Landowners Were Not Required To Seek General Plan Amendment In Order To Exhaust Their Administrative Remedies Before Filing Lawsuit For Inverse Condemnation

In Howard v. County of San Diego, (— Cal.Rptr.3d —-, Cal.App. 4 Dist., April 29, 2010), the court of appeal considered whether landowners were required to seek a general plan amendment in order to exhaust their administrative remedies prior to filing a lawsuit for inverse condemnation. The court of appeal held the landowners were not required to do so because a general plan amendment is a legislative process, not an administrative process.

Facts

Steve Howard and Megan McQuaide (“Landowners”) own 40 acres of land in Campo, California. Landowners applied for a permit from the County of San Diego (“County”) to build a metal barn on their property. Landowners “discovered there was a road planned on the County’s circulation element of its general plan” and the location where Landowners wanted to build the barn was within the planned corridor for the road. Landowners learned they could not build the barn because County did not allow development within the corridor.

Landowners filed a lawsuit against County and multiple other defendants. Landowners’ claims against County were for inverse condemnation and violation of their rights under 42 U.S.C. § 1983. Landowners asserted that after they were told that the barn they sought to build would be within the footprint of a road (La Posta Road) “they engaged in many meetings with County officials.” County officials told them the road would not be moved or modified, “County would never allow them to build within the road footprint,” and County “would never provide compensation for the taking of that footprint.” Landowners asserted “[t]hey were left with no alternative but to resort to the court for help.”

County asked the trial court for a judgment on the pleadings on several grounds, including that Landowners failed to exhaust their administrative remedies. The trial court granted County’s motion and dismissed Landowners’ lawsuit. Landowners subsequently attempted to exhaust their administrative remedies by submitting a request to County to remove the planned road from the circulation element of County’s General Plan. County told Landowners that the road could not be removed from the General Plan circulation element through a request for modification and that Landowners would instead have to seek a general plan amendment (“Amendment”). County told Landowners if they requested an Amendment, they would responsible for all of the cost associated with the Amendment, including the cost of environmental documentation and studies.

Landowners brought a motion to amend their complaint to bring County back into the lawsuit as a defendant. Landowners claimed they had followed the procedure suggested by County to exhaust their administrative remedies. The trial court denied Landowners’ motion on the ground Landowners failed to exhaust their administrative remedies.

Decision

Landowners claimed County’s regulations amounted to an unconstitutional taking of an interest in their property. “‘[A] claim that application of governmental regulations effects a taking of a property interest is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue.’” Without a final determination by the governmental entity about how the regulation will be applied, a court cannot determine the economic impact of the regulation. This is known as the “‘final decision’ rule.” However, “once it becomes clear that the agency lacks the discretion to permit any development, or the permissible uses of the property are known to a reasonable degree of certainty, a takings claim is likely to have ripened.”

The futility exception that a landowner must exhaust his or her administrative remedies before filing a lawsuit provides that “[t]he failure to pursue administrative remedies does not bar judicial relief where the administrative remedy is inadequate or unavailable, or where it would be futile to pursue the remedy.” Before a plaintiff can invoke the futility exception, he or she must show that the applicable “agency has declared what its ruling will be on a particular case.” The court stated, “A plaintiff need not pursue administrative remedies where the agency’s decision is certain to be adverse.”

The court of appeal held the trial court should not have denied Landowners’ request for leave to amend their complaint because a question of fact remains as to whether the final decision rule or the futility exception applies in this case. The court of appeal found that it could not conclude as a matter of law that Landowners failed to exhaust their administrative remedies. Landowners alleged that “[a]t each step in their attempt to build within the La Posta Road footprint, the County has told [them] their actions were futile.” After Landowners submitted a request for a modification of the road standard or project conditions, County told them they needed to seek a general plan amendment. However, County also told them it would be preserving “La Posta Road in its entirety for use as an ‘emergency access road’ and part of it as a local public road.”

The court of appeal also found that because an amendment to the general plan “is a legislative [act], not an administrative process, [Landowners] were not required to seek [an Amendment] prior to instituting legal action.” The court noted that “[l]egislative actions are political in nature” because they declare a public purpose and make “provisions for the ways and means of its accomplishment.” Administrative actions, on the other hand, “apply law that already exists to determine ‘specific rights based upon the specific facts ascertained from evidence adduced at hearing.’” Because an “amendment of a general plan is a legislative, not an administrative action,” Landowners “were not required to seek an [Amendment] in order to adequately exhaust their administrative remedies.”

County argued that even though a general plan amendment is a legislative act, County has provided an administrative process to obtain a the amendment and, therefore, Landowners had to complete that administrative process. The court rejected this argument finding that “regardless of the process by which landowners may seek [an Amendment], the ultimate decision is a legislative one to be voted on, after notice and a hearing, by the County’s Board of Supervisor.” The court concluded the proposed remedy is not an administrative one. Accordingly, the court held the trial court erred when it denied Landowners leave to amend on that basis.

Questions

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