Pac. Shores Prop. Owners Ass'n v. Dep't of Fish & Wildlife

• Decision Date: 20 January 2016
• Docket Number: C070201
• Citation: 198 Cal.Rptr.3d 72,244 Cal.App.4th 12
• Court: California Court of Appeals Court of Appeals
• Parties: PACIFIC SHORES PROPERTY OWNERS ASSOCIATION et al., Plaintiffs and Appellants, v. DEPARTMENT OF FISH AND WILDLIFE et al., Defendants and Appellants.

244 Cal.App.4th 12

198 Cal.Rptr.3d 72

PACIFIC SHORES PROPERTY OWNERS ASSOCIATION et al., Plaintiffs and Appellants,

v.DEPARTMENT OF FISH AND WILDLIFE et al., Defendants and Appellants.

C070201

Court of Appeal, Third District, California.

Filed January 20, 2016

The Smith Firm and Kelly T. Smith, for Plaintiffs and Appellants.

Environmental Law Clinic, Mills Legal Clinic at Stanford Law School, Deborah A. Sivas, Alicia E. Thesing, Matthew J. Sanders, and Lauren M. Gollaher on behalf of Earl McGrew, Maxine Curtis, Lynda Schoonover, Nicole Solovskoy, and Northcoast Environmental Center, as Amici Curiae on behalf of Plaintiffs and Appellants.

Kamala D. Harris, Attorney General, John A. Saurenman, Senior Assistant Attorney General, Daniel L. Siegel, Deborah M. Smith, Carolyn Nelson Rowan, and

Christie H. Vosburg, Deputy Attorneys General, for Defendants and Appellants.

NICHOLSON, Acting P.J.

In this inverse condemnation action, we face a unique situation where a state agency assumes control of a local flood control process, and it determines to provide less flood protection than historically provided by a local agency in order to protect environmental resources. We affirm the trial court's judgment finding the state agency liable in inverse condemnation for a physical taking of plaintiffs' properties, and not liable for a regulatory taking. We reverse the judgment to the extent the court found another state permitting agency liable in inverse condemnation.

Since the late 1800's, Del Norte County residents, and eventually the County of Del Norte (County), regularly breached a sandbar when water levels in a large coastal lagoon that the sandbar separated from the ocean rose above four feet mean sea level (msl). This process protected lands along the lagoon's shore devoted to agricultural and residential uses against flooding.

In the early 1960's, the County approved a large residential subdivision along the lagoon's shore. Developers designed the subdivision on the premise the sandbar would continue to be breached when the lagoon's water level exceeded four feet msl. Buyers, including plaintiffs, acquired the lots, but they never developed them.

Federal and state environmental legislation adopted in the 1970's imposed permitting requirements on developing the subdivision and on breaching the sandbar. The County obtained federal approval from the United States Army Corps of Engineers (the Army Corps) to continue breaching at four feet msl for 10 years. During that time, the state Department of Fish and Game (now the Department of Fish and Wildlife (the Department)) began adopting plans and purchasing properties to protect the lagoon and its significant environmental resources. The Department also gained possession of the sandbar, and it authorized the County by contract to continue breaching at four feet msl.

When the 10–year permit expired in 1987, the County sought to obtain permits from the Army Corps and the California Coastal Commission (Commission), which had obtained land use jurisdiction over the sandbar and the subdivision, to continue breaching at four feet msl. However, the Department believed the breaching adversely impacted the lagoon's environment. It sought to limit breaching to times when the lagoon's water level reached six feet msl and, in 1990, it jointly applied with the County for federal and state permits to breach at that level. When other agencies expressed concern about breaching at six feet msl, the Department withdrew its permit applications. From 1989 until 2005, no permanent or long-term permit to breach the sandbar was issued. Over those 16 years, while the Department submitted and withdrew various applications to breach at six and then eight feet msl, breaching occurred only pursuant to emergency and interim permits issued by the Commission when the lagoon's water level rose above eight feet msl and began flooding properties and roads in the residential subdivision.

Finally, in 2005, the Department approved a management plan for the lagoon that called for breaching the sandbar at eight to 10 feet msl. The Commission and the Army Corps approved permits to breach at that level. Plaintiffs, whose properties suffered flooding damage when the lagoon level rose above eight feet msl, filed this action in 2007 for inverse condemnation. They alleged they suffered a physical taking from the Department's actions, and a regulatory taking by the Commission retaining land use jurisdiction over the subdivision throughout this time instead of transferring it to the County. Plaintiffs also sought precondemnation damages and statutory attorney fees.

The trial court found the Department and the Commission (collectively, the State) liable for a physical taking and awarded damages, but it concluded plaintiffs' claim for a regulatory taking was barred. It rejected the State's arguments that the statute of limitations barred plaintiffs' complaint. It awarded plaintiffs attorney fees in the amount they incurred under a contingency agreement, but it denied plaintiffs any precondemnation damages.

Both the State and plaintiffs appeal. The State contends the trial court erred because (1) plaintiffs' complaint was time barred; (2) the State could not be liable because it owed no duty to provide any flood protection; and (3) it also could not be liable because any protection it provided, it did so reasonably. Alternatively, the State asks us to grant it a flowage easement over plaintiffs' properties.

The plaintiffs contend the trial court erred by (1) denying their claim for a regulatory taking; (2) denying their claim for precondemnation damages; and (3) not awarding reasonable attorney fees based on the hours expended and rates charged by counsel.

Except to reverse the judgment against the Commission, we affirm the judgment and remand the matter for the trial court to grant the Department a flowage easement over plaintiffs' properties. Regarding the State's appeal, we hold: first, plaintiffs' cause of action for a physical taking against the Commission was not timely, but the cause against the Department was timely, as it did not accrue until the Department's actions against plaintiffs' properties stabilized, a point achieved in 2005 when the Department obtained a long-term development permit to breach the sandbar. Plaintiffs filed their action within the three-year limitation period after their cause accrued.

Second, the Department is strictly liable for the damages it caused in this instance. Strict liability applies because the Department intentionally designed the breaching to flood plaintiffs' properties by reducing the flood protection plaintiffs had historically enjoyed, and its primary purpose for doing so was not to provide flood protection, but to protect environmental resources.

Third, even if the State was not strictly liable, it still would be liable under a standard of reasonableness applied to inverse condemnation actions for damages caused by flood control projects. Substantial evidence supports the trial court's determination that because of the Department's intentional actions, plaintiffs contributed more than their fair share to the Department's efforts to protect environmental resources.

Regarding plaintiffs' appeal, we hold: first, the trial court correctly ruled their cause of action for regulatory taking was barred, as plaintiffs failed to comply with California law governing recovery for a regulatory taking. Plaintiffs were required to seek a development permit and challenge the application of any permit restriction by petition for writ of mandate before bringing an action for inverse condemnation based on a regulatory taking. Plaintiffs did not do this. Also, the administrative jurisdiction exception to the prerequisites for bringing an inverse condemnation action does not apply here.

Second, the trial court correctly denied plaintiffs' request for precondemnation damages, as the Commission's retaining land use authority over the subdivision was not improper or unreasonable.

Third, the trial court correctly awarded attorney fees in this instance in accordance with the terms of plaintiffs' contingency agreement, which limited fee awards to the amount of fees plaintiffs had actually incurred.

We remand the matter solely for the trial court to grant the Department flowage easements over plaintiffs' properties.

FACTS

We present a detailed history of events leading up to this case primarily to address whether the action is barred by the statute of limitations.

Lake Earl and Lake Tolowa are located approximately four miles north of Crescent City and adjacent to the Pacific Ocean. Although referred to as lakes, Lake Earl and Lake Tolowa form a coastal lagoon connected to each other by a narrow channel.¹ A sandbar separates the lake's western edge from the Pacific Ocean. The lake's normal water level behind the sandbar is four feet above msl. Heavy precipitation and runoff, and occasional overflow from the nearby Smith River, raise the lake's level.² When the lake reaches a level of 10 to 14 feet above msl, the water overflows the sandbar and erodes an outlet to the ocean, referred to by the parties as the breaching site. As the outlet at the breaching site increases in size, lake water flows into the ocean and the lake's water level drops until reaching equilibrium with the average tides. The lake comes under marine tidal influence until storms, wind, and tides rebuild the sandbar. Lake Earl rises again, and the process repeats.

Lake Earl is California's largest coastal lagoon. It supports numerous habitat types and provides a resting and wintering area for over 250 species of birds on the Pacific Flyway. Forty species of mammals occur within its environs. Fourteen endangered or threatened species of plants and animals occur there, as do 25 fish, amphibian, and avian species of concern.

By 1869, settlers had built sawmills on Lake Earl's eastern shore. The establishment of the timber industry began the long-standing...