SECURITY NATIONAL GUARANTY, INC v. CALIFORNIA COASTAL COMMISSION

Filed 1/25/08

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

Story continues from Part I

b. Submission of the LCP for Commission Certification

The local government must then submit the proposed LCP to the Commission for certification. ( 30510.) The local government may choose to submit its entire proposed LCP at once, or in phases (in which case the LUP is processed first, followed by the implementing actions), or in separate geographic units. ( 30511, subds. (a)-(c).) The Commission must then review the land use portion of the LCP under specified procedures. ( 30512, subd. (a).) If the Commission finds that the LUP meets the requirements of chapter 3 of the Coastal Act, and is in conformance with the policies of that chapter, then it must certify it. ( 30512, subd. (c) [Commission shall certify LUPs meeting chapter 3 requirements].) The Commissions review of the LUP is limited by statute to the Commissions administrative determination that the land use plan . . . does, or does not, conform with the requirements of Chapter 3 (commencing with Section 30200). In making this review, the commission is not authorized by any provision of this division to diminish or abridge the authority of a local government to adopt and establish, by ordinance, the precise content of its land use plan. ( 30512.2, subd. (a), italics added.) Similarly, the Commission may only reject the local governments implementing actions on the grounds that they do not conform with, or are inadequate to carry out, the provisions of the certified land use plan. ( 30513.) Quoting with approval City of Chula Vista v. Superior Court (1982) 133 Cal.App.3d 472, 478, our high court noted in Yost that the Commission in approving or disapproving an LCP does not create or originate any land use rules and regulations. It can approve or disapprove but it cannot itself draft any part of the coastal plan. (Yost, supra, 36 Cal.3d at p. 572, italics added.)

c. Delegation of Development Review Authority After Certification

Once the Commission approves the local governments LCP, development review authority shall no longer be exercised by the commission over any new development proposed within the area to which the certified local coastal program, or any portion thereof, applies and shall at that time be delegated to the local government that is implementing the local coastal program or any portion thereof. ( 30519, subd. (a).) After certification, the local government has discretion to choose what actions it will take to implement its LCP. (Yost, supra, 36 Cal.3d at pp. 572-573.) Thus, for example, the Coastal Act does not dictate that a local government must build a hotel and conference centerthat decision is made by the local government. It merely requires local governments to comply with specific policiesbut the decision of whether to build a hotel or whether to designate an area for a park remains with the local government. (Id. at p. 573.)

Once the LCP is certified, the Commissions role in the permit process for coastal development [is] to hear appeals from decisions by [the local government] to grant or deny permits. (Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346, 1354, fn. 5, citing  30603.) The Commissions jurisdiction in such appeals, however, is limited. (City of HalfMoonBay v. Superior Court (2003) 106 Cal.App.4th 795, 804.) As relevant here, the Coastal Act limits the grounds for a CDP appeal to an allegation that the development does not conform to the standards set forth in the certified local coastal program . . . . ( 30603, subd. (b)(1), italics added.)

d. Periodic Review and Amendment of the LCP

The Coastal Act requires the Commission to review every certified LCP at least once every five years to determine whether the program is being implemented in conformity with Coastal Act policies. ( 30519.5, subd. (a).) If the Commission finds that a certified LCP is not being carried out in conformity with the Coastal Act, it must recommend corrective actions to the local government, which may include recommended amendments to the certified LCP. (Ibid.) Even in these circumstances, however, the statute gives the Commission no power either to make the amendments itself or to compel the local government to make them. Instead, the law requires the affected local government to report to the Commission the reasons that it has not taken the recommended corrective action. ( 30519.5, subd. (b).) The Commission may then review the local governments report and where appropriate, report to the Legislature and recommend legislative action necessary to assure effective implementation of the relevant policy or policies of [the Coastal Act]. (Ibid.)

The Commissions role in the amendment process is similarly circumscribed. The Coastal Act provides for amendment of a certified LCP but once again makes clear that the LCP may be amended by the appropriate local government, subject to review by the Commission. ( 30514, subd. (a).)

3. By Declaring SNGs Site an ESHA, the Commission Exceeded its Statutory Authority, Improperly Assumed Powers Reserved to Local Government, and Contradicted the Terms of the Certified LCP.

Nothing in the statutory scheme outlined above grants the Commission the authority to make changes to the content of Sand Citys LCP during an appeal from Sand Citys grant of a CDP. This lack of statutory authority alone would suffice to invalidate the Commissions action, because absent a delegation of authority from the Legislature, the Commission literally has no power to act. (LPSC, supra, 476 U.S. at p. 374.) But the Commissions action in this case is even less justifiable for at least three other reasons.

First, the Commissions action clearly exceeded an express limitation on its jurisdiction in permit appeals. The Coastal Act limits the grounds for such an appeal to an allegation that the development does not conform to the standards set forth in the certified LCP. ( 30603, subd. (b)(1).) In denying SNGs permit (at least in part) based on its unlawful ESHA designation, the Commission imposed additional standards not found in Sand Citys LCP. SNG was entitled to have its development proposal judged by

the standards of the certified LCP in effect at the time of its application.[1](See Toigo, supra, 70 Cal.App.4th at p. 318 [pertinent question is whether proposed development is prohibited by the regulations and zoning in effect at time application is made].)

Second, the Commission has purported to exercise powers that the Legislature has expressly allocated to local government, which has decreed that LCPs may be amended by the appropriate local government. ( 30514, subd. (a).) By declaring the site an ESHA, the Commission has impermissibly attempted to amend part of Sand Citys LCP. (Cf. Yost, supra, 36 Cal.3d at p. 572 [Commission cannot draft any part of coastal plan].)

Third, the Commissions ESHA designation actually contradicts the terms of the certified LCP itself. The Commissions staff concluded that SNGs site was ESHA on the basis of general LCP policies regarding ESHA protection. But that conclusion cannot be reconciled with the specific findings in section 4.2.4 of Sand Citys certified LUP that there were no ESHAs in the area west of Highway 1, where SNGs site is located. The Commissions staff cited sections 4.3.20 and 4.3.21 of the certified LUP to justify its conclusion, but it failed to note that while LUP section 4.3.20 requires that ESHAs be protected, it is directed specifically at the ESHAs mapped in the LCP. Nor did the staff report mention LUP section 4.3.19, which requires Sand City to [d]esignate general areas as sensitive habitats as shown on the Coastal Resources Map (Figure 7). (Italics added.) It is undisputed that SNGs site is not shown on the Coastal Resources Map. In fact, the Commission explicitly conceded this point below in its opposition to SNGs petition for writ of mandate. The Commission explained that Sand Citys LCP attempted to map generalized locations of habitat areas. [Citation.] None of those areas are located on SNGs site, [citation] and the LCP opined that there was no natural habitat seaward of Highway 1. (Italics added.) The Commissions ESHA designation simply cannot be squared with the plain terms of Sand Citys LCP.

4. The Commissions Contentions at Oral Argument

Finally, we address the principal points raised by the Commissions counsel at oral argument.

First, counsel cited the Second Districts recent decision in LT-WR, L.L.C. v. California Coastal Com. (2007) 152 Cal.App.4th 770 (LT-WR) to support the Commissions claim that it possessed the authority to make an ESHA designation in the context of a permit appeal. In LT-WR, the court concluded that the fact that property was not mapped as ESHA in the controlling LUP did not preclude it from being designated as ESHA during a permit appeal. (Id. at p. 793.) LT-WR is distinguishable from the case before us because the LUP at issue in LT-WR required the designation not only of ESHAs that had been mapped, but also of any undesignated areas which meet the criteria and which are identified through the biotic review process or other means . . . . (Ibid.) Sand Citys LUP contains no comparable provision. Furthermore, the Second Districts opinion in LT-WR does not even discuss the question presented herewhether the Coastal Act provides the Commission with statutory authority to declare property an ESHA when the Commission is considering an appeal from a local governments grant of a CDP. It therefore provides no guidance on the issue of the Commissions statutory authority.[2] (See, e.g., In re M.M. (2007) 154 Cal.App.4th 897, 910 [fact that courts in prior cases exercised jurisdiction to review particular orders provides no support for conclusion that court actually possessed jurisdiction, because jurisdictional issue was not considered], citing American Portland Cement Alliance v. E.P.A. (D.C. Cir. 1996) 101 F.3d 772, 775-776.)

Second, counsel for the Commission relied on Sand Citys LCP amendment No. 2-97 as support for the Commissions purported ESHA designation. Counsel for the Commission did not claim (nor could he have) that amendment No. 2-97 actually designated SNGs property as an ESHA. Instead, counsel asserted that the amendment put SNG on notice that its property was subject to review and potential identification as ESHA. (Italics added.) Counsel thus implicitly conceded that the amendment itself did not make SNGs property an ESHA. Indeed, any such argument would fly in the face of the text of the amendment as unanimously approved by the Commission. The modified amendment specifically approved the intermixing of uses on SNGs site, and it contemplated a maximum of 375 hotel/vacation club/timeshare units, 100 visitor-serving residential units, and 175 medium density residential units, as well as several acres devoted to public recreation. As the Commissions District Director explained at the Commission hearing on the proposed amendment, this amendment would allow the intermixing of uses, and the types of uses that [SNG is] proposing to go forward with. In short, the level of development expressly permitted by amendment No. 2-97 belies the Commissions assertion that the amendment somehow presaged the Commissions ESHA designation. (See Sierra Club, supra, 12 Cal.App.4th at p. 617 [residential development in an ESHA is non-resource-dependent . . . development in violation of the [Coastal] Act].)

Third, citing Toigo, supra, 70 Cal.App.4th 309, counsel for the Commission also argued that the question of the Commissions statutory authority is not ripe for review. As we have explained in part I.B.2., ante, SNGs challenge to the Commissions authority is presently ripe. We need add only that Toigo held that a takings claim arising out of a towns denial of a subdivision application and subsequent rezoning of the subject property was not ripe for judicial review. (Toigo, supra, at pp. 324-332.) The takings claim was unripe because the property owners had neither submitted a lower-density proposal that the town might approve nor shown that such a reapplication would be futile. (Id. at pp. 326-332.) In contrast, the Toigo court did consider the merits of the property owners challenge to the trial courts denial of their petition for administrative mandamus. In its discussion of that issue, the court noted that, unlike SNG in this case, the property owners did not challenge the statutory authority of the town to take the actions it did. (See id. at p. 318 [property owners did assert that town failed to comply with statutory time guidelines and had not questioned the legality of the rezoning].) Unlike the property owners in Toigo, SNG here challenges the Commissions very authority to designate SNGs property as an ESHA during the administrative appeal from Sand Citys grant of a CDP.

Fourth, the Commissions counsel contended that SNG had forfeited the statutory authority issue by failing to challenge the Commissions factual findings in support of the purported ESHA designation. As we explained in footnote 9, ante, before we may address whether the Commissions purported ESHA designation is supported by substantial evidence, we must necessarily resolve the question of whether the Commission possessed the statutory authority to make the ESHA designation in the first instance. Put another way, the factual evidence marshaled by the Commission to show that SNGs site is an ESHA has no bearing at all on the legal issue of whether the Coastal Act grants the Commission the authority to make such a designation in these circumstances. In any event, having declined to oppose SNGs statutory authority challenge either in its opposition to SNGs petition in the trial court or in its responsive brief in this court, the Commission is in a poor position to claim forfeiture.

For the foregoing reasons, we hold that in designating SNGs site an ESHA in the course of an appeal from Sand Citys grant of a CDP, the Commission acted without, or in excess of [its] jurisdiction.[3](Code Civ. Proc.,  1094.5, subd. (b).)

D. Remedy

In its opening brief, SNG requested that we remand the case to the trial court to compel it to make a finding on whether the SNG site was properly designated an ESHA. Having made that determination ourselves, no purpose would be served by having the superior court rule on the issue. Instead, we believe that the proper course is to reverse the superior courts denial of SNGs petition for writ of administrative mandamus and to order the lower court to issue a peremptory writ commanding the Commission to vacate its decision and rehear SNGs permit application on the basis of the standards set forth in Sand Citys certified LCP. (See Schneider, supra, 140 Cal.App.4th at p. 1350.)

Our colleagues in Division One applied a similar remedy in Brooks v. State Personnel Bd. (1990) 222 Cal.App.3d 1068. In that case, a university employee challenged his termination on the grounds that the university had improperly amended the charges against him after it issued its notice of dismissal. (Id. at p. 1071.) The court concluded that the Education Code provided no statutory authority for the amendment of disciplinary charges against the employee after the employees termination had become effective and that the state personnel board therefore had no power to hear matter based on the amended charges. (Id. at pp. 1074-1076.) The court remanded the matter to the trial court with instructions that it issue an order setting aside the order of the state personnel board and directing the board to reconsider the matter based on the charges set forth in the original notice of dismissal. (Id. at p. 1076.) We will do the same here.[4]

We now turn to the propriety of the superior courts grant of summary adjudication to the Commission on SNGs claims for breach of contract and estoppel.

II. SNGs Claim for Breach of Contract

SNG also asserted a cause of action for breach of contract against the State and the Commission. SNG based this claim on the MOU, alleging that [t]he . . . Commission and the [Parks Department] are components of the same entityi.e., the State of California. The . . . Commission is in privity with the State and is bound by the States contractual obligations. The trial court granted summary adjudication against SNG on this claim. SNG now argues that this ruling was error, because SNG had a valid breach of contract claim as an intended third-party beneficiary of the MOU.

We reject this argument for a number of reasons. First, as the quotation from SNGs petition confirms, its argument is predicated on a single, untenable propositionthat because both the Parks Department and the Commission are agents of the State, a contract entered into by one agency binds the other. This is not the law.

At the outset, we observe that SNG has cited no direct authority for the proposition that a contract entered into by one state agency may be enforced against other agencies that are not signatories to that contract. Instead, SNG relies on general statements in cases such as People v. Department of Housing & Community Dev. (1975) 45 Cal.App.3d 185, 197, which noted in passing that a state department is not a separate entity; rather, it is an administrative segment of the state government. But an acknowledgement that all agencies are administrative segments of the state government is a far cry from a holding that contracts entered into by one state agency can legally bind a wholly separate agency. In fact, the different state agencies have varied interests, and these interests may conflict to the point that one agency may sue another. (See Westly v. Board of Administration (2003) 105 Cal.App.4th 1095, 1105-1108 [state controller, as agency head, had authority to sue the state retirement board, another state agency].) Given the possible conflicts that may arise among different agencies, we are justifiably hesitant to impose contractual liability on the Commission based upon a contract signed by the Parks Department. (Cf. People ex rel. Lockyer v. Superior Court (2004) 122 Cal.App.4th 1060, 1078-1080 [holding that in action brought by the People, defendants could not compel Attorney General to produce documents in possession of nonparty state agencies, because [e]ach agency or department of the state is established as a separate entity].)

More specifically, we can find no statute that would authorize the Parks Department to contract to require the Commission to approve development. SNG would have us find such authority in the statutes granting the Parks Department the general power to administer the state park system. (See, e.g.,  5001, 5003.) There are, however, two problems with this argument. First, the statutes upon which SNG relies specifically limit the Parks Departments authority to the property under its jurisdiction ( 5003), and SNGs property does not fall under that jurisdiction. Indeed, one of the express promises that the Parks Department made in the MOU was that it agree[d] not to acquire title to any portion of the Lonestar Site unless specifically requested to do so in writing by [SNG]. Therefore, the statutes upon which SNG relies do not appear to confer on the Parks Department any authority over SNGs site. Second, any such contract would seem to contravene the declaration of legislative intent contained in section 30400, which states: It is the intent of the Legislature to minimize duplication and conflicts among existing state agencies carrying out their regulatory duties and responsibilities. [] In the absence of specific authorization set forth in this division or any other provision of law or in an agreement entered intowith the commission, no state agency . . . shall exercise any powers or carry out any duties or responsibilities established by this division . . . . ( 30400, italics added.)

Finally, even if we were to agree with SNG that the MOU constituted a promise to permit development on SNGs site, the Commission would still have been entitled to summary adjudication. The foregoing discussion demonstrates that the Parks Department had no statutory authority to make such a promise. As a consequence, any attempt by the Parks Department to exercise control over matters which the Legislature has not seen fit to delegate to it is not authorized by law and in such case the agencys actions can have no force or effect. (Tirapelle v. Davis (1993) 20 Cal.App.4th 1317, 1335.) This principle operates to limit an agencys contracting power. [A] contract entered into by a governmental entity without the requisite constitutional or statutory authority is void and unenforceable. (White v. Davis (2002) 108 Cal.App.4th 197, 229 [reversed on other grounds in White v. Davis (2003) 30 Cal.4th 528, 534-535], quoting Air Quality Products, Inc. v. State of California (1979) 96 Cal.App.3d 340, 349 (Air Quality Products).)

In sum, the trial court properly granted summary adjudication against SNG on its breach of contract claims.[5]

III. Estoppel

SNGs final argument is that the trial courts order failed to address the entirety of SNGs estoppel claim. SNG contends that its estoppel claim sought not only an adjudication that SNG had the right to complete the project as proposed but also reliance damages. SNGs position is that it is entitled to recover from the State its out-of-pocket expenditures made in reasonable reliance on the States promise. We cannot agree.

First, as the Commission points out, SNGs third amended petition for writ of mandate does not properly plead a reliance damages claim. In its cause of action for equitable and promissory estoppel, SNG alleged that [t]he State and the Coastal Commission are estopped to block the issuance by SandCity of the coastal development permit. And it is SNGs petition that measures the scope of issues material to a summary adjudication motion. (See Williams v. California Physicians Service (1999) 72 Cal.App.4th 722, 738.)

Second, assuming that SNGs petition had alleged a claim for reliance damages, any such claim would fail on the merits. As we have explained previously, even if one were to interpret the MOU in the manner SNG proposes (and we do not), the Parks Department simply had no power to bind the Commission to approve the permit sought by SNG. (See Air Quality Products, supra, 96 Cal.App.3d at p. 349 [a contract entered into by a governmental entity without the requisite constitutional or statutory authority is void and unenforceable].) Indeed, the case on which SNG places primary reliance, US Ecology, states plainly that [n]o contractual or promissory estoppel liability may be assessed against [a state agency] if the contract or promises were not statutorily or constitutionally authorized. (US Ecology, Inc. v. State of California (2001) 92 Cal.App.4th 113, 132 (US Ecology), quoting Air Quality Products, supra, 96 Cal.App.3d at p. 350.) Such is the case here.[6] That SNG honestly may have believed that the Parks Department possessed the authority to bind the Commission is irrelevant. As the California Supreme Court has explained, [o]ne dealing with public officers is charged with the knowledge of, and is bound at his peril to ascertain, the extent of their powers to bind the state for which they seem to act. And, if they exceed their authority, the state is not bound thereby to any extent. [Citation.] (Stevens v. Geduldig (1986) 42 Cal.3d 24, 35.)

Thus, even if we were to accept that SNG had properly pleaded a claim for reliance damages, that claim would have failed on its merits. As a consequence, SNGs contention that it was entitled to a trial on reliance damages is unfounded.

Disposition

The judgments are reversed insofar as they deny SNGs request for a writ of administrative mandamus, and the superior court is ordered to issue a peremptory writ commanding the Commission to vacate its decision and rehear the matter based on the standards set forth in Sand Citys certified LCP. The judgments entered in favor of the Commission and the Sierra Club on SNGs claims for breach of contract and estoppel are affirmed. Each party shall bear its own costs on appeal. (Cal. Rules of Court, rule 8.276(a)(3).)

NEEDHAM, J.

We concur.

JONES, P. J.

STEVENS, J.*

(A114647)

Trial Judge: Hon. Ronald E. Quidachay

Trial Court: San Francisco County Superior Court

Counsel for Plaintiff and Appellant: Thomas D. Roth,

Collins Law Firm,

Craig M. Collins

Counsel for Defendant and Respondent: Edmund G. Brown, Jr., Attorney General,

J. Matthew Rodriquez,

Senior Assistant Attorney General,

Daniel L. Siegel,

Supervising Deputy Attorney General,

Peter Southworth,

Deputy Attorney General

Counsel for Intervenor and Respondent: California Environmental Law Project,

Laurens H. Silver

Publication Courtesy of California lawyer directory.

Analysis and review provided by Escondido Property line attorney.

* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of parts II and III.

[1]To the extent that the Commission appears to argue that its ESHA designation is somehow justified because Sand Citys LCP was outdated, that argument was answered by the California Supreme Court in Citizens of Goleta Valley v. Board of Supervisors (1990) 52 Cal.3d 553. In that case, the court held that in approving a development project a local government was not required to demonstrate that the conclusions in the LCP still relate to current conditions. (Id. at p. 574.) The court explained that requiring a reexamination of basic land-use policy with every permit application would impose an unnecessary and wasteful burden on local governments. (Ibid.)

[2] The sole statute cited by Commission counsel at oral argument, section 30625, subdivision (c), states only that [d]ecisions of the commission, where applicable, shall guide local governments . . . in their future actions under this division. ( 30625, subd. (c).) We decline to hypothesize about what this subdivision may mean, but it cannot reasonably be read to grant the Commission the legislative power to amend a local governments certified LCP when the Commission hears an appeal from a local governments grant of a CDP.

[3]Obviously, we express no view on the question of whether the facts would justify classifying SNGs site as an ESHA under section 30240. It is sufficient for us to hold, as we do, that the Commission has no power to revise the content of Sand Citys certified LCP when hearing an administrative appeal from the grant of a CDP.

[4]Because we order this matter remanded to the Commission, we need not address SNGs claim that the superior court erred in denying its motion to remand based on newly produced evidence. Likewise, we need not examine SNGs claim for inverse condemnation, because that claim is based on the Commissions ESHA designation, which we have now set aside.

[5] Our holding makes it unnecessary to address SNGs arguments regarding its status as an alleged third-party beneficiary of the MOU.

[6] Despite SNGs claims, US Ecology does not assist its argument. In that case, US Ecology had executed a memorandum of understanding with the Department of Health Services (DHS) for the purpose of developing a disposal facility for low-level radioactive waste. (US Ecology, supra, 92 Cal.App.4th at p. 123.) The court held that the memorandum of understanding could not form the basis of a breach of contract action against DHS. (Id. at pp. 127-130.) Although US Ecology could not state a cause of action for breach of contract, the court held that it had adequately stated a cause of action for promissory estoppel. (Id. at p. 137.) But unlike SNG, US Ecology sought an estoppel against the agency that had actually executed the memorandum of understanding at issue. US Ecology does not hold that a plaintiff may estop one state agency by relying upon an agreement executed by an entirely different agency. Moreover, the US Ecology court grounded its decision on extremely case-specific factors, such as the nature of the statutory scheme in question and the unique nature of the relationship between [DHS] and [US Ecology] . . . . (Id. at pp. 131-135.) None of these factors is present here.

* Retired Associate Justice of the Court of Appeal, First Appellate District, Division Five, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.