Landowner Waives Right to Challenge Permit Conditions

Lynch v. California Coastal Commission (July 6, 2017, Case No. S221980)

By Susan K. Hori, Partner, Land Use

Why It Matters: Can a landowner accept the benefits of a permit while simultaneously rejecting the burdens of that very same permit? The California Supreme Court answered with a resounding “No.” In a case involving a landowner who sought a coastal permit to protect a blufftop house from erosion, the California Supreme Court held that once the landowner builds in reliance on that permit, the right to challenge any of the permit conditions is waived. If a landowner wants to challenge a permit condition, he or she must pursue legal remedies first. Once the permit is “accepted”—work authorized by the permit is commenced—the right to challenge is forfeited.

Facts: In 2011, Barbara Lynch and her neighbor received coastal development permits from the California Coastal Commission to replace an aging wooden seawall with a new concrete seawall system to protect their homes, located on an 80-foot bluff along the coast in Encinitas. The properties included the bluff top where the houses were built, the bluff with a stairway extending to the sandy beach and the reach of the beach from the toe of the bluff to the mean high tide line. Because of its location, the properties were protected by a seawall system on the beach secured to the bluff. In 2003, the landowners filed applications with the city to replace the aging seawall with a state-of-the-art concrete seawall system. Because the original seawall was permitted by the California Coastal Commission (Commission), authorization from the Commission was also required. While their coastal development permit (permit) application was pending, a series of storms hit Southern California and did major damage to properties, which resulted in the mid-bluff area collapsing and demolishing the lower portion of the stairway.

The Commission approved the permit, but imposed several onerous conditions. One condition was a term limit to the permit that required the landowners to apply for a new permit in 20 years, at which time the Commission could consider extending the approval of the seawall or require the seawall to be removed or replaced. Another condition required the removal of the stairway, robbing the landowners of the ability to access the beach from their houses.

After the Commission approved the permit, Lynch and her neighbor filed a lawsuit in October 2011 challenging the conditions. The lawsuit alleged that the condition imposing a 20-year limit on the project and requiring them to obtain a new permit for the seawall was unconstitutional and was not related to mitigating the impacts of the project. They also alleged that the Commission’s prohibition on rebuilding the stairway was also unlawful. Despite having filed the lawsuit, the landowners continued to satisfy the other special conditions—including recording a deed restriction stating that the permit conditions were covenants, conditions and restrictions on the use and enjoyment of their properties. On Dec. 6, 2011, the Commission issued the permit, and the landowners began constructing the replacement seawall.

The Decision: The Supreme Court’s decision was primarily grounded in the principle that once landowners accept the benefits of the permit, they also accept the burdens. There was no dispute regarding the facts: The landowners objected to the conditions, then filed a legal challenge to the conditions, but once the permit was issued built the seawall. At issue was whether a landowner who timely files a challenge to a permit condition can reserve the right to maintain that challenge even after the project has been built. The landowners argued that the disputed conditions did not affect the design or construction of the seawall and could therefore be severed from the remainder of the permit. Citing the Mitigation Fee Act, which allows developers to pay challenged fees under protest while continuing to build a project, the landowners argued that these conditions could be similarly challenged after the seawall was built.

The Supreme Court was firm that once the landowners accepted the benefits of the permit and built the seawall, they forfeited the right to maintain their otherwise timely challenge. In response to the landowners’ argument, the Court noted that the 20-year limit bore a nexus to the approved seawall, as the Commission may have imposed a different design or location if it intended to approve a seawall for a period longer than 20 years. By its very terms, the Mitigation Fee Act was enacted by the legislature to apply only to “fees, dedications, reservations, or other exactions,” and the Court refused to significantly expand the reach of that statute by applying it to the challenged conditions. Finally, while recognizing that the landowners were faced with a situation where they needed to take action to protect their homes without waiting for litigation to conclude (which in this case would have meant a six-year delay), the Court nevertheless felt the landowners could have availed themselves of temporary erosion protection authorized under an emergency permit or reached an agreement with the Commission to build the improvements while a permit challenge was pursued.

Practice Pointers:

• If you accept the benefits of a permit, you also must accept the burdens.
• Landowners must litigate challenges to permit conditions before building in reliance on the disputed permit.
• Reserving the right to challenge conditions while simultaneously building a project only applies to fees and exactions covered by the Mitigation Fee Act, or where the agency clearly agrees to allow work to proceed while a challenge is pending.