One more lesson on the speed of the interwebs: we were all set to take a deep dive into the California Court of Appeal's opinion in an inverse condemnation case, Bottini v. City of San Diego, No. D071670 (Sep. 18, 2018), when our colleague Brad Kuhn analyzed the case at his California Eminent Domain Report blog.
The title of Brad's post, "Improper CEQA Determination Does Not Trigger Regulatory Taking," tells you most of what you need to know. The short story is that the City asserted that Bottini's planned demolition of a beach bungalow as part of a project to build a new house required assessment and analysis under California's environmental reporting statute, CEQA (California Environmental Quality Act). Bottini disagreed, asserting the demolition was exempt from CEQA, and, by the way, the delay caused by the City's wrongful assertion of CEQA authority was a temporary taking.
As Brad writes, "[t]he Court of Appeal agreed with the owners that the proposed development was exempt from CEQA, as the demolition of the potentially historic resource was pursuant to a separate nuisance abatement action, and the only 'project' was the new construction. However, the Court rejected the owners' takings claim."
The interesting issue was whether the U.S. Supreme Court's Penn Central test for an ad hoc regulatory taking applied, or the California Supreme Court's test set out in Landgate, Inc. v. California Coastal Comm'n, 73 Cal. Rptr. 841 (Cal. 1998). In Landgate, the California court mirrored the then-valid Agins test for takings under the Fifth Amendment: a government action takes property when it results in either a denial of all economically beneficial use, or does not substantially advance a legitimate state interest. Takings nerds know that in Lingle v. Chevron U.S.A., Inc., 544 U.S. 528 (2005), the U.S. Supreme Court jettisoned the latter part of the Agins test, and held that "substantially advances" is a test of due process, not takings.
But the California Supreme Court has never gone back, post-Lingle, and told us whether the "substantially advances" test is still good as a takings test under California law. It could be, after all. There's no reason that a taking under the California Constitution needs to follow the Fifth Amendment's analysis, provided that California recognized more, not less, protection to the property owner. But the California Supreme Court has never clarified. As another California Court of Appeal wrote, "there are no California appellate cases that expressly hold that Landgate did not survive Lingle."
In Bottini, the trial court applied Landgate's test, and concluded that the City's action did not fail to substantially advance a legitimate state interest. On appeal, the City urged the court of appeal to apply the same test and reach the same result. Bottini, by contrast, argued that the Penn Central test governed, and applying that test should have resulted in a conclusion the City's wrongful delay was a taking.
The Court of Appeal agreed with Bottini that the Penn Central test was applicable:
We now answer that question in the negative and conclude that the Penn Central test endorsed in Lingle—and not the "substantially advances" formula—applies to ad hoc regulatory takings claims that arise under the California Constitution.Slip op. at 35. Read the court's reasons for doing so on pages 35 to 37.
But even though Bottini convinced the court to apply the right test, there was no joy to be had, because the court concluded that even under the Penn Central test, there was no taking because Bottini's expectations were not "distinct," but rather "vague and abstract." Slip op. at 39.
Bottini testified that he purchased the home after confirming with the prior owner that the bungalow could be demolished. But his declaration did "not state that, at the time the Bottinis purchased the property at issue, they intended to demolish the Windemere and construct a residence on the lot." Id. (emphasis original). A narrow distinction for sure -- and one we don't quite get -- but a distinction the court found critical. Remember that next time you are drafting a declaration.
Plus, even if they had an expectation they could demolish, the court concluded they should have known that a demolition probably could not have been undertaken without any kind of environmental review. Why, you ask? Well, the court doesn't really say. Maybe property owner -- especially beachfront property owners -- just should expect that they need to jump through regulatory hoops (even where, as the court held here, they didn't need to).
Read Brad's post for more of the details about how the court treated the other two Penn Central factors.
An odd result, for sure: on one hand, the court held that as a matter of law, Bottini didn't need CEQA review. But on the other, Bottini's expectation that he didn't need CEQA review was not reasonable. Explain that one to us, and we'll buy you a beer.