In Shaw v. County of Santa Cruz, (— Cal.Rptr.3d —, Cal.App. 6 Dist., Dec. 19, 2008), a California Court of Appeal considered whether a county, through its denial of an electrical permit, could be liable for taking. The Court of Appeal concluded that though the county improperly denied the property owner the electrical permit, the county’s denial did not amount to a taking.
In 1985 Michael and Joanne Shaw purchased a 74 acre undeveloped parcel of property located in La Selva Beach, California. Shortly after purchasing the property, the Shaws hired crews to remove exotic or non-native plants from the property in an effort to restore the native plant life and seed bank
In 1992, the Shaws notified the County of Santa Cruz (“County”) of their concern over the County’s dumping of grasses and weed materials at a cul-de-sac that bordered the Shaws’ property. The Shaws claimed that the clippings threatened to compromise all of the environmental restoration they were performing on the property.
In 1995, the Shaws applied for a permit to drill a well on the property. The County approved the permit and in 1998 the Shaws drilled and constructed a well on the property at a cost of approximately $100,000. Later in 1998, the Shaws contracted with PG&E to bring electrical service to the property with the stated intention to power the well. An examination of the request with PG&E indicated the Shaws had bigger plans as they wanted “enough power to satisfy the region,” that is the full 74 acres. For approximately $50,000, PG&E provided the necessary infrastructure and facilities to service the 74 acres with 400 amps of electrical power, which is enough power to support the significant development of the property.
In October of 2000, the Shaws applied to the County for a Level I permit to connect electrical power to the property to power the well “to be used for irrigation and to restore native plants.” The permit was denied by the County because a Level I permit could only be issued if there was a dwelling-like structure on the property. The County also could not identify any exceptions for the issuance of a Level I permit based on the Shaws stated purpose and use of the property. The County was skeptical of the Shaws’ application because the Shaws were evasive when asked about their intended use of the property. The County informed the Shaws that they would have to apply for a Level V permit which requires, as part of the application process, a public hearing before County representatives.
In 2001 and 2002, the Shaws filed two successive complaints where they stated that the County had interfered with the development of their property through the denial of the Level I permit which amounted to a taking, and further made claims of trespass and nuisance in connection with the County’s dumping of debris at the cul-de-sac located near their property. After significant delay, the trial court concluded that the County incorrectly denied the issuance of the Level I permit and ordered the County to grant the permit. The remaining claims asserted by the Shaws for taking, trespass and nuisance took over two years to be heard by the trial court. After trial, the trial court ruled in favor of the County on the Shaws’ remaining claims and dismissed the case. The Shaws appealed this ruling.
The Court of Appeal began by addressing the Shaws’ takings claim. Both the federal and California constitutions guarantee property owners “just compensation when their land is taken for public use.” These constitutional provisions are designed to ensure that governmental entities give value to a property owner when they take a property for public use.
As the court explained at some length, the concept of taking is not limited to the government’s physical taking of one’s property, but can also extend to situations where governmental regulation reaches a level where a property owner is deprived of “all economically beneficial or productive use of the land.” Under yet another alternative taking theory, a court will look at the property owner’s use of the property and the degree to which the governmental regulation interferes with that use. Also, the court will consider the nature of the governmental regulation and whether the effects of that regulation “substantially advance [a] legitimate state interest.”
The Shaws argued that the County’s denial of the electrical permit constituted a taking because they were denied all economically beneficial use of their property. The Court of Appeal rejected this argument because the Shaws continued to use their property exactly as they had before the denial of the permit. The Shaws did not lose an expected return on their investment in the property, nor had the property suffered any reduced value because of the denied permit.
In the alternative, the Shaws argued that the denial of the electrical permit was a taking because the county engaged in delaying tactics with the specific purpose of denying the Shaws an electrical permit which did not serve a legitimate state purpose. Again, the Court of Appeal disagreed with the Shaws’ explaining that while the County may have been responsible for some of the delay and incorrectly denied their permit; there was no evidence that the County denied the Shaws’ application out of delaying tactics. The court pointed out that the Shaws were responsible for much of the delay themselves because of requests to the trial court for more time to conduct discovery.
Finally, the Court of Appeal discussed the Shaws’ nuisance and trespass claims. The court found that these claims were not supported by sufficient evidence presented by the Shaws because “there were numerous ways in which unwanted species could migrate onto the property” and there was no way to prove that any exotic plant material on their property came from the County’s dumping.
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