Homeowners Association Land Use Approval Process Is Protected Activity Under Anti-SLAPP Statute

The California Court of Appeal for the Fourth District has determined that the actions of a homeowners association undertaken in accordance with its land use approval process are protected activities in furtherance of free speech under California’s anti-SLAPP statute. Golden Eagle Land Investment, L.P. v. Rancho Santa Fe Association, 19 Cal. App. 5th 399 (2018)

Background. Two developers proposed a joint project to build residential housing units for senior citizens on property near Rancho Santa Fe, California. Because the project would exceed local density restrictions, the developers sought approvals from both the County of San Diego and the Rancho Santa Fe Association. Initially, the association expressed support for the development. But that changed following an association meeting at which community members expressed opposition to the project. Following the meeting, the association sent communications to the county recommending the county follow current zoning requirements until the association determined whether it would approve the project.

After the developers failed to secure the necessary approvals, they filed suit against the association asserting nine causes of action alleging violations of the Common Interest Development Open Meeting Act, breach of fiduciary duties, fraud, and interference with business relations. While the complaint separated these theories into separate causes of action, the crucial allegations common to each were that the association initially expressed to the developers that it supported the project; the association refused the developers’ request to reschedule an “informational public meeting” to discuss the project; the meeting agenda did not adequately describe the meeting; and the association improperly influenced the county to reject the project.

In response, the association filed a special motion to strike all nine causes of action under California’s anti-SLAPP statute, Code of Civil Procedure § 425.16. The trial court granted the association’s motion as to eight causes of action, but denied the motion as to the cause of action for violations of the Open Meeting Act. The trial court ruled that the association’s alleged activities were not protected under sections 425.16(e)(1) or (2) of the Act as activities occurring during an “official proceeding.”

The Court of Appeal’s Decision. The court of appeal held that the trial court erred in finding the association’s alleged violations of the Open Meeting Act were not based on protected conduct in furtherance of free speech, and upheld the trial court’s rulings striking the developers’ other claims.

Application of the anti-SLAPP statute requires a two-step analysis. First the defendant must demonstrate that the cause of action arises from protected activity. If the defendant does so, the burden then shifts to the plaintiff to demonstrate that it is likely to prevail on its claims.

Regarding the Open Meeting Act cause of action, asserted by only one of the developers, the court concluded that it was unclear whether the association’s activities should qualify as “official” governmental actions under the statute. The court held, however, that the anti-SLAPP statute applied because the activities complained of—communicating with project applicants, setting agendas, and sending emails and letters—were all within the quasi-governmental responsibilities of the association. As a result, the association’s actions fell within the broader protections of section 425.16(e)(4) as “conduct in furtherance of the exercise the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” Under the second prong, the court held that the developer could not demonstrate a probability of success on the merits because it was not a member of the association and therefore lacked standing to seek relief under the Open Meeting Act.

For the remaining causes of action based on the association’s alleged breach of fiduciary duties, fraud, and interference with business relations, the court held that the crux of these causes of action was the same as the set of allegations giving rise to the Open Meeting Act cause of action. Thus, these causes of action also arose from protected activities. And because the developers did not show they could prevail on the merits of those claims, the trial court did not err by striking them.

Conclusion. While the court acknowledged that the case presented a “close question as to the applicability” of the anti-SLAPP statute, it broadly held that that the association’s activities concerning property entitlements “are matters of public interest” and therefore are protected activities in furtherance of free speech. The court did not suggest any limitations or provide any guidance as to how broad a segment of the public must be affected for the challenged activities to be considered as in the public interest.

 

Court Gives Green Light to Referendum of Ordinance Adopted to Conform Zoning With General Plan

A referendum requiring either the rejection of an enacted zoning ordinance or submission to the voters that would leave in place zoning inconsistent with a general plan does not violate Gov’t Code Section 65860, according to the court’s decision in Save Lafayette v. City of Lafayette, 20 Cal. App. 5th 657 (2018).

The City of Lafayette amended its general plan to designate a parcel residential in anticipation of a residential development project. After the general plan amendment became effective, the city enacted a zoning ordinance to conform the parcel’s zoning with the general plan. The plaintiffs, Save Lafayette, subsequently collected signatures and properly filed a referendum requesting the city to either prevent the enacted zoning ordinance from taking effect or submit it to a vote.

The city declined either option, asserting that preventing the ordinance from taking effect or submitting it to voters would violate Gov’t Code Section 65860, resulting in zoning inconsistent with the city’s general plan. The city defended its decision by relying on deBottari v. City Council, a key case decided in 1985 in which the court held that the City of Norco correctly refused to certify a referendum that would have rejected a zoning ordinance that was amended to be consistent with the general plan.

The court disagreed with this characterization. Relying on the recently-decided City of Morgan Hill v. Bushey, the court held that the referendum would not violate Section 65860 because it did not seek to enact new zoning inconsistent with the general plan. At most, the referendum would preserve the existing zoning designation on the parcel, which had become inconsistent because of the recent amendment to the general plan.

The court acknowledged that if instead an initiative was proposed to change the zoning to a designation inconsistent with the general plan, that this would violate Section 65860. This was not the case here; the referendum could lead to the rejection of the new zoning ordinance, but it did not propose to enact zoning inconsistent with the general plan. While the referendum amounted to a challenge to the city’s choice of zoning, it did not further constrain the city’s ability to enact another suitable zoning designation.

The California Supreme Court recently granted review of Bushey to address the split in authority among the courts of appeal. The case summary on the court’s web site describes the issue presented as follows: “Can the electorate use the referendum process to challenge a municipality’s zoning designation for an area, which was changed to conform to the municipality’s amended general plan, when the result of the referendum – if successful – would leave intact the existing zoning designation that does not conform to the amended general plan?”

The court’s review should settle whether a referendum that seeks to overturn a new zoning ordinance violates Section 65860 if it leaves in place zoning inconsistent with a general plan.

EPA Delays Applicability of Clean Water Rule While Challenges to Rule Proceed in District Courts

As reported in our prior Update, in a decision issued on January 22, the U.S. Supreme Court ruled in National Association of Manufacturers v. Department of Defense, 138 S. Ct. 617, that challenges to the Obama administration’s 2015 Clean Water Rule must be brought in federal district courts, rather than directly in the federal courts of appeals. The Court’s decision will likely prolong the ongoing litigation over the validity of the Rule.

Shortly after the Court’s decision, the Trump administration delayed the Rule’s applicability date for two years while it works on rulemakings to rescind and replace the Rule. Continue Reading

Clean Water Act Permit May Be Required for Pollution Discharged Indirectly into Navigable Waters

A Clean Water Act permit is required for discharging wastewater from injection wells into groundwater where wastewater is “fairly traceable” to navigable waters, the U.S. Court of Appeals for the Ninth Circuit held in Hawai’i Wildlife Fund v. County of Maui, 881 F.3d 754 (9th Cir. 2018). Continue Reading

Clean Water Act Requires Permit for Pollution Discharges from Oyster Hatchery’s Pipes

The Clean Water Act requires a permit to discharge pollutants through pipes, ditches, and channels from an oyster hatchery, even though the facility would not be subject to the Act’s permitting requirements as a “concentrated aquatic animal production facility,” the U.S. Court of Appeals for the Ninth Circuit held in Olympic Forest Coalition v. Coast Seafoods Co., 884 F.3d 901 (9th Cir. 2018). Continue Reading

City’s Bifurcated Procedure For Appealing Approval of Entitlements Separately From CEQA Determinations Upheld

The Fourth District Court of Appeal upheld a mitigated negative declaration where the project opponent correctly appealed the approval of entitlements but failed to properly appeal the CEQA determination under the City of San Diego’s bifurcated appeals process. Clews Land & Livestock, LLC v. City of San Diego, 19 Cal. App. 5th 161 (2017).

A city hearing officer approved permits and adopted a mitigated negative declaration for development of a private school on Clews Ranch Road, adjacent to  a horse ranch owned by Clews Land & Livestock.  Under the city code the entitlement approvals had to be appealed to the planning commission, and the CEQA determination to the city council, both within 10 days after the hearing officer’s decision.

Clews Land appealed both the project entitlements and CEQA determination to the planning commission. After the planning commission upheld the project approval, the project opponent appealed the hearing officer’s CEQA determination to the city council. By then, 10 days had elapsed and the city council refused to hear the appeal, citing its untimeliness.

Clews Land filed suit and the trial court upheld the city’s actions. On appeal, the court agreed with the trial court that Clews Land failed to exhaust its administrative remedies and rejected the claim that the city’s bifurcated appeal process violated CEQA. The hearing officer was the “decision making body” for the project, with authority under the city code to approve the permits and to comply with CEQA by adopting or certifying the appropriate environmental document. And under the city code, all CEQA determinations not made by the city council had to be appealed directly to the city council.

Although the court had concluded Clews Land had failed to exhaust administrative remedies, it nevertheless addressed its challenges to the mitigated negative declaration. First, the court was generally dismissive of the claim that the project would have a significant impact on fire hazards in the area. The court found that neither the project opponent nor their expert, made a fair argument as to why the project would significantly increase fire hazards. The expert’s questions and comments were general in nature and did not establish a nexus to the project. Furthermore, that the project was located in a severe fire hazard zone was, on its own, insufficient to establish a significant impact: CEQA requires consideration of a project’s impact on the existing environment, not the environment’s impact on the project.

The court also quickly dismissed claims of impacts on traffic. The project opponent’s lay testimony that Clews Ranch Road could not support both the horse ranch and the school was insufficient because no factual basis was offered for this conclusion. The court observed that Clews Ranch Road was 20 feet wide, only 1,650 feet long, and had historically supported traffic to and from the large commercial ranch without incident.

In regards to noise impacts, Clews Land alleged that construction of the school and school activities could frighten horses and disrupt ranch operations. The court was not persuaded because the project was located near existing sources of noise, a busy highway and the large horse ranch. Furthermore, the court explained, the particular noise impacts on the horse ranch are not relevant under CEQA, which requires analysis of a project’s impact on the environment, not on particular persons or the operation of a nearby business.

The court also found no issue with the addition of the school’s shuttle bus plan and a condition that the school be closed on red flag fire warning days, after the mitigated negative declaration was circulated. These conditions of approval, the court concluded, were voluntary and therefore did not constitute mitigation measures requiring recirculation of the mitigated negative declaration.

 

Air Resources Board’s Regulatory Relief For Small Truck Fleets Violated CEQA

A court of appeal has held that the California Air Resources Board violated CEQA when it issued a “regulatory advisory” notifying small trucking operations that they need not meet ARB’s regulatory deadline for retrofitting their truck engines, and that the regulation would soon be relaxed. John R. Lawson Rock & Oil, Inc. v. State Air Resources Board, 5th Dist. Case No. F074003 (Jan. 31, 2018). The court rejected ARB’s argument that it did not need to prepare the equivalent of an environmental impact report before issuing the regulatory advisory.

In 2008, ARB adopted its Truck and Bus Regulation, requiring retrofits or upgrades to large diesel vehicles so that their air pollutant emissions would not exceed those of model year 2010 or newer trucks. January 1, 2014, was to be the deadline for small fleets to bring at least one of their trucks into compliance. By October 2013, the vast majority of the 260,000 California-registered trucks were in compliance; of those that still needed retrofits, most were in small fleets. In November 2013, ARB decided to ease the rules applicable to small fleets, issuing a “regulatory advisory” that it would take no enforcement action against noncompliant truck operators before July 1, 2014, and that operators could rely on five regulatory changes ARB planned to adopt in 2014 that would make the Truck and Bus Regulation more lenient.

In 2014, ARB approved the revised regulations without preparing an EIR-equivalent CEQA document under its certified regulatory program. ARB reasoned: “The amendments only change the mid-term timing of clean-up of the truck fleet and, therefore, do not result in any increase in emissions compared to existing environmental conditions.” A truck operator that had complied with the regulation on time sued, alleging ARB had violated CEQA and the Administrative Procedures Act.

Citing the California Supreme Court’s decision in Save Tara v. City of West Hollywood, the court held that ARB violated CEQA when it approved the regulatory advisory in 2013, because it had publicly announced that the regulation would be changed and that its existing terms would not be enforced. In so doing, ARB significantly furthered its proposed 2014 regulatory changes in a manner that foreclosed alternatives or mitigation measures, including the alternative of not going forward with the project. Accordingly, CEQA compliance was required at that point.

The court ruled that that ARB was required to prepare the equivalent of an EIR for its relaxation of the Truck and Bus Regulation, based on the difference between future conditions with and without its proposed regulatory change. The court cited CEQA’s requirement that a lead agency discuss any inconsistencies between the proposed project and applicable plans, including the State Implementation Plan for air pollutant reductions and the state’s plans for reductions in greenhouse gas emissions. Because there was a fair argument that ARB’s action would conflict with these plans, at least in the short- to medium-term, an EIR-equivalent document was required.

The decision in Lawson demonstrates both the difficulties ARB faces in conforming its regulatory decisionmaking to the demands of CEQA and the heightened attention courts pay to air quality and greenhouse gas impacts.

Court Upholds Use of Small Facilities Exemption for Microcell DAS Project

In Aptos Residents Association v. County of Santa Cruz, the court of appeal upheld Santa Cruz County’s use of a CEQA exemption to approve a distributed antenna system (often referred to as a DAS) for the provision of cell service. (6th Dist., No. H042854, Feb. 27, 2018.)

The court found that the project fit squarely within the intended scope of CEQA’s Class 3 categorical exemption for small facilities and structures. The court also rejected petitioners’ arguments that there was an applicable exception that would have precluded the use of the exemption.

Background

The project involved 10 microcell transmitters that would be used as part of Crown Castle’s distributed antenna system. Each microcell consisted of a two-foot by one-foot antenna mounted on an extender pole that would be attached to an existing utility pole. Crown Castle submitted a separate permit application for each microcell. Raising concerns about health and aesthetics, residents began mounting opposition to the project.

The county jointly considered the applications for the microcells and determined that they fell within the Class 3 exemption for small structures. After conducting site visits and reviewing photo simulations, the county concluded that the microcells would not result in any visual or other environmental impacts. Residents filed suit, contending that the county’s approval of the project violated CEQA.

The Court’s Decision

The residents’ petition claimed the county violated CEQA in several ways: by improperly segmenting the project; by finding the project fell within the Class 3 exemption; and by using an exemption where an exception barred an exemption. The court of appeal found these claims unavailing.

Improper segmentation

The court rejected petitioners’ contention that because Crown Castle applied for a separate permit for each microcell, the project was improperly segmented. The county expressly considered the project to be the entire group of microcells and found that the Class 3 exemption was applicable to all of the microcells. The fact that Crown Castle filed a separate permit for each microcell unit was irrelevant.
Applicability of exemption.

The Class 3 categorical exemption applies to “limited numbers of new, small facilities or structures” including “electrical, gas, and other utility extensions.” The court found the project to fall squarely within the class of projects intended to be covered by this exemption, recognizing that the exemption extends to multiple small structures in scattered locations.

Exceptions to the use of the exemption

Petitioners urged the court to find applicable several exceptions that would have precluded the use of the Class 3 exemption. The court declined, finding that that petitioners failed to meet their burden to identify evidence supporting an exception.

           Cumulative impact exception. The cumulative impact exception bars an exemption where the cumulative impact of “successive projects of the same type in the same place, over time is significant.” Petitioners claimed that this exception should apply because AT&T intended to implement its own distributed antenna system in the area at some time in the future. The court rejected this argument as amounting to “mere speculation” as petitioners provided no evidence that AT&T was actually pursuing a project or any evidence of the location of AT&Ts would-be facilities.

           Location exception. The CEQA Guidelines prohibit use of the Class 3 exemption if the activity may have an impact on an environmental resource of “hazardous or critical concern where designated, precisely mapped, and officially adopted pursuant to law by federal, state or local agencies.” The county’s zoning of the project area as “Residential Agricultural” did not meet this requirement as nothing in the zoning ordinance specifically designated the zone as “an environmental resource of hazardous or critical concern.”

          Unusual circumstance exception. Under the CEQA Guidelines, an exemption cannot be used where there is “a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” The court found nothing unusual in microcells being built in rural areas, as such areas “clearly need utilities, including cell coverage.”

Attorneys’ Fees Can Be Awarded to CEQA Litigants Hoping to Preserve Their Home Values

Successful petitioners under CEQA who are motivated to file suit, in part, by their private financial interests are not necessarily ineligible for an award of attorneys’ fees under the public interest fee statute. Heron Bay Homeowners Association v. City of San Leandro, 19 Cal. App. 5th 376 (2018).

Halus Power Systems sought approval from the City of San Leandro for a zoning variance to construct a 100-foot-tall wind turbine on a five-acre industrial parcel. The property is located in the San Francisco Bay Estuary, where many species of waterfowl and shorebirds, including four threatened or endangered species, reside. The property is also roughly 500 feet from the 629-unit Heron Bay residential development. The city approved the construction of the turbine based on a mitigated negative declaration, finding that the significant environmental effects of the project could be reduced to insignificance through eleven mitigation measures.

The Heron Bay Home Owners Association filed suit under CEQA, asserting that the city needed to prepare an EIR for the project. The trial court rejected the mitigated negative declaration, finding a fair argument that the project as mitigated would still have a significant effect on biological and aesthetic resources and noise. It entered judgment in favor of the HOA and directed the city to set aside its approvals and halt any further action on the project until an EIR was certified. Halus Power and the city did not appeal the decision, and Halus Power ultimately abandoned the project.

Heron Bay HOA then requested an award of attorney’s fees under California Code of Civil Procedure section 1021.5, which authorizes an award of attorney’s fees to the prevailing party in a case that enforces an important right affecting the public interest. The trial court awarded the HOA only part of the fees it sought finding that the HOA “had a significant financial incentive to initiate the litigation.” The court found that the HOA members had brought the suit in part because they feared the turbine would cause their property values to decrease. But it also found that they were also motivated by “non-pecuniary” concerns for the project’s impact on wildlife, aesthetics, health and noise levels. As a result, the court apportioned financial responsibility for their attorney’s fees during the administrative proceedings entirely to the HOA, but because of the “different risks and much larger financial commitment” of CEQA litigation, it divided equally the responsibility for the fees the HOA incurred for the litigation between the HOA on one side, and the city and Halus Power on the other.

Halus Power and the city appealed the award of attorney’s fees, arguing that a fee award was not appropriate because the value of the benefit to the members of the HOA (i.e., maintenance of their property values) far exceeded the financial burden of litigation.

The court of appeal disagreed. It found that any financial benefit to the home owners was speculative since the litigation was not certain to prevent construction of the turbine or even change the project, and preservation of property values was not immediately or certainly “bankable.” And while the exact amount of personal benefit to the HOA members was uncertain, the fees could nevertheless be apportioned because the record supported an implied finding that the HOA’s motivations to litigate were not purely financially self-interested. Thus, the court of appeal ruled, the trial court’s apportionment and partial award of attorney’s fees was not an abuse of discretion.

The court of appeal affirmed the trial court’s award to Heron Bay HOA for a little over $181,000 in attorney’s fees for the CEQA litigation, which was less than half the amount that the HOA had requested. The court also awarded the HOA its attorneys’ fees for successfully defending the appeal.

This decision exemplifies the rule that trial courts have considerable discretion in awarding and apportioning attorneys’ fees under section 1021.5 based on the particular facts of each case. More importantly, it makes it crystal clear that CEQA plaintiffs that might avoid a decrease in their property values by successfully challenging a project are not cut off from recovering section 1021.5 attorneys’ fees.

Size Limit on Retail Tenants Not Likely to Cause Urban Decay

A general plan policy that limited the size of retail tenants in certain areas of a city was not likely to cause urban decay and was not inconsistent with other general plan policies encouraging infill development, the court of appeal held in Visalia Retail, LP v. City of Visalia, 20 Cal. App. 5th 1 (2018).

The City of Visalia’s general plan update included a policy that Neighborhood Commercial areas should be anchored by a grocery store and could not have individual tenants greater than 40,000 square feet. Visalia Retail, which owned property designated Neighborhood Commercial, filed a petition for writ of mandate seeking to invalidate the city council’s certification of the EIR and adoption of the general plan update. Visalia Retail argued that the EIR should have analyzed the potential for the tenant size cap to cause urban decay and that the general plan was internally inconsistent. The superior court ruled in favor of the city, and the court of appeal upheld the superior court’s decision.

Potential for Urban Decay

The petitioner argued that the EIR should have analyzed the potential for urban decay to result from the tenant size cap. The petitioner had submitted a report from a real estate broker that explained the policy would likely lead to vacancies, physical blight, and urban decay because, in his opinion, it was unlikely a grocery store anchor would be willing to lease a space that was smaller than 40,000 square feet. In support, the real estate broker stated in his report that (1) he was personally unaware of any grocers willing to build new stores under 40,000 square feet, (2) a typical grocery store for four grocery chains must be at least 50,000 square feet to be profitable, (3) 10,000–20,000-square-foot stores launched by a large grocery chain had been unsuccessful, and (4) three grocery stores in Visalia under 40,000 square feet had closed.

While an EIR does not need to study economic and social changes resulting from a project, physical changes to the environment that are caused by a project’s economic or social impacts are environmental effects that must be considered under CEQA. The court of appeal concluded that the real estate broker’s report did not provide substantial evidence that the 40,000-square-foot limit would cause urban decay in the form of significant physical effects on the environment.

The court explained that the real estate broker’s report did not support an argument that no grocers would be willing to build stores under 40,000 square feet. The court noted that the report’s conclusion was based only on the real estate broker’s personal knowledge, the typical store size for four grocery chains, and one chain’s experience with stores under 20,000 square feet. The court also noted that the report indicated that some grocers in some circumstances had built stores under 40,000 square feet, which contradicted the real estate broker’s conclusion that no grocers would build stores under 40,000 square feet. Moreover, the court noted that the report did not provide a reason why the three stores in Visalia under 40,000 square feet had closed. Finally, the court determined that the real estate broker’s report did not demonstrate that any vacancies in Neighborhood Commercial areas as a result of the tenant size cap would be so rampant as to cause urban decay.

General Plan Consistency

The petitioner also argued that the general plan was internally inconsistent. The petitioner claimed that the 40,000-square-foot limit conflicted with eight other policies and goals in the general plan, including a goal to promote infill development. The court of appeal rejected the petitioner’s argument. The court concluded that the city council could have reasonably concluded that the tenant size cap would not impede infill development because tenants larger than 40,000 square feet were permitted in other areas of the city. The court also explained that the city could reasonably decide to restrict the nature of infill development in some areas in order to pursue other goals, such as encouraging smaller businesses or promoting pedestrian-oriented retail:

“In sum, just because the general plan declares a goal of promoting infill development does not mean all of its policies must encourage all types of infill development. General plans must balance various interests, and the fact that one stated goal must yield to another does not mean the general plan is fatally inconsistent. Few, if any, general plans would survive such a standard.”

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