders and order relating to Peti-

tioners’ counsel, but the trial court denied these requests

for reconsideration. (CT 3917.) Petitioners also filed a

petition for writ of mandate with the appellate court

seeking to stay the trial until review could be had on

three orders. (See Court file.) The Court of Appeal denied

the petition. (Ibid.) The trial then commenced and lasted

for three days with both sides calling witnesses and intro-

ducing documentary evidence. (RT 103-521.) Though

Petitioners listed Petitioner Bogart as a trial witness (CT

3764), he was never called to testify (RT 515). After trial

and post-trial briefing by the parties, the matter was

submitted. (RT 4070; CT 4071-4160.) ‘

On October 7, 1994, the trial court ruled on the

Coastal Commission’s prayer for permanent injunctive

relief holding that, because the Coastal Commission had

previously “prevailed on its injunctive cause of action

when [the prior judge] granted its summary adjudication

motion as to the First Cause of Action[,] . . . [it already] |

has [been] determined that appropriate permanent

eR ee ee

13

injunctive relief requires each of these Cross-Defendants

to comply with the terms of the Thorne and Leanse

permits and to refrain from violating the permits in the

future.” (CT 4166-4167.) Accordingly, the court issued a

permanent injunction that required Bogart and his corpo-

rations to rescind each of the illegal sales of the deed

restricted lots and make monetary restitution to the third

party purchasers. (CT 4166-4169.) The court ordered that

such rescission and restitution should be completed

within 20 days of the injunction. (CT 4169.)

On October 14, 1994, the trial court issued a tentative

statement of decision regarding the imposition of civil

fines. (CT 4170-4174.) The court imposed a daily civil fine

of $100 for each of the 73 violations, accruing at a rate of

$7300 per day until Petitioners have complied with the

permanent injunction. (CT 4173-4174.) The court also

imposed a one-time civil fine of $5,000 per violation. (CT

4172.) The court declined to impose an additional civil

fine because, based on the language of the Coastal Act,

the extra fines “are not necessary to deter further viola-

tions” of the Act. (CT 4174.) Thus, as of the date of the

tentative statement of decision, the total civil fine was

$9,822,800. (CT 4172-4174.)

C. The Instant Appellate Decision

On December 5, 1994, Petitioners appealed the judg-

ment and all orders. (CT 4365-4366.) On April 17, 1997,

after briefing and argument of the parties, the California

Court of Appeal for the Second Appellate District,

14

Division Seven, affirmed the judgment and each order in

their entirety. (See Pet., App. A.)

*

ARGUMENT

I.

THE COASTAL ACT FINES ARE PROPORTIONAL TO

PETITIONERS’ COASTAL ACT VIOLATIONS

Petitioners argue that a civil fine that is imposed on a

“per violation, per day” basis violates the Eighth Amend-

ment to the U.S. Constitution because the resultant fine is

not “proportional” to the violation. During trial, all par-

ties stipulated that the criteria for determining the

amount of fines would be confined to the five factors that

the Coastal Commission utilizes in analyzing the serious-

ness of Coastal Act violations; the California Legislature

codified the criteria in the 1992 amendments to the

Coastal Act. (RT 133.) In applying the five factors, the

trial court explicitly considered the mitigating factors

(little or no physical damage to the properties involved;

no evidence of prior violations by Petitioners), as well as

those facts that established the seriousness of the viola-

tions (the number of knowing and intentional illegal acts;

sensitivity of the resource; cost to the state in bringing

this action; Petitioners’ culpability and profits made and

expected to be made). (CT 4171-4172.)

In exercising its discretion, the trial court imposed a

near minimum $100 per day per violation, rejecting the

Coastal Commission’s appraisal of Petitioners’ violations

which, the Commission had maintained at trial, war-

ranted the imposition of the maximum fines available

15

under the Coastal Act. (CT 4171-4172.) Thus, the Court of

Appeal found that the “trial court exercised its discretion

in setting the amounts of the fines, rather than mechan-

ically adopt the Commission’s position.” (Pet., App. A at

p. 37a.) The Court also noted that the trial court’s refusal

to impose any additional amounts sought by the Coastal

Commission “also evidences its exercise of discretion.”

(Id. at fn. 21.)

Nowhere do Petitioners explain what level of fines

would, in their estimation, pass constitutional muster.

Petitioners merely assert that the Coastal Commission

were “seeking a maximum of $470 million. ...” (Pet. at p.

6.) The Coastal Commission never prayed for a specific

amount of fines, nor do Petitioners offer their computa-

tions to explain how they arrived at the total “maximum”

fines. In any event, the trial court did not impose the

maximum.

Petitioners also gloss over the fact that the trial court

was dealing with numerous separate violations. As the

Court of Appeal noted, the aggregate “amount is large

only because Ojavan Investors violated the Coastal Act 73

times and refused to remedy their violations.” (Pet., App.

A at p. 41a.) Petitioners offer no rejoinder to this assess-

ment other than to imply that their 54 purchases and 19

sales of the deed restricted lots should not have been

counted as separate violations. (Pet. at p. 3 and fn. 1.) The

state court rejected this argument holding that “[s]ince

the number of lot transfers totaled 73, the trial court did

not err in calculating the number of violations.” (Pet.,

App. A at p. 38a.) Petitioners do not explain why the state

court should have counted the violations any differently.

16

Petitioners also miscast the record in two other ways.

First, they assert that the “Coastal Commission was not

required to provide, and failed to provide, evidence as to

its actual cost and damages which would justify” the final

judgment. (Pet. at p. 18.) As shown above, however, the

state court explicitly considered the cost to the Coastal

Commission in bringing the litigation. (CT 4171-4172.)

Second, Petitioners characterize enforcement under the

Coastal Act as an action for damages. (Pet. at p. 20.) In

doing so, Petitioners offer no authority as support for

their claims, nor can they. In truth, contemporary envi-

ronmental legislation such as the Coastal Act is grounded

in equity because it represents a legislative declaration

that acts injurious to the state’s natural resources consti-

tute a public nuisance. (CEEED v. California Coastal Zone

Conservation Com., 43 Cal.App.3d 306, 318, 118 Cal.Rptr.

315 (1974); see also Leslie Salt Co. v. San Francisco Bay

Conservation etc., Com., 153 Cal.App.3d 605, 618, 200

Cal.Rptr. 575 (1984).)

In sum, the Court of Appeal applied well-settled

factors and legal principles in finding that the Coastal Act

fines were proportional to Petitioners’ numerous and

intentional violations of state law.

II.

THE COASTAL ACT REMEDIES ARE NOT CRIMINAL

IN NATURE

Petitioners wrongly rely on the civil forfeiture line of

cases to argue that the fines imposed in this case are

unconstitutional. (Pet. at pp. 12-13.) That body of case

law arises “under the Double Jeopardy Clause [where] a

a ae

17

defendant who already had been punished in a criminal

prosecution may not be subjected to an additional civil

sanction to the extent that the second sanction may not

fairly be characterized as remedial, but only as a deter-

rent or retribution.” (United States v. Halper, 490 U.S. 435,

448-449 (1989).)

Here, the Coastal Commission sued Petitioners only

once, seeking injunctive relief and civil fines under the

remedial provisions of the Coastal Act. Thus, the civil

forfeiture cases are inapplicable because they involve

prior criminal convictions as the basis for the forfeiture.

No prior criminal convictions are present in the instant

case. Thus, the Court of Appeal correctly rejected Peti-

tioners’ forfeiture analysis:

“Since the injunctive relief was intended to pro-

tect the public’s interest in California’s coastal

areas, the remedy was civil in nature. Conse-

quently, Ojavan Investors’ forfeiture theory does

not apply. In view of the record, the trial court

properly exercised its discretion in ordering

Bogart to rescind the sales to third parties.”

(Pet., App. A at p. 35a.)

Furthermore, the fines, once paid, must be used to

“carry[ ] out the provisions” of the Coastal Act and, for

that reason, “shall be deposited in the Violation Remedia-

tion Account of the Coastal Conservancy Fund until

appropriated.” (Pub. Resources Code § 30823.) Thus, the

fines are remedial and not punitive.

Accordingly, the Court of Appeal properly rejected

Petitioners’ attempts to paint the Coastal Act’s remedial

provisions as criminal in nature because they are

designed and intended to protect the public’s interest in

Lo Ad en ac lh lll

18

the state’s coast, obtain compliance with the Act and

remediate environmental degradation within the coastal

zone.

Ill.

THERE IS NO RIGHT TO A TRIAL BY JURY BECAUSE

COASTAL ACT ENFORCEMENT IS PURELY EQUITA-

BLE

Subsequent to the liability determination, the trial

court granted the Coastal Commission’s motion in limine

to strike Petitioners’ jury demand “because the only

remaining issues are those raised in the Coastal Commis-

sion’s cross-complaint brought pursuant to the California

Coastal Act of 1976, Public Resources Code § 30000 et seq.,

and such claims are equitable in nature.” (CT 3873.) Peti-

tioners argued on appeal that the trial court abused its

discretion in issuing this order because the “gist” of a

Coastal Act enforcement action is “damages” and that,

therefore, Petitioners were entitled to a jury trial on the

amount of fines to be imposed. (Pet. at pp. 18-22.) The

state court disagreed and affirmed the order in the

unpublished portion of the opinion. (Pet., App. A at p.

30a.) The court held that “there is no right to a jury trial

in an action sounding in equity [and] [w]here, as here, the

civil fines are tied to the injunction in that the same

alleged misconduct is the basis for all the types of relief

sought, the issues are equitable in nature.” (Ibid. citing C |

& K Engineering Contractors v. Amber Steel Co., 23 Cal.3d 1, |

9, 151 Cal.Rptr. 323 (1978), and People v. Witzerman, 29 |

Cal.App.3d 169, 176-177, 105 Cal.Rptr. 284 (1972).) |

ee ery

19

Relying on the federal Clean Water Act decision of

Tull v. United States, 481 U.S. 412 (1987), Petitioners argue

that the Seventh Amendment to the U.S. Constitution

guaranteed them a right to a jury trial on the fines issue.

(Pet. at pp. 20-22.) In fact, the Tull decision held precisely

the opposite:

“In this case, highly discretionary calculations

that take into account multiple factors are neces-

sary in order to set civil penalties under the

Clean Water Act. These are the kinds of calcula-

tions traditionally performed by judges. [Cita-

tions.] We therefore hold that a determination of

a civil penalty is not an essential function of a

jury trial, and that the Seventh Amendment

does not require a jury trial for that purpose in a

civil action.” (Tull v. United States, supra, 481 U.S.

at 427.)

Petitioners’ confusion over the Tull decision appar-

ently springs from this Court’s other holding in the same

decision concerning the right to jury on the /iability issue.

This Court held that based on explicit legislative history

unique to the Clean Water Act, a violator was entitled to a

jury trial on the issue of liability because the Clean Water

Act's “authorization of punishment to further retribution

and deterrence clearly evidences that [the penalty provi-

sion] reflects more than a concern to provide equitable

relief.” (Id. at 423.) Because liability in the instant case

was established by a motion for summary adjudication,

and because Petitioners did not and cannot point to any-

thing in the Coastal Act’s legislative history that in any

way resembles that examined in Tull, this holding has no

application here.

20

In any event, the Seventh Amendment jury trial guar-

antee has not been incorporated in the Due Process

Clause of the Fourteenth Amendment and, therefore, is

not binding on the states. (Palko v. Connecticut, 302 U.S.

319, 324 (1937), overruled on other grounds in Benton v.

Maryland, 395 U.S. 784 (1969).) Thus, with respect to the

Seventh Amendment, the “States . . . are left to regulate

trials in their own courts in their own way.” (Walker v.

Sauvinet, 92 U.S. 90, 92-93 (1875).) This Court continued:

“A trial by jury in suits at common law pending

in the State courts is not, therefore, a privilege

or immunity of national citizenship, which the

States are forbidden by the Fourteenth Amend-

ment to abridge. A State cannot deprive a per-

son of his property without due process of law;

but this does not necessarily imply that all trials

in the State courts affecting property of persons

must be by jury. This requirement of the Consti-

tution is met if the trial is had according to the

settled course of judicial proceedings. [Citation.]

Due Process is process due according to the law

of the land.” (Walker v. Sauvinet, supra, 92 U.S. at

93.)

In civil actions brought in California, the “defendant

has no right to a jury trial under the Seventh Amend-

ment.” (County of El Dorado v. Schneider, 191 Cal.App.3d

1263, 1272, 237 Cal.Rptr. 51 (1987).) It is also settled in

California that contemporary environmental legislation

such as the Coastal Act is grounded in equity because it

represents a legislative declaration that acts injurious to

the state’s natural resources constitute a public nuisance.

(CEEED v. California Coastal Zone Conservation Com., supra,

21

43 Cal.App.3d at 318; see also Leslie Salt Co. v. San Fran-

cisco Bay Conservation etc., Com., supra, 153 Cal.App.3d at

618.) And, as the state court ruled here, there is no right

to a jury trial in an action sounding in equity. (C & K

Engineering Contractors v. Amber Steel Co., supra, 23 Cal.3d

at 9.)

Even the other non-environmental and non-equitable

case law relied on by Petitioners supports the order strik-

ing their jury demand. For example, in a case cited by

Petitioners at page 12 of their petition, this Court held:

“[C}jivil contempt sanctions, or those penalties

designed to compel future compliance with a

court order, are considered to be coercive and

avoidabie through obedience, and thus may be

imposed in an ordinary civil proceeding upon

notice and an opportunity to be heard. Neither a

jury trial nor proof beyond a reasonable doubt is

required.” (International Union, United Mine

Workers of America v. Bagwell, 512 U.S. 821, 827

(1994), emphasis added.)

This analysis is applicable here because, as with civil

contempt sanctions, Coastal Act civil fines are designed

to coerce compliance with the permit requirements of the

Act, including the terms and conditions placed on any

permit. For this reason, enforcement actions under the

Coastal Act are not punitive, but are actions to abate

public nuisances. (CEEED v. California Coastal Zone Con-

servation Com., supra, 43 Cal.App.3d at 318; Leslie Salt Co.

v. San Francisco Bay Conservation etc., Com., supra, 153

Cal.App.3d at 618.) Furthermore, Petitioners were and are

given a chance to purge the daily fine because, as the

22

state court noted, it is imposed “per day for each day in

which such violation occurs.” (Pet., App. A at p. 16a.)

Thus, if Petitioners had agreed to rescind their illegal

purchases and sales of the deed restricted lots earlier in

this litigation, they could have unilaterally and dramati-

cally limited their exposure. Indeed, as demonstrated by

Petitioners’ related petition writ of certiorari filed concur-

rently with the instant petition, even in the face of mount-

ing daily fines and three civil contempt citations,

Petitioners have steadfastly refused to comply with the

unbonded and currently enforceable injunction, thus pre-

venting reimbursement to the defrauded third party pur-

chasers who are still holding deed restricted properties.

(Bogart v. California Coastal Com., Sup. Ct. Docket No.

97-622.) The related petition also shows that Petitioner

Bogart is currently a fugitive from justice with a bench

warrant for his arrest outstanding. (Ibid.) This obdurate

and illegal behavior cannot be laid at the Coastal Com-

mission's feet.

Similarly, daily fines could have been suspended by

bonding the judgment pending appeal. The key to stop-

ping fines has always been in Petitioners’ hands. Peti-

tioners, however, would rather blame the Coastal

Commission for its successful enforcement of the law

rather than take responsibility for their own illegal and

fraudulent actions.

;

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23

%

IV.

PETITIONERS ARE BARRED BY THE RES JUDICATA

DOCTRINE FROM RENEWING, AT THIS LATE DATE,

THEIR CHALLENGE TO THE UNDERLYING

COASTAL DEVELOPMENT PERMITS

Petitioners cite the concurring opinion in Suitum v.

Tahoe Regional Planning Agency, __ U.S. __, 117 S.Ct.

1659, 137 L.Ed.2d 980 (1997), for the proposition that the

TDC program, similar to that used by the Coastal Com-

mission, “was recently soundly [sic] criticized by Justices

Scalia, O’Connor and Thomas... . ” (Pet. at pp. 4-5, fn.

2.) Setting aside Petitioners’ characterization of the con-

curring opinion, Petitioners are indirectly attempting to

re-open the validity of the coastal development permits.

The California Court of Appeal, however, has unequivo-

cally and finally rejected Petitioners’ attempts to chal-

lenge the permits’ TDC conditions:

“We . . . hold that the time to challenge coastal

development permits issued pursuant to the

TDC Program is within the statutory 60-day

period after issuance of the permits (Pub.

Resources Code, § 30801), not when a party or a

successor in interest elects to violate declara-

tions of restrictions imposed pursuant to the

permits, and a cease and desist order ensues.”

(Ojavan I, supra, 26 Cal.App.4th at 525.)

3 In their “Question Presented for Review,” Petitioners

assert that the Fifth Amendment is implicated in this action.

(Pet. at p. i.) Petitioners, however, never brief the Fifth

Amendment in the body of their petition. The Coastal

Commission, therefore, can only assume that Petitioner’s

discussion of the Suitum decision constitutes their attempt to

raise the Fifth Amendment.

24

This Court subsequently denied Petitioners’ petition

for writ of certiorari. (Ojavan I, supra, 513 U.S. 1148.)

Accordingly, the state court properly rejected Petitioners’

renewed attacks on the TDC conditions as barred by the

res judicata doctrine. (Pet., App. A at p. 12a, citing Goddard

v. Security Title Ins. & Guar. Co., 14 Cal.2d 47, 52 (1939).)

e

CONCLUSION

The petition for writ of certiorari should be denied

for the above reasons.

DATED: November 4, 1997.

Respectfully submitted,

DanieEL E. LUNGREN

Attorney General

Roperick E. WALSTON

Chief Assistant Attorney General

RicHarD M. Frank

Assistant Attorney General

GorDON R. OVERTON

*DaniEL A. OLIvAsS

Deputy Attorneys General

*Counsel of Record for Respondents