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Summit Media LLC v. City of Los Angeles

December 10, 2012


APPEAL from a judgment of the Superior Court for the County of Los Angeles. Terry A. Green, Judge. (Los Angeles County Super. Ct. No. BS 116611)

The opinion of the court was delivered by: Grimes, J.


Affirmed in part, reversed in part and remanded.


This is a dispute among several outdoor advertising companies and the City of Los Angeles over certain billboards with digital displays, and over the city's authority to settle with two of those companies on terms that permitted them to digitize many of their existing billboards, even though a municipal ordinance expressly prohibited "alterations or enlargements" of such signs. A third company filed this suit for a writ of mandate ordering the city to set aside the settlement agreement and withdraw all permits issued under it. The trial court found the settlement agreement was illegal and void, because it allowed the alteration of billboards in violation of municipal ordinances. But the trial court declined to revoke permits that had been issued pursuant to the agreement, concluding permit revocation was an administrative issue for determination on an individual basis.

We affirm the trial court's order finding the settlement agreement void, but conclude the court also must order revocation of all digital conversion permits granted under the illegal settlement agreement.


In August 2008, Summit Media LLC (plaintiff) sought a writ of mandate ordering defendant City of Los Angeles to set aside a settlement agreement between the city, on the one hand, and CBS Outdoor Inc. and Clear Channel Outdoor, Inc. (real parties in interest), on the other. Plaintiff and real parties are companies engaged in the outdoor advertising business in the city. All of them own and maintain numerous "off-site signs"--billboards in locations other than at a property owner's business. Plaintiff contended the city's entry into the settlement agreement with real parties (its competitors) was an invalid, illegal and ultra vires act, and that all permits and authorizations the city had issued pursuant to the settlement should be revoked.

The genesis of the contested settlement agreement, executed two years earlier, was litigation over city ordinances regulating off-site signs. In December 2000, the city council passed an ordinance imposing an interim prohibition on the issuance of permits for the construction or placement of new off-site signs. In April 2002, the city council amended the Los Angeles Municipal Code (LAMC or municipal code) to establish a permanent, general ban (with exceptions not relevant to this case) on new off-site signs throughout the city (the 2002 sign ban). The 2002 sign ban also applied to "alterations or enlargements of legally existing off-site signs." (L.A. Ord. No. 174547.)

Also, in February and July 2002, the city council passed two ordinances amending the municipal code to establish an off-site sign periodic inspection fee and an inspection program. The first ordinance established an off-site sign inspection program and an annual fee to pay for it (the inspection program), and the second ordinance set the amount of the annual inspection fee (the sign fee ordinance). The main components of the inspection program were that all off-site signs on private property were subject to annual inspection; an annual inspection fee (later set by ordinance at $314) was imposed on all off-site signs; upon payment of the fee and furnishing of the relevant building permit or equivalent documents, the city would issue an inspection certificate; and if the fee were not paid, or the city determined that a sign had not been lawfully erected, the sign would be removed. (LAMC, former §§ 91.6205.18.1-91.6205.18.9.)

Litigation over the inspection program and sign fee ordinance ensued, the complete history of which is unnecessary to recount here. On October 4, 2002, Vista Media Group, Inc. (hereafter Vista) (also in the outdoor advertising business) brought a reverse validation action (Code Civ. Proc., § 860 et seq.) in superior court. The Vista action sought a judicial declaration that the sign fee ordinance was invalid, on the grounds that it violated free speech, takings and due process constitutional provisions and the fee exceeded the reasonable cost of achieving its purported goal. We find it helpful at this point to briefly summarize what is a validation, or "reverse validation" action. The validation statutes permit a local government entity to obtain a judicial decision that a municipal or other local agency has acted legally in making a decision affecting real or personal property. A so-called reverse validation action seeks the opposite, a declaration that the act or omission of a local government is invalid and illegal. A validation, or reverse validation, action may be brought only if authorized by another statutory provision.

Vista's action was authorized under statutes that govern fees charged by local agencies for zoning variances, building permits and the like. (See Gov. Code, §§ 66014, subds. (a) & (c), 66022, subds. (a) & (b); Code Civ. Proc., § 860 et seq.) Real parties intervened in the Vista action and in December 2002 filed cross-complaints against the city, seeking to invalidate the sign fee ordinance and also seeking declaratory and injunctive relief preventing the city from enforcing the reporting requirements of the off-site sign inspection program.

Vista settled its lawsuit with the city in December 2004 and moved to have its settlement incorporated into a stipulated judgment. Real parties objected, contending the Vista settlement was "ultra vires and void," because the city was contracting away its police power by creating a reduced inspection fee schedule and enforcement program applying only to Vista, and the new fee structure for Vista was established without public participation. The trial court (Judge Dau) eventually approved a revised stipulated judgment. (We do not address the city's settlement with Vista any further.) Then, on September 30, 2006, the city and real parties entered into a settlement agreement in the Vista action.

The city and real parties agreed to file a stipulated judgment dismissing real parties' claims. The stipulated judgment, expressly reciting the terms of the settlement agreement, was entered by Judge Dau on February 2, 2007. In April 2007, plaintiff sued the city in federal court. The district court declined to exercise jurisdiction, and in August 2008 plaintiff filed this lawsuit.

This lawsuit was initially assigned to Judge Chalfant, who issued a number of rulings that real parties challenge in this appeal, as discussed below. After Judge Chalfant recused himself from this case, it was reassigned to Judge Green. We now quote Judge Chalfant's description of the facts of this case, later found by Judge Green to be an accurate recital.

"The Settlement Agreement grants [real parties] exemption from the City's [2002 sign ban], the Off-Site Sign Inspection Program, and numerous other zoning and building laws regulating off-site signs in the City.

"The Settlement Agreement exempts [real parties] from the application of numerous zoning and building laws, including many provisions of the [2002 sign ban].[*fn1 ] The Settlement Agreement allows [real parties] to maintain all of their pre-1986 off-site signs, whether or not lawfully erected, whether or not they have permits, whether or not they comply with their permits, and whether or not they violate present or prospective City building ordinances. . . .[*fn2 ]

"The Settlement Agreement also requires the City to issue new permits to allow [real parties] to 'modernize' up to 840 of their post-1986 off-site signs--one quarter of their total inventory. The City has agreed to issue these permits despite the [2002 sign ban] for new off-site signs, and its strictly enforced ban on these very types of modification. The City has also agreed to issue these permits without regard to whether or not those 840 signs were lawfully erected, whether or not those 840 signs ever had permits, whether or not those 840 signs comply or have ever complied with a permit, and whether or not those 840 signs violate present or prospective City building and zoning ordinances.

"Additionally, the Settlement Agreement permits [real parties] to add 200 new off-site signs to their existing sign structures, known as 'back-up faces,' despite the City's general ban on all new off-site signs, including adding 'back-up faces,' by way of alteration or modification of an existing sign structure.

"The Settlement Agreement gives [real parties] a general exemption from the requirement to provide evidence that pre-1986 sign structures were lawfully erected, a direct violation of LAMC section 91.6205.18(3).[*fn3 ] Off-site signs erected by [real parties] between 1986 and 1998 will be allowed to exist even if no permit was ever obtained or the signs were illegally modified. The Settlement Agreement gives [real parties] the right to maintain sign structures that are out of compliance with the original building permit, even though such alterations render the signs illegal and subject to abatement under LAMC section 91.6205.18(9).[*fn4 ]

"The Settlement Agreement specifically identifies 10 separate City laws with which [real parties] need not comply in undertaking modernizations, including LAMC sections 12.21(A)(7)(l) (off-site sign ban), 12.21.1(A)(10) (height restrictions), 12.22(a)(23) (regulations in mini-shopping centers and commercial corners), 91.6205.18 (the Inspection Program), and LAMC § 91.6205.11(11) or any other ban on one or more categories of signage.[*fn5 ]

"[Real parties] are also exempted from the usual procedures for obtaining permits. Section 5(D)(ii) [of the settlement agreement] prescribes that, in the event the City cannot process [real parties'] permit applications within 30 days, the City is prohibited from processing any other 'building, demolition or relocation permits for any structure, including but not limited to signs' until it has cleared [real parties'] applications. Thus, no matter what the circumstances or exigencies, the applications of every other Los Angeles resident and property owner must be put on hold until those of [real parties] are approved."

As the trial court found, "[s]hortly after signing the Settlement Agreement, [real parties] began undertaking significant modifications of their existing signs, which are otherwise prohibited by the general ban on off-site signs. Clear Channel has already received City permits under the Settlement Agreement to convert over 40 off-site signs to digital displays. Because the cost to convert an existing static, wood and vinyl sign to an LED digital display exceeds 50 percent of the replacement cost of both the sign and sign support structure, such a conversion would not be a mere 'alteration repair or rehabilitation' within LAMC section 91.6216.4,[*fn6 ] but would be either a violation of that section or a new sign subject to the general ban. [CBS Outdoor Inc.] has received numerous permits as well."

In December 2008, the city enacted an ordinance expressly preventing the issuance of building permits for off-site signs with digital displays. (L.A. Ord. No. 180445.) The ordinance imposed "interim regulations on the issuance of building permits for Off-Site Signs, including Digital Displays, and new Supergraphic Signs." The ordinance defined "digital display" and "supergraphic sign," and prohibited both the issuance of building permits and the alteration or construction of all off-site signs (including digital displays and supergraphic signs) "pursuant to a building permit issued prior to the effective date of this ordinance." (The ordinance included an exception if the building permit holder had already performed substantial work and incurred substantial liabilities in reliance on the permit.) The ordinance's "whereas" clauses referred to the city's settlements with real parties allowing them "to modernize a certain number of existing conventional signs to digital signs," and stated that "no existing City regulations address where and how these conversions can take place" and that the conversions were "causing unanticipated negative impacts including negative impacts on residential neighborhoods . . . ." Prohibitions explicitly banning off-site signs with digital displays became a part of the municipal code effective August 14, 2009. (LAMC, § 14.4.4(B)11.)

After multiple hearings, the trial court (Judge Green) granted plaintiff's motion for a writ of mandate, ordering the city to set aside and cease implementing the settlement agreement. The court ruled on each of the contentions we discuss in this opinion, and we affirm all of the rulings which led the court to conclude the settlement agreement was void for all purposes. The court, however, rejected plaintiff's contention that all permits that had been issued pursuant to the settlement agreement should be revoked. The court concluded that the issue of permit revocation was an ...

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