Court Upholds City’s Ability to Regulate an Advertising Sign After Finding the City’s Decision was Supported by Substantial Evidence

After over 35 years of advertising its business with a 35 foot pole sign, the Court of Appeal agreed with the City of West Sacramento that the time had come for U-Haul to reduce the sign's height to 12 feet in compliance with a local ordinance.  U-Haul contended that Business and Professions Code section 5499 gave it an absolute right to maintain its current sign.   A City hearing officer and board of appeal rejected U-Haul's argument and found the non-conforming sign constituted a nuisance.  In upholding the City's decision, the Court of Appeal, in Amerco Real Estate Company v. City of West Sacramento (March 12, 2014, C072403) — Cal.App.4th —-, examined whether substantial evidence supported the City's decision, and upon finding such evidence, concluded that U-Haul had no right to maintain its non-conforming sign.


Amerco Real Estate Company owns a U-Haul truck rental facility within the City.  Since 1976, the facility has contained a 35 foot pole sign including a top panel with large block letters "U-HAUL."  In 1993, the City enacted an ordinance limiting signs within the Central Business District to 12 feet in height.  The City's ordinance provided for a 15 year amortization period.

Upon expiration of the amortization period, and after several additional years of negotiations, the City brought an administrative nuisance action against U-Haul since it refused to remove its non-conforming sign.  An administrative hearing officer found in favor of the City, and the City's Board of Appeal affirmed the hearing officer's decision.

U-Haul then challenged the administrative decision by filing a court action seeking a writ of mandate.  U-Haul contended that Business and Professions Code section 5499 gave it an absolute right to maintain the sign.  Based upon that section, U-Haul argued that special topographic conditions necessitated the current sign in order to maintain its visibility and communicative effectiveness.  The trial court reviewed the administrative record, and at U-Haul's request, inspected the sign.  Upon review, the trial court determined that substantial evidence supported the City's decision, and that Section 5499 did not permit U-Haul to maintain its non-conforming sign.


On appeal, the court addressed two basic issues:  "(1) Did the trial court properly use the substantial evidence test rather than the independent judgment test to review the City's decision under section 5499? and (2) On appellate court review, is there substantial evidence to support the relevant decision?"  As to the first issue, the court noted that the evidentiary sufficiency of an administrative  decision is examined under an independent judgment standard if the decision affects a fundamental vested right.  In other cases, the court examines whether the administrative findings are supported by substantial evidence in light of the whole record.

In determining whether the right is so important to require review under the independent judgment test, the court analyzes the character and quality of the right in both its economic and human aspect.  The court's analysis is on a case-by-case basis, but courts are less sensitive to preservation of purely economic interests.  For example, courts have applied the independent judgment test in reviewing administrative decisions that will drive an owner out of business or significantly injure a business' ability to function.  However, courts have applied the substantial evidence test when a regulation's impact on a business was purely economic.

In its analysis, the court noted that Section 5499 allows a business to maintain an on-premises advertising display, notwithstanding a local ordinance that attempts to regulate such display on the basis of height, if special topographic circumstances would result in a material impairment (1) of visibility or (2) the owner's or user's ability to adequately and effectively communicate through the use of the display.  The court concluded that the trial court properly used the substantial evidence test to determine whether U-Haul could keep its current sign under Section 5499.  The record contained no indication the sign's reduction would destroy or significantly injure U-Haul's business, but the impact would be purely economic.  "In short, while the City's decision leveled U-Haul's 35-foot business sign, it did not level U-Haul's business."  The court also noted that the City's reasonable regulation of signage does not impinge on U-Haul's property rights or free speech rights.

The court rejected U-Haul's argument that Denny's, Inc. v. City of Agoura Hills (1997) 56 Cal.App.4th 1312, implicitly approved independent review under Section 5499.  That case did not determine the proper standard of review for the trial court to use in reviewing an administrative decision under 5499.  The fact the trial judge personally viewed the scene did not mandate independent judgment review.

Having established the proper standard of review, the court determined that substantial evidence supported the City's decision.  Under this standard, the trial court may not reweigh the evidence and must consider the facts in the light most favorable to the administrative decision.  Upon review, the court noted photographs showing a lower sign would have increased visibility for east-bound traffic.  Additionally, the flat topography, signs of other businesses, low speed limit and local customer base supported a finding that a conforming sign would not be materially less visible.

The record also supported a finding that a conforming sign would not materially impair adequate and effective communication.  Other businesses had conforming signs, and the U-Haul property was not physically different from other properties with confirming signs.  A conforming sign could provide space for advertising, and the U-Haul trucks parked on-site provide an additional way of communicating available goods and services.  A conforming sign would be consistent with the pedestrian oriented street on which the property is located.

What This Means To You

This decision highlights the importance of establishing the basis for, or challenging the basis for, an administrative decision at the administrative level.  Unless a compelling argument for independent review exists, a court will simply examine whether or not substantial evidence in the record supports the administrative decision, will not reweigh evidence and will resolve doubts in favor of the agency.  This decision also supports a public agency's exercise of its police power in regulating signs.


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William T. Chisum | 916.321.4500