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Wilson & Wilson v. City Council of Redwood City et al

January 25, 2011


Superior Court of San Mateo County, No. CIV429131, Joseph E. Bergeron, Judge

The opinion of the court was delivered by: Simons, Acting P.J.


(San Mateo County Super. Ct. No. CIV 429131)

In February 2003, the law firm of Wilson & Wilson (Wilson) brought an action against the City Council of Redwood City (City Council), the City of Redwood City (Redwood City), and the Redwood City Redevelopment Agency (Redevelopment Agency) (hereafter collectively the City) to challenge the approval and construction of a retail-cinema redevelopment project in Redwood City's downtown. Wilson asked the court to invalidate resolutions enacted by the City Council and the Redevelopment Agency and to void agreements entered into by the City to carry out the redevelopment. The action did not come to trial until 2004, and final arguments were not held until 2007, by which time the retail-cinema project had been substantially completed. Although the City urged the trial court to dismiss the action as moot, the trial court found for Wilson and entered judgment against the City in 2008.

The City appeals from that judgment, arguing that the trial court should have dismissed Wilson's action because it did not present a justiciable controversy. We agree that Wilson's action was not justiciable, and we reverse the judgment and instruct the trial court to dismiss Wilson's action.


The Original Redevelopment Project

In 1982, the City adopted a redevelopment plan to combat the economic stagnation of its downtown area. Initially, the City planned to redevelop two downtown blocks into a retail-cinema, office, and parking project. "Block 1," bounded by Middlefield Road, Broadway Street, and Jefferson Avenue, was to be the site of a retail-cinema development containing ground-floor retail and restaurant space and a 20-screen, 4,200 seat movie theater on the second floor. The area designated "Block 2" is located across Middlefield Road from Block 1 and is bounded by Winslow Street, Middlefield Road, Jefferson Avenue, and the Caltrain railroad tracks. Under the City's original plan, Block 2 would have been developed with a 108,400 square-foot office building and public parking garage.

To implement the original plan, the City entered into a disposition and development agreement (DDA) with Western Innisfree Ventures, LLC (the Developer), on January 29, 2001.*fn1 The following day, the City issued a notice of determination under the California Environmental Quality Act (CEQA) (Pub. Resources Code, § 21100 et seq.) certifying the environmental impact report (EIR) for the original project. (See Pub. Resources Code, § 21152, subd. (a).) Wilson, which owns property located on Block 2 that would have been directly affected by the original project, did not challenge the EIR.

Due to a decline in the market for office space following approval of the original project, it became impracticable to construct the office building that had been planned for Block 2. The City and the Developer therefore agreed to eliminate the office-parking structure previously planned for that block and instead to construct the retail-cinema component above a two-level underground parking garage on Block 1. As modified, the new project consisted of approximately 85,000 square feet of ground-floor retail and restaurant space, the movie theater, and an underground parking garage with some 590 spaces (the Project).

The Amended Disposition and Development Agreement

On January 8, 2003, the City and the Developer entered into an amended and restated DDA (the ADDA), which superseded the DDA. The ADDA provided that the Developer would pay $7.5 million for acquisition of the air rights parcel needed to construct the retail-cinema portion of the Project, with the City contributing the remaining cost of site acquisition.

The ADDA included a number of provisions concerning parking. In addition to the underground parking spaces located beneath the retail-cinema building, the City contemplated creating approximately 300 off-site parking spaces, with as many as possible on Block 2. To that end, the City agreed that it would "use its best efforts and legally available means to provide additional parking as more particularly described in the Parking Facilities Agreement." The terms of the latter agreement were to be negotiated later in accordance with the "Retail/Cinema Parking Business Points" document (the Business Points) incorporated as Attachment 7 to the ADDA. The Business Points declared that "[t]he purpose of the final Parking Facility Agreement is to ensure that sufficient parking is available in the downtown . . . ." The parties agreed, however, that "the Parking Agreement is one, but certainly not the only tool for assuming this common goal." By their terms, the Business Points were non-binding, and stated in their first paragraph that "execution of this document will not bind or obligate the signatories until all the signatories execute the final Parking Facilities Agreement."

Regarding the Block 2 parking lot, the Business Points, echoing the language of the ADDA itself, stated, the "City will use its best efforts and legally available means to acquire the remaining parcels and, if the acquisition is successful, will restripe it to create a total of approximately 300 parking spaces." (Fns. omitted.) A footnote to the foregoing sentence cautioned that the "City cannot, however, commit to making the acquisition before a legally required eminent domain public hearing is held." Another footnote explained that the number of spaces might vary by plus or minus 10 percent, depending upon the City's determination of the number of spaces that could fit on the site.

Planning and Approval of the Project

In November 2002, the City and its environmental consultant completed an addendum to the original EIR (the EIR Addendum). The EIR Addendum found that the changes made from the original redevelopment project, including the elimination of the office building on Block 2, made the Project smaller in scale than the project evaluated in the previously certified EIR. The City concluded that an EIR Addendum was the required CEQA compliance document for the Project because the scope of the Project had narrowed, and the changes tended to reduce the severity of previously identified environmental impacts.

On November 23 and 30, 2002, a notice was published in the Redwood City Tribune announcing that the City Council and the Redevelopment Agency would hold a joint public hearing on December 9, 2002, to review both the ADDA and a revised summary report for the Project. (See Health & Saf. Code, § 33433, subd. (a)(1) & (2).) The City also made the ADDA, the Summary Report, and the EIR Addendum available for public review. The City sent between 550 and 600 official meeting notices to owners and tenants in the downtown area. Both the notice published in the Redwood City Tribune and the notices sent to downtown area owners and tenants stated that the joint public hearing would be held on December 9, 2002. In addition, the City sent 51 courtesy notices to individuals who had spoken at prior public meetings, whether or not they resided in the vicinity of the Project. The courtesy notices stated that public hearings would be held on December 9 and December 16, 2002. Wilson's principal, Donald Wilson, received the notice specifying only the December 9 hearing date and did not receive one of the 51 courtesy notices that included a second hearing date. He later testified that he "was aware of the two meetings by the time of the hearing on [December 9]."

The City Council and the Redevelopment Agency held a joint public hearing on December 9, 2002, to consider approving the EIR Addendum, approving the summary report, and authorizing execution of the ADDA. According to the minutes of the meeting, several members of the public spoke, including Donald Wilson. The minutes reflect that he urged the City Council to consider whether it should "endorse the expenditure of $26 million . . . to fund a parking structure primarily for the exclusive use of the theatre project." Neither Donald Wilson nor any other speaker raised any environmental issues, and Wilson made no objections concerning the EIR Addendum. He also submitted nothing in writing at the December 9 hearing.

After hearing the comments from the public, members of the City Council responded to the issues that had been raised. At the conclusion of the hearing, the City Council and the Redevelopment Agency adopted resolutions approving the ADDA, the EIR Addendum, and the summary report (the Resolutions).

On February 24, 2003, the City Council and the Redevelopment Agency held a joint meeting at which they agreed to authorize Redwood City, rather than the Redevelopment Agency, to acquire the properties on Block 1 by eminent domain.*fn2 The City Council and the Redevelopment Agency therefore approved the First Implementation Agreement to the ADDA. In adopting this agreement, the parties "determined that [Redwood] City, rather than the [Redevelopment] Agency should be responsible for acquiring the Acquisition Parcels, as defined in the [ADDA]."

Wilson's Action

Meanwhile, on February 7, 2003, Wilson had filed a complaint against the City. The original complaint contained three causes of action. It sought invalidation of the ADDA, a writ of mandate, and declaratory relief. On February 26, 2003, Wilson filed a first amended complaint (FAC), which is the operative pleading in this case. The action was brought as a "reverse validation action."*fn3 The FAC abandoned the writ of mandate cause of action, but like Wilson's original complaint, the FAC's first cause of action sought to have the court invalidate the ADDA on various grounds. The second cause of action requested declaratory relief.

For the most part the FAC challenged the Project as too costly to the taxpayers and improperly beneficial to the Developer. The FAC also attacked the Resolutions on certain procedural grounds. Among other things, the FAC claimed the ADDA should be invalidated because the Project had been substantially modified after its initial conception, and therefore a new EIR should have been prepared rather than an EIR Addendum. It also claimed the Resolutions were not preceded by appropriate public input because the public meeting allegedly scheduled for December 16, 2002, had been cancelled and the members of the City Council and the Redevelopment Agency had "plainly predetermined" that the Project would be approved. Finally, Wilson asserted that its property was not required for the Project.

In its prayer for relief, Wilson asked the court to determine that the approvals of the EIR Addendum and the ADDA were "invalid, illegal, void and of no effect." It also requested that the court direct the City Council and the Redevelopment Agency to seek reimbursement "for all monies illegally and improperly spent on the Project." The FAC further asked for a declaration that the Resolutions were not "proper and lawful" and did not "authorize the actions therein stated." Finally, Wilson requested an award of attorney fees and costs.

Proceedings Prior to Trial

Between the filing of the FAC and the scheduled date for commencement of trial, Wilson sought no discovery from the City. Although Wilson claimed in its mandatory settlement conference statement that it wanted to "[s]top the . . . Project until a new DDA is negotiated and the total cost is accurately known," at no time did Wilson ask the court for a stay or injunction to halt construction of the Project.

The City filed a motion for summary judgment in the action in August 2003. Among other arguments, the City contended that Wilson had failed to exhaust its administrative remedies with respect to the claimed CEQA violations and that Wilson's second cause of action for declaratory judgment did not present an "actual controversy" between the parties. (See Code Civ. Proc., § 1060.) The City claimed no actual controversy existed because Wilson's property "is not included within the . . . Project."

In its opposition to the City's motion, Wilson did not claim it had raised any CEQA issues at the December 9, 2002 public hearing, but asserted that an unidentified "local businessman" had raised concerns about the depth of the excavation.*fn4 The opposition did not directly address the City's contention that Wilson's second cause of action presented no actual controversy. It did note, however, that under the ADDA, "[Wilson's] block would be reserved for future development." (Italics added.)

The City's reply to Wilson's opposition pointed out the opposition raised issues regarding the City's eminent domain power that were not included in the pleadings. The City objected that Wilson had not sought leave to amend its complaint and contended that allowing Wilson to do so would ...

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