CA Appeals Court Holds Landowner Had Vested Right to Construct Crematorium Pursuant to Building Permit

Stewart Enterprises, Inc. and SE Combined Services of California, Inc. obtained a building permit to construct a crematorium on a site in East Oakland. Five days later, the Oakland City Council passed an emergency ordinance requiring a conditional use permit (CUP) to operate new crematoria. Stewart administratively appealed a determination that the emergency ordinance applied to its proposed crematorium, but Oakland’s Planning Commission denied the appeal. Stewart then brought this action, which included administrative-mandamus claims, against the City of Oakland, the City Council, and the Planning Commission. The trial court granted one of Stewart’s claims petitioning for writ of administrative mandamus, ruling that Stewart had a vested right in the building permit based on a preexisting local ordinance and that the emergency ordinance was not sufficiently necessary to the public welfare to justify an impairment of that right. On appeal, the City argued that: Stewart had no vested right; even if Stewart had a vested right, it was not impaired; and even if Stewart had a vested right that was impaired, the impairment was supported by substantial evidence.

Under the judicial vested-rights doctrine, a party acquires a vested right in a building permit if the party has performed substantial work and incurred substantial liabilities in good faith reliance upon a permit issued by the government. Here, the permit-vesting ordinance conveyed a vested right because it shielded the holder of a lawfully issued building permit from having to comply with any subsequently adopted zoning regulations if such regulations would “prohibit the construction … authorized by said permit.” Even if the emergency ordinance was lawfully passed and the City Council intended it to override the permit-vesting ordinance, the court found no reason as to why the permit-vesting ordinance failed to confer a vested right on Stewart when Stewart obtained the building permit.

The City next argued that the application of the emergency ordinance to Stewart’s project impaired no vested right conferred by the permit-vesting ordinance because the latter ordinance only “proscribed the application of legislation to prohibit a project, whereas the emergency ordinance imposed a CUP requirement.” The court disagreed, finding that once the emergency ordinance was applied to the project, Stewart was no longer allowed to build the crematorium because it did not have a CUP. Moreover, the possibility that Stewart could regain the right to build the crematorium if it applied for and was granted a CUP does not change this fact: a project can be “prohibited” even if the fulfillment of certain contingencies might at some later date reauthorize it.

Lastly, the City contended that the impairment of Stewart’s vested right by the emergency ordinance was justified because the impairment was sufficiently necessary to the public welfare. The evidence the City cited established there were concerns about what impacts the crematorium might have on the public and local businesses. However, there was no evidence that Stewart’s crematorium in particular posed a danger to public health. Accordingly, the court held that there was insufficient evidence of a danger or nuisance to the public to justify the City’s application of the emergency ordinance to Stewart’s project.

Stewart Enterprises, Inc. v City of Oakland, 2016 WL 3453650 (CA 6/23/2016)