Posted by: Patricia Salkin | October 30, 2008

Eternal Moratorium Can Be a Taking Says California Appellate Court

Monks v. City of Rancho Palos Verdes, involves a 1978 moratorium on construction of new homes in an area in which landslides had occurred.  Plaintiffs’ property consisted of a number of lots which were vacant and zoned for single family use.  Plaintiffs sought approval to build a house in 2002, but the defendant took the occasion to make the approval criteria more rigorous while that application was pending.  Plaintiffs brought the instant action to invalidate the new criteria and alleged inverse condemnation under the California Constitution as well.  The trial court denied the claim based on the administrative record before the council, denying plaintiffs’ request to put on more evidence on the takings claim.  Based on the administrative record, the trial court determined a permanent taking had not occurred and plaintiffs appealed for the first time.

 

            On the first appeal, the court found a permanent deprivation of all viable economic use under Lucas v. South Carolina Coastal Commission, 505 U.S. 1003 (1992) which required justification under background principles of property or nuisance concluding as follows:

            The city failed to meet its burden of justifying the moratorium – as applied to plaintiffs’ lots – through evidence showing a reasonable probability of personal injury or property damage other than the possibility of damage to plaintiffs’ desired homes in the distant future – damage that could be repaired.  A permanent ban on home construction cannot be based merely on a fear of personal injury or significant property damage.  Because the city did not carry its burden in light of the evidence and principles of state nuisance and property law, we reverse the judgment and remand for proceedings to determine an appropriate remedy.

 

The appellate court noted that there had been an ancient landslide on the Palos Verdes Peninsula between 100,000 and 120,000 years ago and that there were two landslides more recently which set off the 1978 moratorium.  The City hired experts to review the moratorium and the experts concluded that additional studies were necessary to allow further residential construction.  A report stated that a subarea which included plaintiffs’ property could be developed without causing further damage, but there was an unknown risk.  The report went on to say that an industry standard for safety of 1.5 (1.0 being no immediate risk) should be used.  The City installed utilities on the site and plaintiffs made an application to construct a home. While that application was pending, the City considered a resolution to the effect that it could not approve new home construction in the area given the lack of information and posited the need for the margin of safety of 1.5, rejecting the testimony of plaintiffs’ expert that it was safe to build on plaintiffs’ site.  The City’s expert said that further work to determine safety for the whole area would cost between $500,000 and $1.5 million.

 

As noted, the trial court determined in the first case that the matter would be heard on the administrative record and denied plaintiffs’ request for further evidence.  The City’s resolution relating to the new safety standard was not placed on the Council’s agenda until shortly before Council consideration.  In its first decision in this case, the appellate court had found that plaintiffs must be allowed to submit additional evidence outside the administrative record and determined that the taking claim was ripe. 

 

In this first decision, the appellate court had ruled that the City’s adoption of the moratorium was a final decision with no additional review as there was no variance or other administrative remedy to pursue.  Further, the cost of the new study was found to be a factor to consider in whether further relief is futile.  Moreover, the prior opinion said that the statute of limitations for an inverse condemnation case did not run from the initial moratorium in 1978, but the 2002 resolution setting the heightened standards for exclusion from the moratorium.

 

At the trial on remand, plaintiffs presented evidence that the City had allowed other houses in the same area without perceptible harm and testimony of its expert engineers to the effect that the house could be built on this site so long as water were intercepted.  Plaintiffs also presented evidence that the City had treated other construction in the area inconsistently.  The trial court found for the City under a nuisance theory, i.e., that land movement in the area constituted a substantial interference with “collective social interests,” so that the moratorium did not go “too far” because it was based on important safety considerations, negligible effects on current uses and lack of interference with plaintiffs’ reasonable investment-backed expectations.

 

The court said that the California constitution prevents the taking and damaging of property without just compensation.  That constitutional provision has generally been interpreted by California courts in the same manner as that of the Fifth Amendment to the Federal Constitution.  The appellate court found that the trial court erred in two respects in this case:

1.         It found the moratorium was not permanent because one could request an exclusion and show that the safety factors for the area were met; and

2.         The trial court concluded that any significant land movement would be harmful to collective social interests and could be remedied under state nuisance law.

 

The appellate court found that this case was governed by Lucas, supra., as all viable economic use was denied, so that the three-factor analysis of Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978), was not applicable.  As in Lucas, defendant asserts that it is preventing harm, but did not leave any economic use to the property.  In such a case, avoidance of payment of just compensation requires that the restriction inhere in the state’s background principles of property or nuisance law.  Such principles, as in Lucas, rarely prohibit an “essential use” of the land, such as a single family house in an area so zoned.  In such a case, defendant bears the burden of proof to show the use was never allowable under state law.  A taking could not be avoided merely by the assertion that the regulatory authority acts in the public interest because in Lucas such a restriction could not be found on that basis. 

 

 

In this case the court reviewed California nuisance law and found only a public nuisance theory could prevail in the balancing test to be undertaken.  The City would have to prevail in a nuisance action brought on behalf of the community.  Such a nuisance must be substantial and unreasonable and extend beyond trifles or annoyances.  It must be injurious to health or safety, involve indecency or be offensive to the senses or be an obstruction to the free use of property or free passage or use of navigable lakes, rivers or streams or block passage to public parks, squares, streets or highways.  Thus, keeping diseased animals, storing explosives in a populated area, giving off offensive odors, or obstructions of streets are all public nuisances.

 

On the other hand a private nuisance is a civil wrong based on disturbance of rights in land.   Plaintiffs must prove such a right exists, in addition to proving damages based on the interference with the plaintiff’s use or enjoyment of land.  The degree of harm must meet an objective criterion under the reasonable person standard.  The harm must also be unreasonable, as measured by its social utility. 

 

The court concluded there were no grounds in state property or nuisance law to justify a permanent moratorium.  The court pointed to the City’s change of position, which focused on the safety of construction on the subject site, compared to the overall safety standard it had established for the area, which could only be met by going through a long and costly administrative process in providing an expensive study for a single house.

 

The court added that plaintiffs also should not be required to use this costly process and study because it would require a safety finding for the entire area, rather than plaintiffs’ property.  The law of the case applies here.  It requires an individual evaluation on the taking issue.  Even if the law of the case did not apply as a result of the first appellate court decision, there is nothing in the record to show that the City would exclude this property from its moratorium and allow plaintiffs to build a house.  Further the court found, consistent with Lucas, no obviation of the taking claim from a moratorium by the exclusion process.  The court thus treated the deprivation as both categorical and total.

 

The appellate court then concluded that construction of a single family residential home on the site was not a public or private nuisance as there was no showing of significant harm, which the City was required to show under its burden of proof.   Specifically, the City must show that it could secure an injunction against construction of a home and that it would have a reasonable probability of prevailing on the merits.  The court concluded it could not do so because:

1.         There is nothing inherently unlawful in building a home.  The area is zoned for residential use and subdivision approval had been granted many years ago.  Moreover, utilities are installed.

2.         The uncertainty of harm is an insufficient basis for granting an injunction – the City must show reasonable probability of prevailing in an injunctive action to prevent the construction.  In this case, the evidence does not rise to that level. 

3.         The most pessimistic of defendant’s witnesses admitted that there could be significant structural damage in a decade if one built on a certain portion of the area which had slide potential – something that was not proposed in this case, but also conceded that the damage could be repaired and there was little danger to public safety.

4.         The movement in this case would be of a block sliding along a plane slowly.  The City’s theory is that landowners should be prohibited from building for their own good, even if the damage is repairable and the landowner accepts the risk and the damage is more remote in time.  The court also noted that the City’s expert conceded that the construction of 16 new homes in this area, with appropriate dewatering, was not risky.  The City Council disagreed with that portion of their expert’s opinion without any basis and had also given numerous permits before 2005 when the challenged resolution was adopted.  These permits were for remodeling or expanding existing homes.  (The court noted a similar impeaching of the safety contention in Lucas, where owners of existing homes were not required to tear them down, even if they were within the “no-build” line).

 

Finally, the court said that the safety number used, 1.5, like the no-build line of Lucas, was not determinative – it was common law principles of property and nuisance that must control.  Thus, it was actual harm, not a policy standard that determined the case.

 

The court noted a trial court comment that a city should not have to risk bankruptcy in allowing plaintiffs to build by countering that such potential risks are speculative and no justification for violating the state constitution by denying all viable economic use without just compensation.  The court concluded:

For the foregoing reasons, we conclude that the city’s resolution effected a permanent taking of plaintiffs’ properties.  In Lucas, the court applied a categorical takings rule to a government moratorium on residential construction along the beach.  That moratorium was based on the theory that the presence of homes would contribute to erosion, which, in turn, would expose the homes to damage by the wind and waves.  On remand, the South Carolina Supreme Court concluded that the common law did not justify the moratorium despite the property damage to beachfront homes.  Lucas compels the conclusion we reach today.

 

We therefore remand the case to the trial court for the determination of an appropriate remedy.  In that respect, plaintiffs express concern that the city might impose additional or new restrictions on their attempt to build.  We expect the city to proceed in good faith.  “Government authorities, of course, may not burden property by imposition of repetitive or unfair land-use procedures ….” * * * The city may not “engage in endless stalling tactics, raising one objection after another so that the regulatory process never comes to an end.” * * *

 

 

Monks v. City of Rancho Palos Verdes, 84 Cal App 3rd 75 (2 Dist., 10/1/ 2008)

The opinion can be accessed at: http://www.courtinfo.ca.gov/opinions/documents/B201280.PDF

 

Special thanks to Edward Sullivan of Garvey Schubert Barer in Portland, OR for providing this abstract. http://www.gsblaw.com/people/bio.asp?EmployeeID=S157970608


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Categories

%d bloggers like this: