Pappas v. State Coastal Conservancy

Citation: Not availableDocket: B304347

Court: California Court of Appeal; December 27, 2021; California; State Appellate Court

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The case involves the California Coastal Act, which restricts the sale or transfer of certain state-owned property interests along the coast. It specifically addresses whether a public access easement granted to a state agency by the owner of a large coastal parcel in Hollister Ranch is subject to these restrictions. The court concludes that it is. Hollister Ranch, a gated community and working cattle ranch in Santa Barbara County, has been the center of disputes between state agencies, civic activists, and the Hollister Ranch Owners Association (HROA) regarding public access to its shoreline. In 2016, the California Coastal Commission and the Coastal Conservancy settled a dispute with Hollister, allowing certain organizations limited access to the beach, which the Gaviota Coastal Trail Alliance viewed as a concession to Hollister. The Alliance intervened in the case and alleged that the State Defendants violated the Coastal Act and the Bagley-Keene Open Meeting Act in their settlement with Hollister. The trial court found that the State Defendants did violate section 30609.5 of the Coastal Act and declared the settlement agreements invalid. The court ruled in favor of the Alliance on this point but found other claims moot or barred by the statute of limitations. Hollister appeals the ruling regarding section 30609.5, while the Alliance cross-appeals the statute of limitations findings. The appellate court affirms the trial court's judgment regarding the Coastal Act violations and directs the trial court to enter judgment against the State Defendants, while other judgments are affirmed. The factual background notes that the Ranch spans 14,500 acres and has a complex history involving land grants and various ownership changes, including the YMCA's acquisition of easements in the early 1970s for recreational purposes.

Buyers of land in the new subdivision committed to joining the Hollister Ranch Owners Association (HROA) and adhering to building and occupancy restrictions aimed at maintaining the area’s rural and agricultural character. They also agreed to dedicate at least 98% of their land to agricultural uses, allowing the Ranch to qualify as an agricultural preserve under California’s Land Conservation Act, which reduced property tax rates for owners. The YMCA’s parcel was excluded from the subdivision, with established access easements allowing traversal of several roads and paths to the beach.

The YMCA, having completed camp plans in the late 1970s, applied for and received a Coastal Development Permit (CDP) to construct a recreation center and accommodations for campers and staff, contingent upon ensuring public access to Cuarta Canyon Beach. To meet this condition, the YMCA recorded an 'Irrevocable Offer to Dedicate and Covenant Running with the Land' (OTD) in 1982, effectively granting the public easement rights over the easements obtained from MGIC in 1970, along with a proposed Blufftop Trail Easement.

Following the recording of the OTD, the YMCA commenced construction, prompting an immediate lawsuit from HROA, which led to the YMCA abandoning the project after HROA offered to reimburse costs. HROA subsequently annexed the YMCA parcel into the subdivision, sold it to a private buyer, and the proceeds went to the YMCA. Rancho Cuarta now owns the former YMCA property, with all 136 parcels within the Ranch belonging to the subdivision. The Ranch owners and guests have exclusive access to the coast, while HROA controls beach parcels as a common area, with public access limited to certain beach entry points.

In 2013, the Conservancy accepted the OTD on behalf of the Commission, resulting in a lawsuit from Hollister. The complaint asserted that the YMCA could not separate its easement rights from the inland parcel and challenged the validity of the proposed trail. After initial summary judgment motions were denied, settlement negotiations led to agreements between the parties, including the HROA Settlement and the Class Settlement, where the State Defendants quitclaimed their interests in the OTD for guaranteed public access to the beaches. The settlements were approved in closed sessions, and the court mandated the publication of a public notice regarding the settlements before a final fairness hearing.

A notice announcing a Class Settlement was published in the Santa Barbara News-Press in June 2018. The Alliance, an ad hoc group advocating for coastal access, objected and sought to intervene in the case. The settling parties, including the Hollister Ranch Owners Association (HROA), opposed this motion, arguing it was a tactic to undermine the 2017 Settlement and force a trial. The trial court granted the Alliance's motion to intervene, despite objections from the Class Plaintiffs, who viewed the Alliance's actions as attempts to relitigate issues irrelevant to their interests.

Subsequently, the Class Plaintiffs sought final approval of the Class Settlement, incorporating the HROA Settlement terms. The Alliance objected again, moving to set aside both settlements. The trial court found the Alliance's challenges overly complex and granted it leave to file a cross-complaint to assess the validity of the settlements. The Alliance filed a cross-complaint and a petition for writ of mandate, alleging multiple violations under the Coastal Act and the Bagley-Keene Open Meeting Act. Hollister's demurrer was unsuccessful, and the Alliance subsequently moved for judgment on six of the causes of action.

The trial court ruled in favor of the Alliance on one cause of action, determining the Conservancy had violated the Coastal Act by improperly agreeing to a quitclaim without following required procedures, thus invalidating the settlements. This ruling addressed all other claims except the Bagley-Keene claim, which was deemed time-barred. Both Hollister and the Alliance appealed, with Hollister contesting several trial court decisions regarding intervention, demurrer overruling, procedural requirements, due process, and evidence admission. The Alliance cross-appealed, challenging the trial court's ruling on the expiration of limitations for certain claims. The court’s decision to allow the Alliance to intervene was evaluated for abuse of discretion, confirming that it did not exceed reasonable bounds.

Hollister argues that the Alliance's intervention expanded the case beyond the Second Amended Complaint, but the court disagrees. The Alliance's proposed answer and objections pertain specifically to public access to coastal byways and beaches, as well as rights stemming from the OTD accepted by the Conservancy in 2013. The trial court appropriately considered judicial economy and the avoidance of multiple lawsuits in its decision. Denying intervention would compel the Alliance to initiate a separate action, which the court aimed to prevent to maintain efficiency. Although Hollister claims that the intervention undermines California's class action bar and violates class action protocols, the court finds that the Class Plaintiffs are seeking primarily equitable and declaratory remedies, not financial settlements that could incentivize professional objectors. Hollister's concerns about third-party intervention affecting state litigation are overstated, as the trial court recognized the need to balance the interests of all parties involved. The court noted that its ruling aligns with a liberal interpretation of intervention under section 387, consistent with the Coastal Act's goal of public participation in coastal decision-making. Additionally, the trial court correctly overruled Hollister's demurrer to the Alliance’s writ petition, reiterating that the issues raised were already addressed in the primary dispute regarding public access rights under the OTD.

The Conservancy is bound by the Coastal Act's restrictions on selling or transferring state lands, despite the pending litigation exception under the Bagley-Keene Act. The Coastal Act mandates that state land along the coast may only be sold or transferred if it maintains a permanent property interest that ensures public access to the sea. This provision was enacted in 1999 to prevent the loss of coastal access. The Conservancy can bypass certain restrictions by making specific access-related findings during a noticed hearing, which include retaining permanent property interests for public access, providing equivalent or greater public access, protecting environmentally sensitive areas, or confirming a lack of existing or potential public access to the sea.

The Alliance's second cause of action argued that the OTD constituted state land and therefore could not be transferred to Hollister without compliance with section 30609.5. The trial court supported this claim, ruling that the Conservancy violated the statute by agreeing to a quitclaim of its interest in the OTD without the required hearing, thus invalidating the HROA Settlement.

Hollister contends that the Bagley-Keene Act allowed the Conservancy to discuss the Hollister settlements in closed session, citing the pending litigation exception. This exception permits secret consultations with legal counsel regarding ongoing litigation if public discussion could harm the state's position. Hollister references the Southern California Edison Co. v. Peevey case, where the Supreme Court upheld a settlement under this exception. However, the court emphasized that the exception does not allow state bodies to neglect statutory obligations. The outcome in Peevey would have differed if the settlement had altered utility rates. Hollister also expresses concern that compliance with section 30609.5 would compel board members to reveal privileged information discussed during settlement negotiations.

Section 30609.5(c) allows the board to receive privileged memoranda and meet with counsel in closed sessions regarding pending litigation without hindering its ability to deliberate and vote publicly on components of a proposed settlement agreement. The argument that such privileges invalidate the hearing process under section 30609.5 is rejected, as it does not exempt the agency from its obligations under the Coastal Act.

Regarding the HROA settlement and the OTD, the cessation of litigation by Hollister and the State Defendants over the OTD's validity was challenged by the Alliance's writ petition. Hollister contended that the OTD, deemed void, could not represent an "ownership interest" in "state land," which would necessitate compliance with section 30609.5’s procedures. Hollister also argued that the rights transferred were either an irrevocable license or a lesser interest not included within the statutory definitions of "state land."

The trial court criticized Hollister's reliance on outdated real property law distinctions, emphasizing that such a view would undermine the Coastal Act's intent for full public participation in coastal management. It concluded that failing to adhere to section 30609.5's public hearing requirements rendered the HROA settlement ineffective for the Conservancy.

The court independently reviewed the ruling, noting that the definition in section 30609.5(e) does not limit subdivision (c) to traditional property rights classifications. It emphasized that the statute's concern is the impact on public access to the coast rather than the specific nature of property rights transferred. Since the OTD's status as a potential accessway had not been legally resolved, the trial court correctly found that a transfer under section 30609.5 had occurred.

The trial court refrained from commenting on how the Conservancy should proceed regarding the HROA Settlement approval. It allows Hollister and the State Defendants to align the settlement with section 30609.5 or pursue litigation for a quiet title action. Hollister's claim of due process deprivation due to the court's judgment favoring the Alliance without validating the OTD is rejected. The court found that proving an 'interest in land' under section 30609.5 differs from traditional property interest validation, and the trial's ruling did not affect Hollister's rights to argue its claims in court.

Hollister's challenge regarding the admission of hearsay evidence in the judgment motion is also addressed. The court determined that the Alliance did not need to present evidence against Hollister since the case concerned the State Defendants' liability, and the stipulated facts were relevant to Hollister's cross-complaint. 

A significant error was identified in the trial court's conclusion that section 30609.5 did not apply to the Commission. The Coastal Act empowers courts to restrain violations and adjudicate actions for declaratory relief. The record indicates that both the Commission and the Conservancy sought to implement the unlawful transfer of the OTD. The HROA Settlement explicitly stated that both agencies disclaimed any rights to the OTD, and the trial court's ruling in favor of the Commission effectively protected it from liability in this context, suggesting a limitation on the court's ability to restrain state actors involved in Coastal Act violations.

The trial court incorrectly determined that the 60-day period for seeking writ relief against the Commission had expired before the Alliance intervened, calculating the accrual from the Commission's board's approval of the HROA Settlement. The court misapplied the timeline, as the settlement's approval was merely the first step in a series of actions required to finalize the unlawful transfer. The proper timeline to challenge the settlement would have commenced when the Commission executed the quitclaim deed to Hollister following the court's stipulated judgment. Although the Alliance raised issues regarding the discovery rule and equitable tolling, the court's ruling made these discussions unnecessary. 

Additionally, the trial court correctly ruled that the limitations period for the Alliance's Bagley-Keene Act cause of action had expired. The seventh cause of action alleged violations of the Bagley-Keene Act due to the State Defendants approving the HROA Settlement in closed session, but the court found the claim barred by the Act's 90-day limitations period. It rejected the application of the discovery rule and equitable tolling, despite claims of concealment by the State Defendants. The Alliance argued that the court relied on outdated case law, specifically Regents of University of California v. Superior Court, but the ruling affirmed that Regents still applies. In Regents, the Supreme Court ruled that the statute required actions to be commenced within 30 days of the decision, which did not allow for fraudulent concealment to extend the deadline. Following this decision, the Legislature amended the Bagley-Keene Act through Assembly Bill 1234, extending the limitations period to 90 days and modifying provisions regarding notice postings, but did not fully negate the Supreme Court's ruling in Regents.

Regents’ accrual ruling remains undisturbed, indicating that the deadline for challenging Bagley-Keene violations is similar to a statute of repose. The 30-day statute of limitation under Section 11130(a) does not rely on a discovery or accrual date, but rather begins from the date the action occurs, which is a crucial and controlling detail. The trial court appropriately invalidated the State Defendants’ settlement agreements with Hollister due to the Conservancy's breach of section 30609.5 of the Coastal Act, leading to an affirmation of judgment against the Conservancy. However, the judgment in favor of the Commission is reversed, as it too violated section 30609.5. The trial court is instructed to enter judgment against both State Defendants upon remand, with the judgment otherwise affirmed. The Alliance is entitled to recover its costs on appeal. The ruling is certified for publication by Judge Perren, with concurrence from Judges Gilbert and Yegan. Legal representatives for plaintiffs and appellants include Cappello, Welkom, Cousineau, and others, while Becerra, Bonta, and their team represent the defendants and respondents. Intervenor and appellant representation includes Shute, Mihaly, Weinberger, and others.