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Supreme Court Finds That Permit Holders Forfeit Challenges to Permit Conditions by Completing Construction During Pending Litigation

On July 6, 2017, the California Supreme Court issued its decision in Lynch v. California Coastal Commission (July 6, 2017, S221980), in which it held that homeowners that obtained a permit for the construction of a seawall forfeited their challenges to certain conditions in the permit when they proceeded with construction of the seawall during the pending lawsuit.  The Court rested its conclusion on the equitable principle that permit holders cannot accept all the benefits of the permit and then later complain of its burdens.

Plaintiffs in the case are homeowners of oceanfront properties, sitting on a coastal bluff.  Plaintiffs applied to the city for a permit to demolish the old wooden seawall and midbluff structure, which had been damaged by storms and decay, construct a new concrete seawall, and rebuild a stairway.  Plaintiffs sought a coastal development permit from the California Coastal Commission (Commission) for the project.  The Commission ultimately approved a coastal development permit that allowed seawall demolition and reconstruction.

The permit included three special conditions:  (1) a prohibition of the reconstruction of the stairway; (2) expiration of the permit in 20 years and a prohibition of future development from relying on the seawall; and (3) before the expiration of the permit, a requirement that plaintiffs apply for a new permit to remove the seawall, change its size or configuration, or extend the authorization period.  Plaintiffs challenged the special conditions in a petition for writ of administrative mandate.  During the pendency of the litigation, Plaintiffs satisfied the permit conditions, including recording the special conditions as deed restrictions, obtained the permit, and constructed the seawall.  Plaintiffs were successful in the trial court, and the trial court issued a writ directing the Commission to remove the special conditions challenged in the lawsuit.  The appellate court reversed, finding that plaintiffs waived their objections.

The Supreme Court agreed that plaintiffs could not challenge the objectionable permit conditions.  However, the Court reasoned that plaintiffs had forfeited, rather than waived, their right to challenge the conditions by obtaining the permit and constructing the seawall.  The Supreme Court explained that waiver requires an actual intention to relinquish a known right whereas “forfeiture results from the failure to invoke a right.”  In this case, plaintiffs’ actions constituted a forfeiture.  “By accepting the benefits of the permit and building the seawall, plaintiffs effectively forfeited the right to maintain their otherwise timely objections.”  (Lynch v. California Coastal Commission (July 6, 2017, S221980) at 7.)

The Court found the case to be similar to other land use cases where landowners could not challenge permit conditions because they had acquiesced to the conditions by agreement, or by failing to challenge the conditions while accepting the benefits of the permit.  Further, the Court distinguished the narrow exception provided by a statute, the Mitigation Fee Act, which established a procedure where permit holders may protest the imposition of a fee while moving forward with the project.  The Court declined to create a similar, under-protest exception for other permit conditions.  The Court maintained that allowing such exceptions would disrupt municipal administrations, change the dynamics of permit negotiations, and allow permittees to reap the benefits of the permit while litigating all the permit’s restrictions they find objectionable.

The Court concluded that without an express agreement from the agency preserving the objections, or an exception covered by statute, landowners must litigate the objections to permit conditions before constructing the permitted project.  Otherwise, they risk a finding that the objections to the permit conditions were forfeited.

For more information on the case, please contact Brittany Johnson at bjohnson@somachlaw.com.

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