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Lockaway Storage et al v. County of Alameda et al

May 9, 2013

LOCKAWAY STORAGE ET AL., PLAINTIFFS AND RESPONDENTS,
v.
COUNTY OF ALAMEDA ET AL., DEFENDANTS AND APPELLANTS.



Super. Ct. No. HG 03 091201) Trial Court: Alameda County Superior Court Trial Judge: Honorable James A. Richman Honorable John M. True, III

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

CERTIFIED FOR PUBLICATION

(Alameda County

I. INTRODUCTION

The County of Alameda (County) determined that an amendment to its General Plan adopted by voters as Measure D prohibited Lockaway Storage et al., from completing a project to develop a self-storage facility in the County. Lockaway sued for inverse condemnation and civil rights violations. After issuing a writ of mandate that authorized the project to proceed, the superior court conducted a non-jury trial which resulted in a judgment holding the County liable for a temporary regulatory taking and awarding Lockaway damages of $989,640.96. Pursuant to a separate order, the court awarded Lockaway attorney fees totaling $728,015.50.

The County appeals both the judgment and the attorney fee order. It contends the judgment must be reversed because (1) Lockaway's development plan violated Measure D; and (2) even if the court correctly allowed Lockaway to proceed with the project, the County's conduct did not effect a regulatory taking. The County also contends that if the judgment is affirmed, the trial court erred by awarding Lockaway attorney fees for work that was irrelevant or unnecessary to its inverse condemnation claim.

We conclude that the trial court was correct to rule that Lockaway's project was unaffected by the passage of Measure D. The County's change of position, almost two years after Measure D was implemented, was an unreasonable and unjust interpretation of the measure that effectuated a regulatory taking. The basis for the award of attorney fees is easily discerned from the record and was reasonably within the scope of the trial court's discretion. Thus, we affirm.

II. STATEMENT OF FACTS

A. The Property

Lockaway's property is an 8.45-acre parcel of land in an unincorporated area of Alameda County between Castro Valley and the City of Dublin. Located on the frontage road to Interstate 580, the property was used by Caltrans during highway construction and then for several years functioned as a public dump.

In 1989, the County Board of Supervisors approved an ordinance zoning the property for "agricultural" use with an alternative conditional use for "open storage of recreational vehicles and boats." Over the next 10 years, the County approved several Conditional Use Permits (CUP's) for vehicle storage on the property which expired without development. In 1999, the County approved another CUP for the property authorizing a storage facility for recreational vehicles and boats (the 1999 CUP). The 1999 CUP required that it be implemented within three years of issuance, or it would terminate on September 22, 2002.

In May 2000, Lockaway entered into a contract to purchase the property for $800,000. Lockaway, a general partnership that develops, owns and operates storage facilities, intended to implement the 1999 CUP to develop a boat and RV self-storage facility. Before Lockaway closed escrow, its general partner Michael Garrity met with County Zoning Administrator Darryl Gray, who confirmed that the property could be used as Lockaway intended. When escrow closed in August 2000, Lockaway assumed the rights and obligations of the seller in the 1999 CUP.

B. Measure D

In November 2000, Alameda County voters enacted Measure D, a growth control initiative which became effective on December 22 of that year. Among other things, Measure D generally prohibits the development of a storage facility in the area of Lockaway's property, except by public vote. Furthermore, Section 19, subdivision (c) of the measure states in part: "Except as required by state law, no subdivision map, development agreement, development plan, use permit, variance or any other discretionary administrative or quasi-administrative action which is inconsistent with this ordinance may be granted, approved, or taken."

Notwithstanding Section 19, two other sections of Measure D limit its application. One is Section 3, titled "Protection of Legal Rights," which states: "Notwithstanding their literal terms, the provisions of this ordinance do not apply to the extent, but only to the extent, that courts determine that if they were applied they would deprive any person of constitutional or statutory rights or privileges, or otherwise be inconsistent with the United States or State constitutions or law. The purpose of this provision is to make certain that this ordinance does not violate any person's constitutional or legal rights. [¶] To the extent that a provision or provisions of this ordinance do not apply because of this section, then only the minimum development required by law which is most consistent with the provisions and purposes of this ordinance shall be permitted."

The other is Section 22, titled "Application," which provides: "(a) This ordinance does not affect existing parcels, development, structures, and uses that are legal at the time it becomes effective. However, structures may not be enlarged or altered and uses expanded or changed inconsistent with this ordinance, except as authorized by State law. [¶] (b) Except to the extent there is a legal right to development, the restrictions and requirements imposed by this ordinance shall apply to development or proposed development which has not received all necessary discretionary County and other approvals and permits prior to the effective date of the ordinance."

C. The Lockaway Project

Even after Measure D became effective, Lockaway pursued its plan to develop the property and continued its dialogue with County Administrator Gray and other members of County staff. Gray testified at trial that he never told any Lockaway representative that Measure D's use restrictions applied to the Lockaway project. By the end of 2000, Lockaway had expended approximately $70,000 on project consultants and architects.

In February 2002, Lockaway applied for a grading permit. The County deemed the application incomplete and specified additional requirements and fees. Lockaway went to work to meet the County's requirements.

In July 2002, Lockaway project manager David Michael and construction manager Gary Brown met with Phil Kubicek from the County's planning department. Gray participated in the meeting by telephone. During the meeting, both Gray and Kubicek acknowledged that Lockaway had already implemented the 1999 CUP. Gray also said that if the grading and building permits were not issued by the CUP's September 22 expiration date, he would prepare a formal letter stating that the CUP had been implemented. At trial, Gray denied making these assurances. However, the trial court expressly found that Gray's testimony "in this regard, like his testimony on several other material points, lacks credibility."

On August 30, 2002, Gray informed Michael that unless Lockaway obtained a new CUP, it could not proceed with its project after the 1999 CUP terminated on September 22. That same day, Michael prepared a written request for an extension of the 1999 CUP and personally delivered it to Gray and other County staff associated with the project. His request referenced Gray's assurances during their July 2002 meeting. In response, Lockaway was informed it could not renew its permit, but had to apply for a new one. By that time, Lockaway had spent approximately $400,000 on its project, in addition to the property's $800,000 purchase price.

D. Lockaway's Application for a New CUP

Lockaway applied for the new CUP under protest on September 3, 2002. On September 19, the County issued a grading permit. But the County did not issue a building permit for the project prior to the September 22, 2002, termination date of the 1999 CUP.

The Castro Valley Municipal Advisory Council (Advisory Council) conducted a hearing on September 23, 2002, to consider Lockaway's application for the new CUP. Both Gray and County Counsel Lorenzo Chambliss expressed the opinion that the Lockaway project was prohibited under Measure D. The County took the position that Measure D applied to the project because Lockaway had not obtained a building permit and commenced construction prior to Measure D's December 22, 2000, effective date. No mention was made of the possible effect of either Sections 19 or 22 on Lockaway's right to proceed with the project.

Lockaway argued that its right to complete the project was unaffected by Measure D because the 1999 CUP was implemented before it expired. To support this contention, Lockaway relied on evidence demonstrating the substantial work it had done on the project and on Gray's assurances that the 1999 CUP had been implemented. Several members of the Advisory Council expressed concern that the County had mishandled the project and that it would be unfair to deny Lockaway's application even though it conflicted with Measure D.*fn1 Ultimately, the Advisory Council voted 5-to-1 to recommend approval of Lockaway's application for a new CUP.

On October 9, 2002, the West County Board of Zoning Adjustments considered the Advisory Council recommendation at a hearing. The County's position remained that Lockaway's application should be denied pursuant to Measure D because Lockaway had not obtained a building permit and commenced construction prior to December 22, 2000. The Board of Zoning Adjustment rejected the Advisory Council's recommendation and denied Lockaway's application for a new CUP on the ground that it was inconsistent with the County's general plan as amended by Measure D.

On March 6, 2003, the County Board of Supervisors heard Lockaway's appeal of the Board of Zoning Adjustment's decision. The Board of Supervisors determined that the Lockaway project was subject to Measure D and affirmed the Board of Zoning Adjustment's decision to deny Lockaway's application for a new CUP. Thereafter, the County stopped the work on the project.

E. The Present Action

On April 4, 2003, Lockaway filed its complaint against the County and others alleging causes of action for inverse condemnation and civil rights violations seeking damages, a writ of mandate and other equitable relief.

1. Pretrial Proceedings

Lockaway's seventh cause of action sought a writ of mandate commanding the County to recognize that the 1999 CUP had vested, to recognize that Measure D did not apply to its project, and to allow construction of the project to proceed. The parties agreed this cause of action would be decided on cross-motions for summary adjudication pursuant to their stipulation of undisputed facts.

The motions were considered in November 2004. The County argued that the Lockaway project could not proceed because the 1999 CUP was issued pursuant to a zoning provision which was superseded by Measure D. According to the County, when Measure D took effect in December 2000, the zoning ordinance became ineffective and the 1999 CUP issued pursuant to that ordinance was also ineffective. Lockaway argued that its project was exempt from Measure D under Section 22 of the ordinance which states that it does "not affect existing parcels, development, structures, and uses that are legal at the time it becomes effective," and that the "restrictions and requirements imposed by this ordinance shall apply to development or proposed development which has not received all necessary discretionary County and other approvals and permits" prior to the effective date of the measure. Lockaway argued that this "grandfather clause" applied to its project because it had obtained all necessary discretionary approvals from the County prior to Measure D's effective date.

On November 24, 2004, the superior court granted summary adjudication on the mandate cause of action in Lockaway's favor. The court found that Measure D did not apply to the Lockaway project because the undisputed facts established that the project was "squarely under the protections of Section 22 of Measure D." In reaching this conclusion, the court observed that, although the County had not yet issued Lockaway a building permit, the County conceded a building permit was ministerial. The court rejected the County's argument that Measure D voided both the 1999 CUP and the zoning ordinance pursuant to which that CUP was issued. The court determined that the County's argument was inconsistent with both the purpose of a grandfather clause and the plain language of Section 22.

On February 14, 2005, the superior court filed an order for issuance of a writ of mandate commanding the County to "recognize [the 1999 CUP] as a valid conditional use permit which is vested in Petitioners and to allow construction to proceed on Petitioners' property pursuant to said conditional use permit . . . ." The writ issued on February 28, 2005.

Initially, the County resisted complying with the writ and Lockaway initiated a contempt proceeding. In August 2005, the County issued the necessary permits so that Lockaway could complete its project.

During the lengthy pretrial period that followed, Lockaway settled its claims against the individual defendants in this case. Lockaway's remaining claims against the County were temporally divided into three "phases" consisting of Phase I claims arising prior to September 22, 2002, based on alleged delays during the permitting process; Phase II claims arising between September 22, 2002, and April 15, 2005, based on the County's application of Measure D to the Lockaway project; and Phase III claims arising after April 15, 2005, based on alleged delays in compliance with the writ of mandate. The parties settled the Phase I and Phase III claims prior to trial. Thus, the claims that were considered at trial pertained exclusively to the period between September 22, 2002, and April 15, 2005, when the County prohibited work on the Lockaway project pursuant to Measure D.

2. Trial

Lockaway's damages claims against the County were tried in March 2009. The trial court issued its posttrial findings, conclusions and order on September 22. In its September 2009 order, the court found that the County's possible liability turned on the answers to two questions: "(1) Did Defendant's conduct amount to a temporary 'taking' under the Fifth Amendment to the US Constitution thereby requiring that Plaintiffs be compensated? (2) Did Defendant's conduct violate Plaintiffs' substantive due process rights?"

To answer the first question, the trial court applied a test articulated by the Supreme Court of the United States in Penn Central Transp. Co. v. New York City (1978) 438 U.S. 104, 115-116 (Penn Central). Pursuant to that "Penn Central inquiry," the trial court found that the County's application of Measure D was a temporary regulatory taking making it liable in damages to Lockaway on its cause of action for inverse condemnation. The trial court supported its conclusion with extensive findings of fact including that the County's regulatory action had a "substantial, negative economic impact" on Lockaway's use of the property, had "materially interfered with Plaintiffs' distinct, investment-backed expectations," and that its conduct could not be justified as a normal regulatory mistake.

However, the trial court also rejected Lockaway's due process claim. The court reasoned that while the County's conduct was outside the realm of an inadvertent error or honest mistake, the County had not "deliberately flouted the law and trammeled significant property rights, thereby violating the substantive due process rights of Plaintiffs."

The damages phase was tried in April 2010. On September 14, 2010, the trial court filed its findings which awarded Lockaway $504,175 in lost profits, and $324,954 in increased construction costs due to the 30-month delay in construction during the Phase II period. With the addition of prejudgment interest, ...


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