In Monks v. City of Rancho Palos Verdes, (— Cal.Rptr.3d —, 2008 WL 4416188, Cal.App. 2 Dist., Oct. 1, 2008), a California Court of Appeal considered whether a city’s moratorium, and subsequent resolution, on the development of single family residential homes constituted a taking of property or whether the moratorium was justified by state property or nuisance law. The Court of Appeal concluded that the moratorium imposed by the city was a permanent taking of the property owner’s land, and was not justified by principles of state nuisance law. The matter was returned to the trial court for the determination of an appropriate remedy including the potential payment of compensation to the owner.
Facts
In 1978, the City of Rancho Palos Verdes (the “City”) enacted an ordinance which imposed a moratorium on the construction of new homes in the area where landslides had recently occurred. Upon issuing the moratorium, the City performed extensive geological studies to determine the impact of building in the effected landslide areas. Additional studies were conducted over the next three decades. The most recent of these studies concluding that building in the particular zone where the subject property was located (“Zone 2”) would not cause destabilization of the land.
In January 2002, John Monk and the owners of 16 other undeveloped lots (“Plaintiffs”) in Zone 2 jointly filed an application requesting exclusion from the moratorium. While the Plaintiffs’ application was pending, the City approved a resolution which provided in pertinent part that the City would deny any development requests for lots in Zone 2 unless the moratorium exclusion application was accompanied by adequate geological data demonstrating it was safe to build within the entire Zone 2 area.
Rather than continuing to pursue their pending application for exclusion, the Plaintiffs filed a writ of administrative mandate and a complaint for inverse condemnation. Plaintiffs argued that they were denied an opportunity to present their arguments before the City, and therefore the trial court should conduct an evidentiary hearing. The trial court disagreed and did not hold an evidentiary hearing and concluded that the resolution did not constitute a taking. On appeal, the decision of the trial court was reversed, and the case remanded for trial on the Plaintiffs’ takings claim.
At trial, the Plaintiffs presented evidence in the form of testimony by three experts indicating it was safe to build in Zone 2. The City’s principal witness questioned the safety of any building within Zone 2 but also indicated that the City’s criteria for an exemption to the moratorium made “no sense at all.” Following trial, the trial court concluded that the Plaintiffs’ experts lacked creditability, but found the City’s expert’s testimony “compelling and persuasive.” The trial court also found there to be uncertainty surrounding the stability of Zone 2. Consequently, the trial court entered judgment in favor of the City.
Decision
The Court of Appeal began by explaining the law of takings under the California Constitution. Specifically, the California Constitution provides that “[p]rivate property may be taken or damaged for public use only when just compensation . . . has first been paid to . . . the owner.” Further, the court said that taking by the government does not have to be the “appropriation or physical invasion of private property,” but that a taking can also occur by “government regulation of private property” that is “so onerous that its effect is tantamount to a direct appropriation or ouster . . ..” While there are three basic theories upon which an individual can make a claim of a regulatory taking, the one applied by the court here was first recognized by the Supreme Court in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). A Lucas taking occurs when the government regulation “completely deprive[s] an owner of all economically beneficial use of her property.” The government must pay just compensation for such a regulatory taking, “except to the extent that background principles of nuisance and property law independently restrict the owner’s intended use of the property.” Moreover, when there has been such a categorical taking, “the government bears the burden of proving that the property owner’s intended use is not allowed under state law.”
Next, the Court of Appeal discussed the two different types of nuisance: public and private. A public nuisance is anything that is “injurious to health” or “indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property . . ..” To be a public nuisance, the “interference must be both substantial and unreasonable.” The interference is of the rights of the community at large. A private nuisance requires an individual to show a specific injury “referable to the use and enjoyment of his or her land.” Thus, if the “interference is substantial and unreasonable, and such that would be offensive or inconvenient to the normal person, virtually any disturbance of enjoyment of the property may amount to a [private] nuisance.”
Then the Court of Appeal examined the moratorium and resolution’s effect on the use of the Plaintiffs’ property. First, the court pointed out that the City requires an individual to show that it was safe to build in all of Zone 2. The Court of Appeal pointed to its holding from the first appeal whereby the court concluded that it was futile for an applicant to prove such gross safety factor, and that the Plaintiffs were excused from so doing. Nevertheless, the trial court revisited the issue in reaching its decision, suggesting that the Plaintiffs were not foreclosed from an administrative remedy. The Court of Appeal concluded this was an error and in complete contravention with its ruling in the first appeal. As a result, the court stated that the resolution passed by the City qualified as a categorical taking, and would therefore apply the second part of Lucas which looked to see if the City was justified in its taking because of state principles nuisance law.
To begin its inquiry into the City’s potential justification based on nuisance, the Court of Appeal asserted that the burden was on the City to prove that the moratorium and resolution were justified by state nuisance law. First, the court said that there was nothing inherently harmful about the plaintiffs’ intended use as the land was zoned for residential use and the utilities and sewer system were already in place. Second, the court said that uncertainty was not a sufficient basis to deprive a property owner of a home. The City must prove a reasonable probability of significant harm for an injunction against a nuisance. Third, the court explained that the actual risk of harm was another factor to consider, and pointed out that the City’s expert was the only one to address that issue and he admitted that any risk of harm was limited and speculative. Additionally, the court noted that the City had already approved many exemption and exception permits for existing homes making application of the moratorium to Plaintiff’s undeveloped lots “questionable.” Lastly, the court stated that the City’s requirement of a specific safety factor for any building within the entire zone pursuant to its building code does not decide whether or not there is a nuisance because common law, not statutory law, is determinative in categorical takings cases. Nuisance law focuses on actual harm posed by the intended use of property rather than scientific labels.
In conclusion, the Court of Appeal held that the City’s resolution was a permanent taking of the plaintiffs’ properties under the categorical takings theory expressed in Lucas, and that the City failed to establish any justification for the taking. The court remanded the case to the trial court for a determination of an appropriate remedy.
What This Means To You
In enacting regulations or moratoriums on the use of private property, a public entity must make sure that it does not preclude all uses. If it does, the public entity must make sure its actions are justified. For example, would the proposed use constitute a nuisance? The entity must have facts to support any justification. If not, the entity may have to pay the owner compensation for the property and may also have to pay the owner’s legal fees if litigation results.
Questions
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Karina Terakura, Mona Ebrahimi or William Chisum | 916.321.4500