Litigation & Case Law Update

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Litigation & Case Law Update

Compiled by K. Scott Dickey*

CEQA EXEMPTIONS

Berkeley Hillside Preservation, et al. v. City of Berkeley (March 2, 2015) 60 Cal.4th1086 (2015 WL 858265)

California’s Supreme Court rejects Court of Appeal’s ruling that "unusual circumstances" exception to categorical exemptions does not apply where there is substantial evidence of significant environmental impacts, and holds that for the exception to apply, there must be a finding of significant environmental impacts specifically as a result of the unusual circumstances.

In fall 2009, Berkeley residents Mitchell Kapor and Freada Kapor-Klein applied to the City of Berkeley for permission to demolish a two-story residence they owned in the Berkeley Hills and construct in its place a two-story 6,478 square-foot home with an attached 3,394 square-foot, 10-car garage designed to address lack of street parking in the area. The proposed structures would occupy 16% of the property owners lot Berkeley’s 40% lot coverage limit. The immediate neighbors supported the proposed project and the construction plan.

In January 2010, the Berkeley Zoning Adjustment Board held a public hearing on the application, and voted 7-0 to approve, with one member abstaining. The Board found that the project was categorically exempt from the provisions of CEQA as an in-fill development project (CEQA Guidelines, § 15332), and as new construction or conversion of small structures (CEQA Guidelines, § 15303). The Board also concluded that the project did not trigger any of the exceptions to the exemptions, in particular that the proposed construction would not have any significant effects on the environment due to unusual circumstances. The Board issued permits for demolition of the old residence, construction of the new residence, and for height and setback variances.

Three weeks later, Berkeley resident Susan Nunes Fadley, ultimately joined by dozens more, filed an appeal of the Board’s decision with the City Council. Appellants argued, among other things, that CEQA’s categorical exemptions do not apply because the proposed project’s "unusual size, location, nature and scope will have significant environmental impact on its surroundings." They alleged that the proposed construction exceeded the maximum allowable height under Berkeley’s municipal code, and was inconsistent with the policies of the City’s general plan, and that an EIR was appropriate to evaluate the proposed construction’s potential impact on noise, air quality, and neighborhood safety.

Following a hearing on the appeal, the City Council adopted the findings made by the Board, affirmed the decision to approve the use permit, adopted the conditions enumerated by the Board, and dismissed the appeal by a 6-2 vote, with one council-member absent. The City Planning Department thereafter filed a notice of exemption, stating that the proposed construction was categorically exempt from the provisions of CEQA (CEQA Guidelines, §§ 15332, 15303, subd. (a)), and that the proposed construction did not trigger any of the exceptions to the exemptions (CEQA Guidelines, § 15300.2).

On May 27, 2010, appellants filed a petition for writ of mandate with the trial court challenging the Council’s project approval. The trial court ultimately denied the petition, finding that there were no applicable exceptions to the project’s exemptions. With respect to the "unusual circumstances" exception, the trial court concluded that the exception was inapplicable because only one of the two necessary conditions were met: although there was substantial evidence of a fair argument that the project would cause significant environmental impacts, those impacts would not be due to "unusual circumstances."

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Appellants then appealed to the First District Court of Appeal, which reversed the trial court. The Court of Appeal found that "the fact that proposed activity may have an effect on the environment is itself an unusual circumstance, because such action would not fall ‘within a class of activities that does not normally threaten the environment,’ and thus should be subject to further environmental review." The Court also found that there were "unusual circumstances" here because the proposed project "differ[ed] from the general circumstances of projects covered by the single-family residence exemption, and it is thus unusual when judged relative to the typical circumstances related to an otherwise typically exempt single-family residence." Property owners then sought review by the California Supreme Court.

In Berkeley Hillside Preservation, et al. v. City of Berkeley (March 2, 2015) 60 Cal.4th1086 (2015 WL 858265), the California Supreme Court reversed. The Supreme Court first rejected the Court of Appeal’s conclusion that an effect on the environment is alone sufficient support for the "unusual circumstances" exception to a categorical exemption, noting instead that the test is first, whether an "unusual circumstance" exists that would preclude use of the exemption, and second, whether there is "a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances" The Court also explained the appropriate standards of review for the two prongs. The determination of the existence of "unusual circumstances" is subject to the relatively deferential substantial evidence standard: "reviewing courts, after resolving all evidentiary conflicts in the agency’s favor and indulging in all legitimate and reasonable inferences to uphold the agency’s finding, must affirm that finding if there is any substantial evidence, contradicted or uncontradicted, to support it." Once a finding of "unusual circumstances" is made, "it is appropriate for agencies to apply the fair argument standard in determining whether "there is a reasonable possibility of a significant effect on the environment due to unusual circumstances."

GENERAL LAW CITIES/MAYORAL POWERS

Torres v. City of Montebello (Arakelian Enterprises, Inc) (February 13, 2015) 234 Cal.App.4th 382 (2015 WL 632149)

For purposes of Government Code provision permitting Mayor Pro Tempore to exercise powers of the Mayor in the Mayor’s absence, "absence" means physical absence, not merely the Mayor’s refusal to perform a ministerial duty.

Montebello is a general law city in Los Angeles County. Since 1962, Arakelian Enterprises, Inc., doing business as Athens Disposal Company, has been Montebello’s exclusive residential waste hauling franchisee. In 2008, a candidate for the Montebello City Council, Robert Urteaga, approached Athens about becoming the City’s exclusive commercial waste hauling franchisee, as well. Urteaga won election to the Council and, with his vote, on August 5, 2008, the Council approved a contract granting Athens an exclusive residential and commercial waste hauling franchise by a 3-2 vote. The renewed residential franchise was to commence in July 2009, and the commercial franchise was to commence in July 2016, when the existing franchise expired.

Montebello’s then-Mayor, William Molinari, was one of the dissenting councilmembers. Although he had the approved waste hauling contract in August and September 2008, and although the contract had been approved as to form by the City Attorney, Mayor Molinari refused to execute the contract. The City Attorney advised that the Mayor had a ministerial duty to sign a contract approved by the Council, and informed him that the decision not to sign the contract "warrants a determination that for purposes of this [Contract] only, you are deemed ‘absent,’ thus vesting the Mayor Pro Tempore the authority to execute this contract." When the Mayor persisted in his refusal to sign, on September 12, 2008, the City Attorney directed the Mayor Pro Tempore, Rosemarie Vasquez, to sign the contract with the annotation "for purposes of this Agreement only, the Mayor is deemed absent from execution and thus Mayor Pro-Tem is authorized to execute this Agreement."

On April 23, 2009, Montebello resident Mike Torres filed a complaint against the City seeking a writ of mandate invalidating the City’s contract with Athens. Among other things, the petition alleged the contract was void because the City failed to comply with Government Code section 40602, which requires mayoral execution of all municipal contracts. In the meantime, displeasure with the contract spread to the electorate: none of the three councilmembers who voted to approve the contract remained in office, with voters rejecting the reelection bid of Mayor Pro Tempore Vasquez, and recalling Urteaga and councilmember Kathy Salazar. In 2011, voters also adopted the "Residential Solid Waste Franchises Initiative," which prohibited renewal of residential solid waste franchises, and required a competitive bidding process for awarding new franchises.

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After much process, on July 26, 2012, the Los Angeles Superior Court granted Torres’s petition, finding that the contract was "unlawful and void," because it was not signed by the Mayor as required by Government Code section 40602. The City appealed.

In Torres v. City of Montebello (Arakelian Enterprises, Inc) (February 13, 2015) 234 Cal.App.4th 382 (2015 WL 632149), the California Court of Appeal for the Second Appellate District affirmed on all counts. The Court of Appeal rejected the City’s argument that the Mayor was not required to sign the contract because his refusal to do so rendered him "absent" for purposes of Government Code section 40601, which authorized the Mayor Pro Tempore to act in the Mayor’s stead. Although the Court agreed that section 40601 did not define "absence," it concluded that the Legislature’s use of the term with respect to mayoral rights and duties strongly suggested that section 40601 refers exclusively to physical absence, not mere unwillingness to perform a duty.

Because section 40602 imposes a restriction on contracting authority— that the Mayor sign all contracts— "the contract is void because the statute prescribes the only method in which a valid contract can be made, and the adoption of the prescribed mode is a jurisdictional prerequisite to the exercise of the power to contract at all and can be exercised in no other manner so as to incur any liability on the part of the municipality. Where the statute prescribes the only mode by which the power to contract shall be exercised the mode is the measure of the power." (Citing and quoting Miller v. McKinnon (1942) 20 Cal.2d 83, 91-92.) The Court noted that the appropriate remedy for a mayor’s refusal to perform a ministerial duty is through a petition for writ of mandate, not by circumventing the requirements of the Government Code.

PERMIT APPEALS/DUE PROCESS

Woody’s Group, Inc. v. City of Newport Beach (2015) 233 Cal.App.4th 1012

City Council violates due process when it allows a member of the Council to participate in appeal he himself filed.

Woody’s Wharf is a restaurant in the Lido Isle area of Newport Beach. A city "institution" since the late 1960s and once owned by Chuck Norris, the restaurant overlooks the Newport Beach harbor in an area with a mix of shops, restaurants, bars, and residences.

In September 2013, Woody’s group applied for a conditional use permit and variance to construct a patio cover, remain open until 2:00 a.m. on weekends, and allow dancing inside the restaurant. Woody’s sought the permit and variance for the patio cover to reduce noise from patrons after 11:00 p.m. On September 5, 2013, the Planning Commission voted 5-2 to approve the conditional use permit and variance.

Four days later, Newport Beach City Council member Mike Henn emailed the city clerk to appeal the Planning Commission’s decision. Henn’s email expressed his strong belief that the "operational characteristics requested in the application and the Planning Commission’s decision are inconsistent with the existing and expected residential character of the area and the relevant policies of the voter approved 2006 General Plan." The Newport Beach Municipal Code requires an appellant to, among other things, submit an appeal on a designated form, and pay an appellate fee. Although Henn did not use the required form or pay the fee, the City Clerk noticed the appeal for October 8, 2013.

Henn sat as a member of the City Council when his appeal was heard, over the objections of Woody’s counsel, objections rebuffed by the City Attorney who said that the Newport Beach Municipal Code "does provide that the city council member can basically call it up for review." Henn gave a lengthy, prepared argument for reversal of the Planning Commission’s decision, and made a motion for that reversal. The City Council voted 4-1 in favor of reversal, with one member abstaining, and another recusing himself. The Council adopted a resolution addressing the appropriateness of a councilmember’s appeal, stating: "Councilmem-bers are exempt from paying the filing fee provided by NBMC Section 20.64.030(B)(2) under the City’s long-standing policy and practice of not requiring Councilmembers to pay a filing fee because their appeals are taken for the benefit of the City’s residents. Since 2008, there have been eleven (11) appeals of Planning Commission decisions initiated by City Council Members and the City Clerk has not required the payment of an appeal fee under the City’s long-standing policy and practice."

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The next day, Woody’s sought a writ of administrative mandate overturning the resolution. The City filed a cross-complaint for injunctive relief, and obtained a preliminary injunction prohibiting Woody’s from operating after 11:00 p.m or allowing dancing. In May 2014, the Superior Court denied Woody’s writ petition, and Woody’s appealed.

In Woody’s Group, Inc. v. City of Newport Beach (2015) 233 Cal. App.4th 1012, Division 3 of the 4th District Court of Appeal reversed. The Court began by explaining that when a legislative body considers the appeal of a land use entitlement—such as the conditional use permit and variance Woody’s sought—it sits in an adjudicatory capacity, rather than its ordinary legislative one. As a consequence, it is responsible for providing due process and fundamental fairness to those who come before it. The Court concluded that the Newport Beach City Council had violated this obligation in two ways. First, it allowed a member of the Council who was biased against the applicant to sit in judgment over the appeal: "Henn’s ‘notice of appeal’-our term to describe his email—showed he was strongly opposed to the planning commission’s decision on Woody’s application. That is . . . he took ‘a position against the project.’ [And,] Henn was the one to propose the motion that the lower decision be overturned. Henn’s speech to the council had been written out beforehand, wholly belying his own self-serving comment at the hearing that ‘I have no bias in this situation.’ He should not have been part of the body hearing the appeal."

Second, the Court found that allowing Henn to bring an appeal in the first place—and to bring it outside the express requirements of the Municipal Code—was entirely improper. The Court first noted that the City’s Municipal Code did not contemplate appeals brought by City Council members. The Court reasoned that the Code only permits appeals by an "interested party," and due process requires that Council members hearing an appeal must be "disinterested": "A person cannot be a judge in his or her own cause. Our Supreme Court uttered a very strong statement on that great rule a little more than a century ago: ‘By section 170 of the Code of Civil Procedure it is provided that no justice, judge, or justice of the peace shall sit or act in any action or proceeding to which he is a party or in which he is interested. This is but an expression of the ancient maxim that no man ought to be a judge in his own cause, a maxim which appeals with such force to one’s sense of justice that it is said by Lord Coke to be a natural right so inflexible that an act of parliament seeking to subvert it would be declared void.’"

The Court also rejected the City’s claim that it was long-standing policy and practice to allow Council members to bring appeals to the Council, without charge, because such appeals "are taken for the benefit of the City’s residents." "[T]he city’s incantation of a ‘policy and practice’ in direct violation of its own code cannot conform that alleged policy and practice to due process . . . The city council violated the rules laid down in the city’s own municipal code, then purported to exempt itself from that code by invoking some previously undocumented custom of ignoring those rules when it comes to council members themselves. Needless to say, changing the rules in the middle of the game does not accord with fundamentally fair process."

* Scott Dickey is the Chair of the Public Law Section Executive Committee and a Deputy County Counsel with the Alameda County Counsel’s Office.

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