Ojavan Investors, Inc. v. California Coastal Com.

• Decision Date: 17 April 1997
• Docket Number: No. B089152,B089152
• Citation: 62 Cal.Rptr.2d 803,54 Cal.App.4th 373
• Court: California Court of Appeals Court of Appeals
• Parties: , 97 Cal. Daily Op. Serv. 2862, 97 Daily Journal D.A.R. 4997 OJAVAN INVESTORS, INC., et al., Plaintiffs, Cross-defendants and Appellants, v. CALIFORNIA COASTAL COMMISSION, et al., Defendants, Cross-complainants and Respondents.

Page 803

62 Cal.Rptr.2d 803

54 Cal.App.4th 373, 97 Cal. Daily Op. Serv. 2862,

97 Daily Journal D.A.R. 4997

OJAVAN INVESTORS, INC., et al., Plaintiffs, Cross-defendants and Appellants, v. CALIFORNIA COASTAL COMMISSION, et al., Defendants, Cross-complainants and Respondents.

No. B089152.

Court of Appeal, Second District, Division 7, California.

April 17, 1997.

Certified for Partial Publication. ^*

Review Denied July 9, 1997.

Fosbinder & Fosbinder, James H. Fosbinder, Rhonda M. Fosbinder, Venice, Babak Naficy, Culver City, for Plaintiffs, Cross-defendants and Appellants.

Daniel E. Lungren, Attorney General of State of California, Roderick E. Walston, Jan S. Stevens, Sacramento, G.R. Overton, Daniel A. Olivas, Los Angeles, for Defendants, Cross-complainants and Respondents.

JOHNSON, Associate Justice.

Plaintiffs Ojavan Investors, Inc., Port Lemore Corp., Sutton Properties, Inc., Sealubber, Inc., Pakid Holdings, Malek Agency Ltd., Quelimane Co., MTG Alliance Corp., Western Land Bank, Highland Group, Inc., P.U. Enterprise and Peter Bogart (at times collectively Ojavan Investors) appeal the trial court's judgment imposing civil fines and a permanent injunction against violations of deed restrictions entered into by prior landowners as a condition of the California Coastal Commission's grant of coastal development permits. The Commission required the deed restrictions to further the purposes of the California Coastal Act of 1976. (Pub. Resources Code, § 30000 et seq.) ¹ Ojavan Investors also contest an order granting summary adjudication on the issue of Coastal Act liability raised in the Commission's cross-complaint, as well as evidentiary exclusionary orders, an order precluding a jury trial and an order imposing discovery sanctions and declaring Bogart the "alter ego" of the corporate plaintiffs.

FACTUAL AND PROCEDURAL BACKGROUND

On December 19, 1979, and May 10, 1990, the Commission issued permits to landowners David Leanse and Larry Thorne for the development of real estate in the Malibu area. The permits required the recombination of 77 lots into 2 lots through the recordation of deed restrictions entered into by Sophisticated Investments, Inc. and Dan Bochner, successors in interest to Leanse and Thorne. Although the development projects were not related to each other, the Commission found they created a risk of adverse cumulative effects on coastal resources and public access to the coast.

To mitigate the projects' environmental impacts, the Commission conditioned approval of the permits on the landowners' participation in the Commission's Transfer Development Credits (TDC) Program. Under the TDC Program, the Commission approved new development projects in the Malibu area on the condition landowners extinguish the development capacity of other real property. ²

In four declarations of restrictions, the first executed by Sophisticated Investments on June 19, 1981, and others executed by Bochner on July 11, 1984, and April 3, 1990, the successor landowners stated their intent to recombine and unify the property, and make the declarations perpetual and enforceable. ³ The Los Angeles County Recorder's Office recorded the declarations on July 2, 1981, July 23, 1984, and June 7, 1990.

All four declarations of restrictions stated the landowners agreed to six restrictions, including the following: "(1) All portions of the Subject Lands shall be recombined and unified, and shall henceforth be considered and treated as a single parcel of land for all purposes with respect to the lands ...; (2) The single parcel created herein shall not be divided or otherwise alienated from the combined and unified parcel; ... (4) Any breach of this Declaration of Restrictions shall constitute an abrogation of this contractual agreement which flows from the terms of the Permit and shall therefore render the Declarants or their successors liable pursuant to the provisions of Chapter 9 of Division 20 of the Public Resources Code; (5) This Declaration of Restrictions shall constitute a covenant running with the land ...; and (6) This Declaration of Restrictions ... shall bind the Declarants and their successors, heirs, and assigns in perpetuity and shall benefit the People of the State of California."

Notwithstanding the recombination of the 77 lots into 2 lots, Los Angeles County continued to tax the lots individually.

On January 16, 1991, Commission Staff Counsel John Bowers wrote a letter in response to questions regarding the effect of a tax lien foreclosure sale on the restrictions recorded pursuant to the Commission's TDC Program. Bowers opined a court would likely hold a purchaser acquires an ownership interest in the entire recombined parcel as a whole. ⁴

In February 1991, without the Commission's knowledge or approval, Ojavan Investors bought 54 of the 77 deed-restricted lots from Bochner. According to Bogart, an officer of most of the corporate appellants, Bochner did not inform Bogart the lots were not supposed to be sold separately. ⁵

Thereafter, in an auction brochure, appellants advertised the sale of some of the development-restricted lots. The brochure announced, "Unbelievably cheap, due to restrictions on development. Economists tell us the government is broke, and only development money can fill the bureaucrats' maws. They'll have to develop!"

Ojavan Investors sold 19 of the lots to third parties.

To prevent future sales in violation of the lots' deed restrictions, the Commission in April 1992 had the Los Angeles County Recorder's Office record Notices of Violation Actions.

In addition, the Commission in May and July 1992 ordered Bogart, Western Land Bank, Gerald Gregg, and Jerry Gregg and Associates to cease and desist from the sale, conveyance or transfer of any property interest unless there is compliance with the declarations of restrictions.

On July 14, 1992, Ojavan Investors filed a complaint against the Commission challenging its May 1992 cease-and-desist order.

On September 30, 1992, the Commission cross-complained against Ojavan Investors.

Also named as cross-defendants were Highland Group, Inc., P.U. Enterprises, Peter Bogart, Jearald Gregg, P. Gannin, Dan Bochner, and Jerry Gregg and Associates.

The Commission's cross-complaint asserted six causes of action. Pursuant to section 30803(a), the first cause of action sought injunctive relief, and the second sought declaratory relief. The third cause of action sought civil fines under former section 30820, in the amount of $10,000 for each violation of the coastal development permits. Under former section 30821, the fourth cause of action sought daily civil fines of up to $5,000 for each day in which the alleged violations continue. The fifth cause of action sought section 30822 exemplary damages for Ojavan Investors' alleged knowing and intentional violation of the Coastal Act. The last cause of action requested compensatory and exemplary damages for abuse of process. According to the sixth cause of action, the Ojavan Investors cross-defendants misused their complaint in part by alleging they were corporations when they were sham corporations.

On October 9, 1992, Ojavan Investors petitioned the superior court for writ of mandate seeking the vacating of the Commission's cease and desist order. That same month, Ojavan Investors filed a first amended complaint. Later, the superior court dismissed both pleadings, reserving jurisdiction over the Commission's cross-complaint.

On November 2, 1992, Ojavan Investors answered the Commission's cross-complaint. The answer asserted 15 affirmative defenses.

The first affirmative defense was the cross-complaint failed to state facts sufficient to constitute a cause of action, and the ninth affirmative defense was failure to state facts supporting a punitive damages award. The second, third, fourth, sixth, seventh and eighth affirmative defenses respectively claimed waiver, estoppel, contributory negligence, failure to mitigate damages, laches and an unspecified statute of limitations. The fifth defense urged reduction of any damages awarded against Ojavan Investors in proportion to the amount of fault attributable to others. The tenth and twelfth through fifteenth affirmative defenses alleged respectively Ojavan Investors were not parties to the coastal development permits, there was a failure of consideration for the declarations of restrictions, the declarations are unenforceable against Ojavan Investors, the Commission lacks authority to restrict land sales within the coastal zone, and there was no properly noticed public hearing to notify landowners next to the lots affected by the declarations. The eleventh affirmative defense alleged no proximate cause attributable to Ojavan Investors for the Commission's purported damages.

By November 3, 1993, the superior court entered judgments stipulated between the Commission and all the third-party purchasers whereby the purchasers agreed to an injunction undoing the transfer of the real property to them.

On December 17, 1993, the Commission moved for summary adjudication of the issue of Ojavan Investors' liability under the Coastal Act as pleaded in the cross-complaint's first through fifth causes of actions.

On February 1, 1994, the Commission moved for issue sanctions for discovery violations. This motion stemmed from Ojavan Investors' noncompliance with an order granting the Commission's motion to compel document production.

Pursuant to Code of Civil Procedure section 2023, subdivision (b), Judge Workman granted the discovery sanctions motion on March 3, 1994. The superior court ordered "the facts alleged in paragraph 10 of the cross-complaint are deemed to be established in accordance with the Coastal Commission's claim, to wit: Cross-Defendants are sham corporations, and they are the alter egos ... for Cross-Defendant Peter B. Bogart. The Coastal Commission, therefore, is relieved from producing any further evidence in support of its alter...