Lakeview Development Corp. v. City of South Lake Tahoe

• Citation: 915 F.2d 1290
• Decision Date: 28 September 1990
• Docket Number: No. 89-15214,89-15214
• Parties: LAKEVIEW DEVELOPMENT CORPORATION, a California corporation, Plaintiff-Appellant, v. CITY OF SOUTH LAKE TAHOE, a municipal corporation; Tahoe Regional Planning Agency, a separate legal entity created pursuant to an interstate Compact between the States of Nevada and California, and Does 1 through 30, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1290

915 F.2d 1290

LAKEVIEW DEVELOPMENT CORPORATION, a California corporation, Plaintiff-Appellant, v. CITY OF SOUTH LAKE TAHOE, a municipal corporation; Tahoe

Regional Planning Agency, a separate legal entity created

pursuant to an interstate Compact between the States of

Nevada and California, and Does 1 through 30, Defendants-Appellees.

No. 89-15214.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted April 18, 1990.

Decided Sept. 28, 1990.

Lawrence L. Hoffman, Hoffman, Lien & Faccinto, Tahoe City, Cal., for plaintiff-appellant.

Gary A. Owen, Crowell, Susich, Owen & Tackes, Carson City, Nev., Richard M. Skinner, Deputy Atty. Gen., Sacramento, Cal., for defendants-appellees.

Appeal from the United States District Court for the Eastern District of California.

Before LIVELY, ^* FLETCHER and REINHARDT, Circuit Judges.

FLETCHER, Circuit Judge:

Plaintiff Lakeview Development Corporation (Lakeview) appeals from the district court's entry of judgment against it on four claims, the first of which asks for a declaration that Lakeview has a "vested right" to complete the construction of a townhouse development, and the other three of which ask for injunctive relief and damages to redress the alleged deprivation of Lakeview's right to the economically viable use of its land. We affirm the district court's judgment on all four claims, albeit for reasons different from those stated by the district court.

I. FACTS

In 1967, Lakeview ¹ bought a four acre plot of land in South Lake Tahoe, intending to build a "planned unit development" consisting of townhouses and a hotel.

In October of 1968, Lakeview submitted an application to the City of South Lake Tahoe (City) for a special use permit (SUP). The application included a proposed subdivision map and a proposed site plan which depicted the layout of nine structures to be built on the site--eight townhouse buildings containing between two and six units each (a total of forty-two units) and one hotel containing 158 rooms. The map reflected that there were to be two clusters of townhouses, designated Unit One and Unit Two, containing eighteen and twenty-four units respectively. A swimming pool and a recreation area were also depicted. Also submitted were maps depicting among other things elevations of the buildings, floor plans, and common road and drainage facilities.

On November 27, 1968, the City Planning Commission approved the special use permit subject to four conditions and the tentative map subject to thirteen conditions. One of the four conditions of the SUP was, "All buildings, tree removal, and landscaping to be as approved by Architectural Review Committee ... such approval to be obtained prior to issuance of any individual permit for construction."

On December 3, 1968, the City Council approved the tentative map subject to the same conditions as imposed by the City Planning Commission.

The minutes of the May, 1969 City Planning Commission meeting show that development of the townhouses was intended at that time to take place in two phases; the first was to include the fourteen townhouses designated "Unit One" and the second was to include the twenty-eight townhouses designated "Unit Two." There was to be a three to six month span of time between the completion of phase one and the commencement of phase two.

On June 18, 1969 the newly-created California Tahoe Regional Planning Agency Between November of 1969 and November of 1971, Lakeview obtained building permits from the city as each Unit One structure, including the swimming pool and recreation pavilion, was built.

                (CTRPA) approved the plan subject to the same conditions as those imposed by the City.  (Appellee Tahoe Regional Planning Agency (TRPA), created by an interstate compact approved by Congress, P.L. 91-148, 83 Stat. 360, was still being formed and had not yet come into official existence.  It began operations on March 19, 1970.)    On November 7, 1969, the final map for Unit One was recorded.  On November 17, 1970, the final map for Unit Two was recorded
                

Almost two years later, in October of 1973, Lakeview obtained a foundation permit for the first sixplex in Unit Two. Shortly thereafter, however, it abandoned the permit and changed its construction plans. Lakeview decided to delay building Unit Two and to proceed with the development of the hotel. Nat Sinclair, one of Lakeview's principals, stated in his affidavit that he made the decision because of a "hostile regulatory environment." In other words, it was becoming clear that the California legislature was on the verge of giving CTRPA a broader mandate to control development than it had previously. ² Sinclair felt that the hotel was more important to develop and that the sooner the construction was begun on the hotel, the greater the protection Lakeview would have against changes in the law.

Lakeview attempted to obtain a building permit for the hotel before July 12, 1974, the date CTRPA was expected to announce its new plan. Lakeview failed to do so, but it began to lay a foundation anyway--apparently on assurances that the City would later ratify the work done.

On July 12, 1974, CTRPA announced an interim plan, Resolution 74-1. That plan stated that CTRPA would review all permits for certain buildings "granted [by local governments] since January 1972 for which actual construction has not commenced. For purposes of this section, construction shall constitute issuance of a building permit and completion of a foundation."

On July 24, 1974, the City granted Lakeview the foundation permit for the hotel. On July 28, Gordon Hooper of CTRPA wrote to the City Manager, stating his intention to have a "stop work" order issued because CTRPA had not reviewed the project. The City Manager wrote back, asserting that CTRPA had reviewed--and approved--the hotel project in 1969. CTRPA took no further action.

During the same week in July when Lakeview's foundation permit application was pending before the City, TRPA, independently of CTRPA, expressed in a letter to the City its opinion that the permit should not be granted. TRPA, it should be recalled, did not exist when the special use permit was obtained in 1969. When TRPA began operations, it passed an ordinance requiring all developers to obtain administrative permits from TRPA before building. Section 9.11 of that ordinance, subsequently renumbered as Sec. 9.10, contained a grandfather clause exempting certain developments from the administrative permit requirement. The clause provided:

Uses of land ... that do not conform to the regulations established by this Ordinance and ... which are to be created in connection with a subdivision the final map of which was approved by the appropriate local government ... within five years prior to February 10, 1972 are non-conforming uses [that may be continued], provided, however, in the case of a ... use to be created, it shall occupy no greater area than planned at the time such subdivision was approved. If any such use ceases for a period of one year, subsequent use of such land shall be in conformity with the regulations contained in this Ordinance.

The City responded to TRPA's letter with its own letter stating that it intended to issue the foundation permit. The City's letter, without specifically referring to the grandfather clause, pointed out to TRPA that a series of approvals were obtained by Lakeview "prior to the initiation of regulatory measures" by TRPA and that pursuant to such approvals, "work was begun on the project." The City seemed to be referring to the work done on Unit One, but the reference is not entirely clear. In any event, the City's letter to TRPA, like its letter to CTRPA, proved effective. TRPA did not pursue its objection to the hotel construction. The parties speculate that TRPA did not pursue its objection because of the grandfather clause. That, however, is not entirely clear. TRPA may simply have chosen not to fight a particular battle notwithstanding the fact that it felt the hotel was not grandfathered.

Because of problems with financing, the hotel project proceeded exceedingly slowly. Several years after construction began, only about a quarter of the structure was built. In 1979, Lakeview sold the hotel to another group, and that group eventually finished building it, but only after protracted litigation with CTRPA, which commenced in 1982. That litigation ultimately ended in a settlement, under which both parties (neither of them parties to this lawsuit) agreed that the result would not prejudice them in other cases.

In 1980, TRPA was reconstituted pursuant to extensive amendments to the Interstate Compact. See P.L. 96-551, 95 Stat. 3233; Cal.Govt.Code Secs. 68000 et seq.; Nevada R.S. Secs. 277.190 et seq.

Between May, 1974 and the summer of 1981, Lakeview had done virtually nothing to proceed with the development of Unit Two. In the summer of 1981, Lakeview contacted City officials about obtaining building permits for Unit Two. The City said that it was willing to grant the permits, but only with the consent of TRPA. The City noted that one condition of its own still had to be met--architectural review approval. In September of 1981, a TRPA attorney wrote Lakeview's lawyer that his client should seek a vested rights ruling from TRPA to determine if Lakeview was entitled to build Unit Two. Without such a determination, TRPA would not allow Unit Two to be built absent its further review of the project.

More than two years passed, and no administrative proceeding was brought to determine vested rights. On May 1, 1984, TRPA became subject to a temporary restraining order (TRO), which on August 9 became an injunction, prohibiting it from approving any developments, except in "circumstances of imminent threat to public health, safety, and welfare." The appellees do not raise a claim of laches with regard to Lakeview's failure to seek a vested rights determination prior to May 1, 1984...