Citizens for Amending Proposition v. City of Pomona

Decision Date07 November 2018
Docket NumberB283740
CourtCalifornia Court of Appeals Court of Appeals
Parties CITIZENS FOR AMENDING PROPOSITION L et al., Plaintiffs and Respondents, v. CITY OF POMONA, Defendant and Appellant.

Greenberg Gross, Becky S. James, Los Angeles, and Jaya C. Gupta for Defendant and Appellant.

Raymond N. Haynes, Riverside, for Plaintiffs and Respondents.


In June 1993, appellant City of Pomona (Pomona) entered into an agreement with non-party Regency Outdoor Advertising, Inc. (Regency). Pursuant to that agreement, Regency erected advertising billboards alongside several Pomona freeways. Shortly thereafter, in November 1993, the citizens of Pomona passed a ballot initiative, Proposition L (Prop. L), which prohibited the construction of additional billboards within city limits.

Pomona’s agreement with Regency expired by its terms in June 2014. In July 2014, the Pomona city council adopted an ordinance purporting to amend the agreement by extending it for an additional 12-year term. Plaintiffs/Respondents Citizens for Amending Proposition L (Citizens), Vernon Price, and J. Keith Stephens (collectively, respondents) filed a petition for a writ of mandate and complaint for declaratory relief, alleging that the July 2014 "amendment" was in fact a new agreement for new billboards enacted in violation of Prop. L. The trial court agreed and granted the petition. It also awarded respondents attorney’s fees pursuant to Code of Civil Procedure section 1021.5.1

In this appeal, Pomona challenges these rulings on a variety of grounds. Procedurally, it argues that plaintiffs lack standing and that Regency is an indispensable party to the litigation. Substantively, it contends that the trial court erred in concluding that the "amendment" was a new agreement and in finding that Pomona violated a duty to comply with Prop. L. Pomona also argues that plaintiffs failed to demonstrate an entitlement to attorney’s fees. We affirm the trial court’s rulings. Respondentsmotion for sanctions is denied.

I. 1993 Agreement

In November 1992, the Pomona city council adopted an ordinance establishing regulations for "off-site outdoor advertising structures," commonly referred to as billboards. That ordinance created limited "eligible display areas" in which new billboards could be constructed. Those areas lay alongside three freeways that passed through the city, state routes 57, 60, and 71. The ordinance also required any advertiser seeking to place billboards in the eligible display areas to enter into a development agreement with the city.

Almost immediately, advertising company Regency negotiated a development agreement with Pomona in accordance with the ordinance. The city council approved the agreement, Development Agreement No. 93-001, by ordinance on May 24, 1993; it took effect 30 days later, on June 24, 1993.

Under the agreement, Pomona granted Regency the right to erect 10 new billboards ("New Structures") on properties Regency owned in the eligible display areas. In exchange, Regency agreed to various conditions, including the removal of 30 existing billboards ("Old Structures") located elsewhere in the city. Regency further agreed to pay Pomona various fees, including one-time development and permitting fees totaling $62,000, a $500 annual business license fee for each new billboard face, and a $250 "posting fee every time a sign face is changed." Regency agreed to remove all of the New Structures "on or before the last day" the agreement was in effect. It also agreed to indemnify Pomona in the event that the validity of the agreement was challenged, though the agreement gave Regency the right to select counsel to do so.

By its terms, the agreement was slated to expire "ten (10) years from the earlier to occur of (i) the construction of all of the New Structures, or (ii) twelve (12) months after the Effective Date. ..." The agreement provided, however, that it was to "be automatically extended for a second ten (10) year term," subject to an increase in the fees Regency was obligated to pay, "unless such term is otherwise terminated, modified or extended by circumstances set forth in this Agreement or by mutual consent of the parties." The parties agree that the first 10-year term ended on June 24, 2004, and that the agreement automatically renewed for a second 10-year term scheduled to expire on June 24, 2014.

II. Proposition L

In November 1993, just months after Regency and Pomona entered into their agreement, citizens of Pomona approved Prop. L in a special municipal election. Prop. L, now codified at Pomona Municipal Code section .503-K-K, provides in relevant part: "No new or structurally altered offsite billboards shall be permitted within the City of Pomona. In technical words conveying the same meaning, no ‘offsite advertising signs’ as defined shall be constructed, relocated, or structurally altered in any zoning district." (Pomona Mun. Code, § .503-K-K.) An editor’s note in the municipal code states that Prop. L "cannot be modified without a vote of the people." (Ibid. ) Thus, beginning in November 1993, no additional billboards could be built in Pomona without voter approval. Under the terms of both Prop. L and the Regency agreement, however, the new law did not apply to the New Structures.

III. Efforts to Extend the 1993 Agreement

In 2010, six years into the second 10-year term of the 1993 agreement, Regency approached Pomona with a proposal to extend the agreement for an additional 15 years. City staff prepared a report on the proposal and concluded that it would be possible to extend the agreement notwithstanding Prop. L. Staff reasoned that Prop. L "does not speak to the removal of existing signs, which can remain in tact [sic ] as long as they are in a ‘grandfathered’ status ... or as long as the [1993 agreement] is in effect. ..." The staff report further noted that, absent some extension of the agreement, "at the end of the effective date, the ten signs will need to be removed by Regency." The report recommended that the city council entertain the proposal.

Pomona followed the recommendation and began negotiating with Regency. At the October 2010 city council meeting, "[d]iscussion ensued regarding the locations of billboards in the City, types of digital signs, light emissions, and the possibility of negotiating the removal of the three additional signs." No resolution was reached, however, and the matter was continued.

In advance of the city council meeting scheduled for January 2011, plaintiff Stephens sent a letter opposing the proposal to Pomona’s mayor and city council. In the letter, which he signed in his capacity as president of billboard company Valley Outdoor, Inc., Stephens opined that the proposed agreement extension, particularly Regency’s request to digitize certain New Structures, "violates both the intent and the spirit" of Prop. L. He further asserted that Pomona could receive "significant revenue beyond the proposed $1,000,000" by negotiating for different terms or with his company. In a second letter, sent in February 2011, Stephens reiterated his concerns about compliance with Prop. L and explicitly invited the city council "to negotiate a revenue sharing development agreement with Valley Outdoor."

In March 2011, a representative of Regency sent a letter to Pomona asking the city council to delay further action "for the basic reason that Regency ... and the city have not yet reached a final consensus on the terms of the agreement." The city council appears to have heeded this request; at any rate, the appellate record does not pick up again until June 2012, when the city council began the process of issuing public notice for a July 2, 2012 discussion about extending the agreement.

Pomona continued to negotiate extending the 1993 agreement with Regency through early 2014. During the ongoing negotiations, Regency withdrew its request to digitize some of the billboards and proposed agreement extensions with varying durations and revisions. City staff reports prepared during these negotiations reflect an understanding that the billboards governed by the 1993 agreement would have to be removed "in June, 2014 when the term expires" if the agreement was not extended.

Eventually, in February 2014, Pomona and Regency tentatively agreed to extend their 1993 agreement for 12 years, with a one-time payment of $1,000,000 by Regency. A first reading of an ordinance to approve the agreement extension was placed on the June 2, 2014 city council agenda. Plaintiff Stephens appeared at the meeting to oppose the extension. A representative of the Alameda Corridor-East Construction Authority also appeared to oppose the extension; some of the billboards Regency had erected under the agreement were "in direct conflict" with the agency’s ongoing, $1 billion railroad expansion project. The city council voted "to open and continue the Public Hearing to the Regular City Council meeting to be held on June 16, 2014."

Between June 2 and June 16, 2014, Regency worked to revise the extension proposal to accommodate the railroad project. Under the terms of the revised proposal—which expressly recognized that "the original termination date of the Development Agreement is June 24, 2014"—Regency agreed to relocate one interfering billboard and remove another, and the City agreed to process the permits and approvals for the relocation expeditiously and in good faith. The revised proposal also included a revised indemnity provision.

Under the revised provision, Regency still had the obligation to indemnify and defend Pomona, but Pomona had the right "to approve ... the legal counsel providing the City’s defense" and Regency agreed to "not object to the City Attorney’s Office serving as counsel for the City."

At its June 16, 2014 meeting, the city council introduced for first reading Ordinance No. 4190, "an Ordinance approving amendment number three to Development Agreement No....

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