Felkay v. City of Santa Barbara

• Decision Date: 18 March 2021
• Docket Number: 2d Civil No. B304964
• Citation: 276 Cal.Rptr.3d 322,62 Cal.App.5th 30
• Court: California Court of Appeals Court of Appeals
• Parties: Thomas FELKAY, as Trustee, etc., Plaintiff and Respondent, v. CITY OF SANTA BARBARA, Defendant and Appellant.

62 Cal.App.5th 30

276 Cal.Rptr.3d 322

Thomas FELKAY, as Trustee, etc., Plaintiff and Respondent,

v.CITY OF SANTA BARBARA, Defendant and Appellant.

2d Civil No. B304964

Court of Appeal, Second District, Division 6, California.

Filed March 18, 2021

Ariel Pierre Calonne, City Attorney, Tom R. Shapiro and Philip A. Seymour, Assistant City Attorneys; Best, Best & Krieger and Bruce W. Beach, San Diego, for Defendant and Appellant.

Xavier Becerra, Attorney General, Daniel A. Olivas, Assistant Attorney General, Andrew M. Vogel and Steven W. Kerns, Deputy Attorneys General, for California Coastal Commission as Amicus Curiae on behalf of Defendant and Appellant.

Law Offices of Joseph Liebman and Joseph Liebman, Santa Barbara, for Plaintiff and Respondent.

TANGEMAN, J.

Before seeking damages for a governmental taking of property through inverse condemnation, the property owner must generally submit more than one proposal to the permitting authority seeking zoning variances or reducing environmental impacts to the extent necessary to allow at least some economically beneficial or productive use of the property. Here we hold that multiple applications are not required where the permit denial makes clear that no development of the property would be allowed under any circumstance.

The City of Santa Barbara appeals from a judgment following jury trial awarding Thomas Felkay, as trustee of the Emprise Trust (Felkay), damages for inverse condemnation, and an order after judgment awarding attorney and expert fees. The city contends Felkay's claim was not ripe for adjudication and that he failed to exhaust his administrative and judicial remedies. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Application for Coastal Development Permit

In 2006, Felkay purchased an ocean-front residential lot in Santa Barbara ("the property") for $850,000. The property was a "flag lot" consisting of a narrow driveway from the street to the remainder of the property, which then sloped downward toward the ocean, ending in a sheer cliff above the beach.

Felkay submitted a proposal to build a 3,101 square foot single-family residence to the city's Pre-Application Review Team. He submitted studies that concluded that the top of the bluff was located at 51 feet of elevation. After receiving comments from the city's Single Family Design Board, he applied for a coastal development permit for a slightly smaller residence of 2,789 square feet.

A city planning commission staff report concluded that the bluff top was located at 127 feet of elevation. Because the proposed construction site was located seaward of this elevation, the proposal was inconsistent with City of Santa Barbara Local Coastal Plan Policy 8.2, which prohibits, with exceptions not relevant here, development on a bluff face. Staff concluded that except for Policy 8.2, the proposed project would conform to all applicable zoning and building ordinances.

The report also concluded that the area above 127 feet was "not developable." The report stated that an area above the 127-foot elevation and adjacent to the driveway "does not meet factors of safety for geologic stability" and "there is no feasible alternative location on the property for the proposed level of development."

Staff recommended that the planning commission approve the application notwithstanding the inconsistency with Policy 8.2 to avoid an unconstitutional taking. The planning commission rejected the permit because it violated Policy 8.2.

City council appeal

Felkay appealed to the city council. He agreed to mitigation measures recommended by city staff. He contested the city's determination as to the location of the top of the bluff. He also contended that the refusal to approve the project deprived him of all economic use of the property.¹

The Council Agenda Report included an option to approve the permit to avoid a taking, despite the inconsistency with Policy 8.2. The city council rejected this option and denied the permit. The council declined to state that its denial was without prejudice.

The council made factual findings that Felkay failed to show that the proposed development: (1) was not on a bluff face, (2) was compatible with the prevailing character of the neighborhood (it was substantially closer to the ocean), (3) would be geologically stable, and (4) was based on a reasonable investment-backed expectation. It also found that a takings determination was not ripe because Felkay had not investigated other potential uses of the land including development of the area above the 127-foot elevation, agricultural or educational uses, or merging the property with the adjoining lot he owned.

Petition for administrative mandamus and complaint

Felkay filed a consolidated petition for writ of administrative mandamus ( Code Civ. Proc., § 1094.5 ) and complaint for inverse condemnation. He alleged four causes of action: (1) administrative mandamus, (2) inverse condemnation by regulatory action, (3) temporary inverse condemnation by regulatory action, and (4) inverse condemnation by physical taking. The first cause of action sought an order compelling the city to approve the project. It did not assert that the city acted unlawfully or abused its discretion when it declined to excuse compliance with Policy 8.2 to avoid a taking. The inverse condemnation causes of action sought monetary damages.

The city demurred to the second, third, and fourth causes of action. The trial court overruled the demurrer to the second and third causes of action, rejecting the city's contentions that the claims were not ripe and that Felkay had not exhausted his administrative remedies. The court sustained the demurrer to the fourth cause of action for inverse condemnation by a physical taking.

The parties stipulated, and the court ordered, that "the matters to be adjudicated by the Court on the hearing on the Writ of Mandate shall be those specific issues set forth" in the Determinations and Conclusions of Law section of the city council's resolution denying the appeal, namely, whether the project: (a) is consistent with the policies of the California Coastal Act and the Local Coastal Plan, (b) will be located on the bluff face where it will have adverse effects on coastal resources, (c) minimizes risks in an area of high geologic hazard and assures stability and structural integrity, (d) is compatible with the prevailing character of the neighborhood, and (e) is inconsistent with Policy 8.2. The stipulated order provided that all issues pertaining to the second and third causes of action for inverse condemnation be determined at trial following hearing on the writ of mandate.

Writ proceedings

The trial court denied the petition for writ of mandate. After a hearing, it concluded that substantial evidence supported the finding that the top of the bluff was located at the 127-foot elevation. The court noted that Public Resources Code ² section 30010 authorizes a local government to approve a project that violates coastal restrictions in order to avoid an unconstitutional taking. The court noted that Felkay had not presented evidence supporting the factors noted in McAllister v. California Coastal Com. (2008) 169 Cal.App.4th 912, 940, 87 Cal.Rptr.3d 365 ( McAllister ), i.e., " ‘that the property was purchased with the expectation of residential use, that such expectation was reasonable, that the investment was substantial, and that the proposed development was commensurate with the reasonable investment-backed expectations for the site.’ " Accordingly, the Court deemed the taking claim abandoned for purposes of the writ petition.

Trial

Pursuant to the parties’ stipulation, the court then commenced the liability phase of the inverse condemnation claims.

A land surveyor testified that based on the city's determination of the location of the bluff top, construction would be allowed in only a 265-square-foot area above the 127-foot elevation and below a sewer easement. A geotechnical engineer/geophysicist testified that even that area was not buildable because stabilizing the property would require cement caissons that could damage the sewer line, and tiebacks that would intrude into neighboring properties. A land use consultant testified that the area above the 127-foot elevation was unbuildable.

Project Planner Kathleen Kennedy testified as an expert for the city. She authored "most or all" of the planning commission staff report for the project. She said that the proposed project violated Policy 8.2, which prohibits any development on the bluff face regardless of size, and that Felkay had asked the city council to invoke section 30010 and approve the project to avoid a taking. She testified that "since we have been telling the Applicant all along that development was not allowed on the bluff face for years," the city would not anticipate that he would return with another proposal to build below the 127-foot line. When asked whether, "as you sit here today," it was "the City's position ... that there can be no development ... below the bluff edge," she replied, "I would say that they received a denial for that, so that's the case." The court later asked Kennedy why the city did not just tell Felkay at the beginning that "8.2 trumps whatever you might submit. We're not going to allow anything on the bluff face. Don't submit anything.... [¶] Sounds to me that's where the City was at ... I'm puzzled." Notwithstanding this expression of the court's interpretation of the evidence, the city did not present any witness to testify otherwise.

The court issued a statement of decision that found: (1) Felkay's claims were ripe, (2) he sought a variance or modification pursuant to section 30010, (3) he was not required to pursue futile applications, (4) denial of the permit rendered the property unbuildable and deprived Felkay of all economic benefit of the property, and (5) the denial constituted a total taking of the property. The court held that a de facto taking occurred because the...