In a published opinion filed February 13, 2019, the Fourth District Court of Appeal (Division 3) reaffirmed the need for a CEQA litigant challenging a coastal development permit to appeal to the Coastal Commission before suing.  Fudge v. City of Laguna Beach (Hany Dimitry; Real Party in Interest) (2019) ___ Cal.App.5th ___.  The Court refused plaintiff’s invitation to make the simple complex, and followed published precedents requiring a plaintiff to exhaust the statutory administrative remedy of an appeal to the Commission to ripen a litigation challenge.

The point seems straight-forward.  But lest one question the need for another published CEQA opinion on this topic – or for CEQA reform in general, I might add – I’ll simply quote the Court’s opening two paragraphs:

We venture once again into the brambled thicket of the California Environmental Quality Act – an area of the law largely governed by the unfortunate fact that complicated problems often require complicated solutions.  This case is rendered more recondite by the involvement of the California Coastal Commission’s rules and procedures, effectively overlaying the enigmatic with the abstruse.  [¶]  We resist the temptation to declare the dispute moot and walk away because this issue involves our environment and people’s homes, and involves questions likely to re-occur.  Environmental issues require light – either ours or someone else’s – so we publish the opinion.

The Court was too kind and diplomatic.  CEQA litigation has become such a plaintiff’s sandbox that, perhaps, it is a good thing to reiterate basic exhaustion and mootness principles every decade (or generation) so that litigants know its limits.  While land use litigation can certainly be complex, the Court’s thinly masked irritation with this particular litigation suggests a not-unjustified viewpoint that it was unnecessarily so here.

The “light” shed by the opinion here illuminates the interplay between CEQA and the California Coastal Act.  After an initial Design Review Board denial of a demolition and replacement application, the City of Laguna Beach’s City Council granted Hany Dimitry a coastal development permit (CDP) to demolish his outmoded and rickety 1930 house, located between the Pacific Coast Highway and the ocean; it didn’t act on his request for permission to construct a new home.  His neighbor, Mark Fudge, challenged this action, claiming that the residential relic had historical value and that Dimitry’s proposed replacement home would block view corridors.  Fudge mounted a two-front attack, suing the City and Dimitry in Superior Court to set aside the CDP and also appealing the approval to the California Coastal Commission.  After the Commission accepted the appeal, finding it raised a substantial issue regarding compliance with the City’s Local Coastal Program, the trial court dismissed the action as moot on Dimitry’s demurrer.  That unsurprising result was dictated by two published precedents holding that in these circumstances the court could grant no relief.  See Kaczorowski v. Mendocino County Bd. of Supervisors (2001) 88 Cal.App.4th 564; McAllister v. County of Monterey (2007) 147 Cal.App.4th 253.

The undaunted Fudge appealed the dismissal of his court action to the Court of Appeal.  He argued that his “de novo” appeal to the Commission under Public Resources Code § 30621 was not an adequate CEQA remedy because a 1937 Supreme Court precedent defined a “de novo” hearing as a trial “in the same manner” as the matter was originally heard, and Commission rules didn’t afford that.  The gist was that the City was required to comply with CEQA while the Commission had its own unique Coastal Act procedures for the de novo hearing.  The argument ignored that the Commission’s certified regulatory program was statutorily exempt from normal CEQA EIR requirements and procedures, and from the ordinary CEQA statute of limitations, under Public Resources Code § 21080.5.  The Court snidely noted in a footnote “that Fudge’s voluminous briefing never actually comes to grips with the “in lieu of” language in section 21080.5,” characterizing this key omission as “a rather impressive mistake, demonstrating excellent research and considerable mental activity, but a mistake, nonetheless.”  Indeed.  Perhaps CEQA’s thicket would have been less brambled here had Fudge not so assiduously attempted to obfuscate its rules.

In any event, Public Resources Code § 21080.5, which is part of CEQA, provides that when the Secretary of Resources certifies a state agency’s regulatory program, such as occurred with the Coastal Commission in 1979, the environmental information required to be submitted under it in support of grants of entitlements for use or adoption of regulations may be submitted “in lieu of” the otherwise required EIR.  Moreover, Kaczorowski and McAllister squarely hold that when the Commission accepts an appeal of a CDP approval it decides whether the CDP complies with all relevant legal standards, and that only after that decision is made can an aggrieved party go to court to attack it.

After giving a brief primer on CEQA and the Coastal Act, the Court rejected Fudge’s attack on the case law and the statutory scheme, which provides that local coastal entities’ CDP decisions are heard de novo by the commission on appeal under the Coastal Act.  The Coastal Act’s permit system requires a CDP for any coastal zone development, in addition to any other required permits.  But it initially delegates authority to local coastal entities that are tasked with implementing the Coastal Act’s objectives by developing their own local coastal programs (LCPs) in consultation with the Commission.  When such LCPs are certified as compliant with the Coastal Act, the local governments have responsibility for development within their portion of the coastal zone, subject to appeals to the Commission, which it must accept unless it finds the absence of a substantial issue with Coastal Act/LCP compliance.  While there is obviously not an “exact fit” between CEQA as used in local agency hearings and the procedures in Commission appeals, the Legislature nonetheless provided for such inter-agency appeals, and Public Resources Code § 21174 – a provision of CEQA – expressly states that the Coastal Act takes precedence over CEQA in the event of any inconsistency.  Per the Court, this legislative choice was rational as there is no reason to provide a CEQA plaintiff “two bites at the apple” – through an appeal to the Commission and simultaneous mandate action in Superior Court – and it would also undermine the Commission’s ability to implement uniform coastal development policies.

In a critically important footnote, the Court observed that Public Resources Code § 30625’s provision of an appeal of CDP decisions to the Commission affords an administrative remedy, and it could see no reason why the general doctrine of exhaustion of administrative remedies would not apply.  (Citing McAllister, supra, 147 Cal.App.4th at 283-284.)  That seems to me to be the biggest takeaway from this opinion – i.e., the local coastal entity’s CDP decision is not final and the inter-agency appeal to the Coastal Commission is an administrative remedy that must be pursued to obtain a final decision that can then be challenged in court, whether the basis of the challenge is an alleged CEQA violation or something else.

 

Questions? Please contact Arthur F. Coon of Miller Starr Regalia. Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for more than fifty years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, title insurance, environmental law and land use. For more information, visit www.msrlegal.com.