108 Holdings, Ltd. v. City of Rohnert Park

• Decision Date: 31 January 2006
• Docket Number: No. A108629.,A108629.
• Citation: 38 Cal.Rptr.3d 589,136 Cal.App.4th 186
• Court: California Court of Appeals Court of Appeals
• Parties: 108 HOLDINGS, LTD. et al., Plaintiffs and Appellants, v. CITY OF ROHNERT PARK et al., Defendants and Respondents; South County Resource Preservation Committee et al., Real Parties in Interest.

38 Cal.Rptr.3d 589

136 Cal.App.4th 186

108 HOLDINGS, LTD. et al., Plaintiffs and Appellants, v. CITY OF ROHNERT PARK et al., Defendants and Respondents South County Resource Preservation Committee et al., Real Parties in Interest.

No. A108629.

Court of Appeal, First District, Division 5.

January 31, 2006.

Philip F. Atkins-Pattenson, Elizabeth McDaniel, Kristen A. Jensen, Sheppard, Mullin, Richter & Hampton, Josef D. Cooper, Tracy R. Kirkham, Cooper & Kirkham, Counsel for Plaintiffs and Appellants.

Michelle Marchetta Kenyon, Benjamin L. Stock, McDonough Holland & Allen, Counsel for Defendants and Respondents.

Susan Brandt-Hawley, Paige J. Swartley, Brandt-Hawley Law Group, Glen Ellen, for Real Parties in Interest.

STEVENS, J.

In this appeal, we must determine whether the City of Rohnert Park unlawfully surrendered its police power and improperly amended its General Plan by entering into a Settlement Agreement and Stipulated Judgment to resolve litigation brought against it. 108 Holdings, Ltd. and S.C. Forty Acres, Inc., appeal from a judgment dismissing an action seeking declaratory and injunctive relief and a writ of mandate against the City of Rohnert Park, the Rohnert Park City Council, and the Rohnert Park Planning Commission (collectively "the City"). Appellants sued the City after it entered into a Settlement Agreement and Stipulated Judgment with real parties in interest South County Resource Preservation Committee and John E. King (collectively "SCRPC") resolving a lawsuit brought by SCRPC that challenged the City's adoption of its General Plan.

Appellants contended below, as they do in this court, that the Settlement Agreement and Stipulated Judgment unlawfully bargained away the City's ability to exercise its police power in the future and improperly amended the City's General Plan. The superior court disagreed, and it sustained the City's demurrer to appellants' cause of action for writ of mandate and granted judgment on the pleadings to the City on appellants' causes of action for declaratory and injunctive relief. We conclude that the City neither surrendered its police power nor improperly amended its General Plan. We therefore affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Appellants 108 Holdings, Ltd. and S.C. Forty Acres, Inc. (collectively "108 Holdings"), are the owners of approximately 137 acres of property (the Property) located near the southeastern limits of the City of Rohnert Park. On January 16, 2003, 108 Holdings filed a "PETITION FOR WRIT OF MANDATE AND/OR ADMINISTRATIVE MANDAMUS; COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF" (the Complaint) against the City in Sonoma County Superior Court. The facts set out below are taken largely from the Complaint.

A. ADOPTION OF THE CITY'S GENERAL PLAN AND THE SETTING OF THE URBAN GROWTH BOUNDARY

On July 25, 2000, the City adopted a new General Plan. According to the Complaint the City's July 2000 General Plan included all of the Property within the City's proposed sphere of influence, with a portion designated as open space and the remainder designated for industrial use. On that same day, the city council approved a resolution submitting to the voters Ballot Measure N, a measure amending the General Plan to establish a 20-year urban growth boundary. The majority of the Property is included within the urban growth boundary. The voters approved Measure N on November 7, 2000.

The city council adopted Resolution No.2001-116 on May 22, 2001, and initiated an application to the Sonoma County Local Agency Formation Commission (LAFCO) to amend the City's sphere of influence in a manner consistent with the urban growth boundary established by Measure N. LAFCO approved the City's sphere of influence application on March 6, 2002, and this resulted in the Property's inclusion in the City's sphere of influence. As a result of LAFCO's approval, approximately 100 acres of land owned by 108 Holdings, Ltd. were within both the urban growth boundary and the City's sphere of influence, while 37 acres owned by S.C. Forty Acres, Inc., were outside the urban growth boundary but within the City's sphere of influence.

B. THE SCRPC ACTION, THE SETTLEMENT AGREEMENT, AND THE STIPULATED JUDGMENT

In August 2000, after the City's adoption of the General Plan, SCRPC filed a petition for writ of mandate that challenged the adoption of the City's General Plan on a number of grounds. The petition in the SCRPC action is not part of the record before us, but it appears that, in simplest terms, SCRPC's petition alleged that the City violated the California Environmental Quality Act (CEQA) in certain respects in adopting the General Plan and in certifying the Environmental Impact Report (EIR) for the General Plan. According to the Complaint, the SCRPC action "requested a writ of mandate in the first instance ordering the City `to set aside and void certification of the EIR and set aside approval of the General Plan and housing element project, and related approvals and to comply with all provisions of [CEQA] and other applicable laws prior to further consideration of the project.'"

The Complaint alleges that 108 Holdings learned on August 2, 2002, that the city council was planning to consider a proposed settlement of the SCRPC action at the council's August 6, 2002, meeting. 108 Holdings alleged that prior to August 2, 2002, it had not been informed of the terms of the proposed settlement. 108 Holdings objected to the terms of the proposed settlement agreement, and it sent a letter to the city council explaining its objections. Prior to the city council's hearing, the City distributed written material which purported to amend the proposed settlement agreement in certain respects. These revisions were not circulated for public review prior to the city council's hearing, and the city council considered them in closed session. It appears that the proposed settlement and the revisions were adopted, and the parties executed the agreement (the "Settlement Agreement"). The superior court entered the Stipulated Judgment attached to the Settlement Agreement as an order of the court on September 5, 2002.

In the Settlement Agreement, the parties "acknowledge[d] and agree[d] that the judgment attached as Exhibit A contains provisions that will affect the City's interpretation and implementation of its General Plan when the City approves development projects and when the City evaluates those projects under CEQA and for General Plan consistency." Under the terms of the Stipulated Judgment, the City bound itself to interpret and apply its General Plan in a manner specified in the Stipulated Judgment. As we will explain in greater detail later in this opinion, the City agreed to apply to LAFCO for an amendment of its sphere of influence affecting the Property and to interpret and apply certain policies concerning groundwater conservation, community design, and traffic in a manner set forth in the Stipulated Judgment.

On September 26, 2002, the City's planning commission held a public meeting at which it adopted a resolution recommending that the city council approve a General Plan amendment removing the Property from the City's sphere of influence. On October 22, 2002, the city council held a public hearing to consider this proposed amendment of the General Plan, after which the city council adopted the amendment.

C. 108 HOLDINGS'S ACTION AGAINST THE CITY

As noted earlier, 108 Holdings filed an action against the City, the city council, the Rohnert Park Planning Commission and various Doe defendants on January 16, 2003. The Complaint asserted five causes of action, only three of which are the subject of this appeal.¹ In its first cause of action, for declaratory relief, 108 Holdings contended that "[t]he City's amendment of the General Plan, and adoption of the Settlement [Agreement] are ultra vires acts on the part of the City." (Italics in original.) The Complaint alleged that the City was "prohibited from surrendering or impairing [its] delegated power, or that of successor legislative bodies either by ordinance or by contract. [citation]." The Complaint further asserted that the City could not amend its General Plan by contract without complying with CEQA or the statutory requirements governing the adoption of general plans. The first cause of action then set forth a number of statutory provisions that the City allegedly had contravened in amending its General Plan.²

In its second cause of action, 108 Holdings sought injunctive relief. The Complaint alleged that 108 Holdings would suffer irreparable harm if the City were not enjoined from taking steps in furtherance of the Settlement Agreement. The second cause of action made specific mention of the City's seeking of approval from LAFCO to amend the City's sphere of influence, an amendment that would result in the removal of the Property from the sphere of influence.

The Complaint's third cause of action sought a writ of mandate pursuant to Code of Civil Procedure section 1085. 108 Holdings alleged that the City's action in adopting the October 2002 amendment "effectively overturned years of public planning as to the Property." It further alleged that the City's action in adopting the October 2002 amendment was arbitrary, capricious, unlawful, and a violation of 108 Holdings's rights and that "[t]he sole reason that the City adopted the October 2002 Amendment was that the terms of the Settlement bound it to do so."

The City later filed general and special demurrers to each of the Complaint's five causes of action. The City initially demurred to the first and second causes of action on the grounds that (1) the Complaint was untimely and (2) the Complaint was barred by doctrines of preclusion because 108 Holdings had failed to appeal the denial of its motion for leave to intervene in the SCRPC action. The City demurred to the Complaint's third cause of action on the ground that 108 Holdings had failed to...