AGINS v. CITY OF TIBURON

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Court of Appeal, First District, Division 2, California.

Donald W. AGINS and Bonnie G. Agins, Plaintiffs and Appellants, v. CITY OF TIBURON, a Municipal Corporation, Defendant and Respondent.

Civ. 39895.

Decided: April 24, 1978

Reginald G. Hearn, San Francisco, for plaintiffs and appellants. Robert I. Conn, City Atty., City of Tiburon, Richard H. Breiner, Deputy City Atty., City of Tiburon, San Rafael, for defendant and respondent.

The landowners, Donald and Bonnie Agins (Agins), appeal from a judgment of dismissal entered on an order sustaining without leave to amend the City of Tiburon's (City) demurrer on their cause of action in inverse condemnation and sustaining with leave to amend the City's demurrer on their cause of action for declaratory relief as to the validity of the City's Municipal Ordinance No. 124 N.S. (open space ordinance). Agins declined to amend and the dismissal ensued. On this appeal, Agins contend that they pled facts sufficient to state a cause of action for declaratory relief, as they alleged that the City's open space ordinance did not comply with the state open space law (Gov.Code, ss 65560-65570, 65910-65912), and for inverse condemnation on the authority of Eldridge v. City of Palo Alto, 57 Cal.App.3d 613, 129 Cal.Rptr. 575. We have concluded that the demurrer was properly sustained as to the cause of action for declaratory relief, but that pursuant to Eldridge, supra, the trial court erred in sustaining the demurrer as to Agins' cause of action for inverse condemnation.

On appeal from an order sustaining a demurrer without leave to amend, we must treat every material, issuable fact properly pleaded as true (Commercial Standard Ins. Co. v. Bank of America, 57 Cal.App.3d 241, 129 Cal.Rptr. 91). Further, we may take notice of the zoning ordinances and actions of the City (Evid.Code, s 452, subd. (b); City of Los Angeles v. Wolfe, 6 Cal.3d 326, 331, 99 Cal.Rptr. 21, 491 P.2d 813). Pursuant to these rules, the following facts appear:

Agins own five acres of property in the City. The parcel is situated on a ridge that provides a panoramic view of San Francisco, and was acquired by Agins for residential development, its highest and best use. The City is comprised of a 1676-acre peninsula surrounded by navigable water on three sides; it has an estimated population of 6,209 (based on 1970 census figures), and the highest land value per acre for a suburban area in the state.

On June 28, 1973, the City Council enacted the open space ordinance, which designated the Agins property (among other parcels) as an indispensable part of the City's open space plan. The ordinance was based upon two reports compiled for the City during 1972. The first, by a city planning firm, set out the elements necessary to comprise the open space element to the City General Plan; the second, by Dean Witter & Co., devised the financial arrangements for the acquisition of the properties necessary to implement the plan. Both reports identified the Agins property as part of the open space plan and recommended its acquisition by the City. Both reports were published. In October 1972, the City passed an open space bond issue in the amount of $1,250,000 and proceeded with the sale of bonds.

On October 15, 1973,1 pursuant to Government Code section 905, Agins filed with the City a claim for damages to their property in the sum of two million dollars. The City rejected the claim on November 12, 1973, and initiated condemnation proceedings by filing a complaint in eminent domain on December 4, 1973 (No. 69070).

Agins answered and cross-complained on January 7, 1974. On October 15, 1974, the court granted the City's motion to advance the trial date to November 18, 1974. Agins filed a notice of appeal from this order on October 31, 1974. On November 1, 1974, the City filed its notice of abandonment of the eminent domain proceeding. Thereafter, the matter was taken off the calendar and on May 20, 1975, the court entered a judgment of dismissal upon the City's motion. Agins was paid $4,500 for the diminution in value during the pendency of the inverse condemnation proceedings. On June 16, 1975, Agins filed the instant complaint, alleging two causes of action, inverse condemnation and declaratory relief.

As indicated above, for the purposes of this appeal, we take judicial notice of the open space ordinance, which amends the City's previous zoning ordinance by classifying certain properties for open space uses. The ordinance incorporates the findings of the state Legislature in adopting the state open space laws (Gov.Code, s 65561). In addition, the ordinance enumerates the independent findings of the City Council2 which declare, inter alia, that the preservation of open space land is necessary for the enjoyment of scenic beauty, that the unique characteristics (i. e., scenic assets) of the properties which are rezoned make overdevelopment undesirable, and that the RPD-1 zone “permit(s) economically viable uses consistent with the open space preservation necessity outlined (in this ordinance.)”

The open space ordinance defines the RPD-1 zone applicable to the Agins property as intended to allow the reasonable use of open space land consistent with protecting its inherent open space characteristics. The RPD classification allows the construction of single family residences but only at a density of one residence for every five acres. The further restrictions imposed by the ordinance are not pertinent to this appeal.

We turn first to the cause of action for declaratory relief.3 Agins contend that the City's open space ordinance is inconsistent with the goals of the state open space law, as the permitted use of single family residences does not comply with any of the legislative definitions of open space use found in Government Code section 65560, subdivision (b).4 Thus, Agins present the novel argument that the open space ordinance, by permitting single family residential use, is not sufficiently restrictive.

In enacting the state open space law, the Legislature clearly indicated that local variances from stated open space uses should be discouraged. The 1970 amendment of Government Code section 65800 demonstrates the Legislature's intent to constrict the normally broad discretion of local zoning bodies by providing, so far as pertinent: “Except as provided in Article 4 (commencing with Section 65910) of this chapter (the open space law), the Legislature declares that in enacting this chapter it is its intention to provide only a minimum of limitation in order that counties and cities may exercise the maximum degree of control over local zoning matters.”

The Legislature attempted to constrict the degree of control of local zoning boards in order to free them from those pressures which would create a disruption of the Legislature's open space concept. This legislative intent is clearly manifested in the conclusions of the Joint Committee on Open Space Land. The committee found: “If a police power land-use control measure is to be successful over the long haul, it must be protected from the forces which undermined zoning. The demands of the market and the call for flexibility will again prevail unless the administrative structure is broadly based and removed from intense pressures.

“Zoning did not fail to preserve open space because it was an inherently poor system. It failed first because the economic forces which compete in the land development market were too intense and too immediate to be effectively dealt with locally. It failed also because the public decision maker was too close to the problem. He was exposed directly to the heat of local politics and was furnished no means of insulating himself.” (Joint Committee on Open Space Land Final Report, Feb. 1970, Appendix to Journal of the Senate, pp. 113-114.)

We believe, upon studying the City's entire zoning ordinance, that it does not violate the legislative intent of the state law, set forth above. As indicated above, the ordinance allows the construction of single family residences, restricted by density (i. e., one dwelling per five acres), height (30 foot height limit), and appearance. (“The development of dwellings or dwelling groups that create the appearance of apartment-like structures through excessive mass, bulk, or repetition of design features, shall be prohibited.”)

We conclude, therefore, that the open space ordinance here is not the product of economic forces to develop the land as the joint committee feared. On the contrary, the open space ordinance maintains the desired scenic beauty, while both avoiding unnecessary overdevelopment and providing a purported beneficial use to the landowner. While the flexibility of the local zoning body in formulating open space zoning ordinances has been restricted, its discretion has not been eradicated. We think the City's open space ordinance achieved the goals of the open space law in a way attuned to the City's needs. Accordingly, we conclude that the ordinance is valid and thus affirm the judgment of dismissal as to the cause of action for declaratory relief.

We turn next to the more difficult contention, namely, that the trial court erred in sustaining without leave to amend the City's demurrer to Agins' cause of action for inverse condemnation. Agins' contention is based on Eldridge v. City of Palo Alto, supra, 57 Cal.App.3d 613, 129 Cal.Rptr. 575. In Eldridge, this court (Division One) held at page 628, 129 Cal.Rptr. at page 583 that the issue whether a zoning restriction is so arbitrary or burdensome so as to constitute a taking is a question of fact to be determined by the trier of that issue and not by demurrer, in a condemnation proceeding involving an open space ordinance permitting one residence per 10 acres. Justice Elkington stated: “Whether a zoning restriction is so ‘arbitrary,’ or ‘unreasonable,’ or ‘burdensome,’ as to transcend ‘proper bounds in its invasion of property rights,’ is ordinarily a question of fact to be determined by trial of the issue, and not by demurrer. (Citations.) And as said in Pennsylvania Coal Co. v. Mahon, supra, 260 U.S. 393, 416, 43 S.Ct. 158, 67 L.Ed. 322, 326, whether in such situations, compensation is constitutionally required, is ‘a question of degree.’

“Among the many factual issues to be resolved in the cases before us is whether the 10-acre homesites of plaintiffs' land are salable at all.”

An identical issue is presented here, as Agins allege that as a result of the ordinance, they are unable to sell, transfer or develop their land.

The City argues that HFH, Ltd. v. Superior Court, 15 Cal.3d 508, 125 Cal.Rptr. 365, 542 P.2d 237, should control. HFH5 held that a cause of action in inverse condemnation will not survive a demurrer where all that is pled is a diminution in market value due to a change in zoning restrictions. In HFH, the landowners acquired a parcel of property that they intended to develop commercially. As a condition of the sale, the property was successfully zoned for the desired development at the time of purchase. Subsequent to the purchase, but prior to any of the intended development, the City rezoned the parcel to single family residence uses only. As a result, the market value of the property diminished from $400,000 to $75,000. The landowners in HFH alleged that the properties were useless for single family residence purposes. The court, however, deemed significant that they did not allege “that the properties are useless for other purposes consonant with the zoning category in which they now lie.” (P. 512, 125 Cal.Rptr. p. 368, 542 P.2d p. 240.)

This particular factual point is significant in applying the holding of HFH. Our Supreme Court, on the basis of the time-honored principle that a property owner holds no right in a continued zoning classification and recognizing the prohibitive cost should government be bound to compensate every loss in property value resultant from its actions, held in HFH that a mere loss in market value from a changed zoning regulation will not be recompensed. The court, however, tempered its ruling by excluding the situation where the restriction makes the property useless, as follows, at page 518, footnote 16, 125 Cal.Rptr. at page 372, 542 P.2d at page 244: “This case does not present, and we therefore do not decide, the question of entitlement to compensation in the event a zoning regulation forbade substantially all use of the land in question. We leave the question for another day.”

We think that the instant case, like Eldridge, supra, 57 Cal.App.3d 613, 129 Cal.Rptr. 575, falls within the parameter of this exclusion as Agins are restricted to a single residence use for their five-acre parcel. In Eldridge, the owners were restricted to one residence per 10 acres and also subject to the additional intrusion of the path and trails system through their property to allow public access.

The City relies on Pinheiro v. County of Marin, 60 Cal.App.3d 323, 131 Cal.Rptr. 633, decided after Eldridge, supra. In Pinheiro, this court (Division Four), consistent with HFH, supra, at page 329, 131 Cal.Rptr. 633, upheld a demurrer without leave to amend where the landowners claimed damage from the rezoning of their property for open space use. Significantly, the owners did not claim that their property was made useless by the regulation. Thus, Justice Caldecott found that in fact the Pinheiros had admitted on the face of the complaint that the land had a fair market value of $210,000, indicated a remaining reasonable use for the property.

In Pinheiro, supra, the owners argued that the rezoning was for the purpose of acquiring the property at no cost to the county and that the effect was the taking of an interest in their property (i. e., a scenic or open space easement), for which compensation was owing. Thus, there were allegations to show that the ordinance was a property taking device, rather than a regulation of land.

In summarizing the failure of the Pinheiros to establish a cause of action, this court provided a concise checklist of elements necessary to survive a demurrer in a case of this type by concluding: “Appellants have simply failed to allege any precondemnation activities, the lack of any remaining reasonably beneficial use, or any public use of their property. The sum of their complaint thus amounts to nothing more than an allegation of diminution in value due to down-zoning, for which HFH, Ltd. refused to find a cause of action in inverse condemnation” (p. 328, 131 Cal.Rptr. p. 636).

A review of the allegations of the instant complaint shows a striking contrast to those in Pinheiro and HFH, supra. At the outset, we note that the mere allegation of taking or damage to property is insufficient to support a complaint in inverse condemnation. In Hecton v. People ex rel. Dept. of Transportation, 58 Cal.App.3d 653, 130 Cal.Rptr. 230, the requirements were set forth at page 657, 130 Cal.Rptr. at page 232 as follows: “The allegations of taking or damage are but legal conclusions. Plaintiffs' claim to inverse condemnation rests on their constitutional right to ‘just compensation’ . . . Whether compensation is just in the constitutional sense depends on the particular facts of the case, and these facts must be set out in the complaint.”

Here, Agins have alleged both significant precondemnation activities, as well as the lack of any remaining reasonably beneficial use. Both of these elements were fatally absent in HFH and Pinheiro, both supra. Here, the complaint set out these elements with factual particularity, avoiding bare legal conclusions of taking or damage, as in Hecton, supra.

Further, we think that the instant case is closer to Eldridge, which struck down a demurrer on substantially similar pleadings. As in Eldridge, supra, 57 Cal.App.3d 613, 129 Cal.Rptr. 575, the gravamen of the Agins complaint was that the City's open space ordinance denied them any reasonable or beneficial use of their land. As indicated above, the Palo Alto ordinance at issue in Eldridge involved a limitation of one residence per 10-acre lot and public paths and trails over the property. The instant ordinance involves a limitation of one residence per five-acre lot.6 The resolution of this question should be decided at trial, as Justice Elkington concluded in Eldridge, at page 628, 129 Cal.Rptr. at page 583: “Whether a zoning restriction is so ‘arbitrary,’ or ‘unreasonable,’ or ‘burdensome,’ as to transcend ‘proper bounds in its invasion of property rights,’ is ordinarily a question of fact to be determined by trial of the issue, and not by demurrer.”

Eldridge, supra, further held that a valid zoning ordinance could operate so oppressively as to deny any reasonable use to the owner.7 The question thus raised in this case, as in Eldridge, is the salability of the five-acre parcel which Agins claim is unsalable. This should not be determined by demurrer. As in Eldridge, we find further enlightenment in one of the federal cases that also involved the Palo Alto open space ordinance and preceded the Eldridge decision. In Dahl v. City of Palo Alto, 372 F.Supp. 647, the court denied a motion to dismiss (equivalent to our demurrer), and declared that “The determination of reasonableness (of the zoning regulation) is a factual one encompassing the interests of the public, the appropriateness of the means, and the oppressiveness of the action. Such a determination is inappropriate in a motion to dismiss. Assuming the truth of the allegations stated above, as the Court must in a motion to dismiss, the question is simply whether the plaintiff has stated facts which, if proved, would entitle her to relief. (Citation.) Since plaintiff alleges that the regulation is arbitrary and capricious and that it allows no reasonable use of plaintiff's property, her burden has been met.”

The inverse condemnation cause of action of the complaint herein also raises an issue regarding the precondemnation activities of the City. The Supreme Court found in Klopping v. City of Whittier, 8 Cal.3d 39, 104 Cal.Rptr. 1, 500 P.2d 1345, that a condemnee is entitled to compensation for precondemnation losses if he could prove the condemning agency unreasonably delayed condemnation or otherwise acted unfairly prior to formal condemnation of the property. In Klopping, the court overturned a demurrer in an action to recover damages based on the defendant city's precondemnation statements which allegedly reduced the market value of the property. The court held that the landowner must be provided the opportunity to demonstrate that the public agency acted improperly by its unreasonable conduct prior to condemnation and as a result the property in question suffered a diminution in market value.

Agins have alleged numerous facts which, if proved, indicate unfair conduct by the City, including publication of various reports and resolutions designating the Agins property as subject to condemnation under the open space ordinance, the acquisition of funds from public bond sales for the purchase of open space lands, and the reasons for the abandonment of the subsequent eminent domain proceedings. We believe that Agins have alleged facts sufficient to be afforded a similar opportunity to prove this aspect of their case. Admittedly, they will have a heavy burden of proving entitlement to monetary relief on the basis of excessive restriction, bad faith or confiscatory intent by the City.

For the foregoing reasons, we believe that the demurrer should have been overruled as to the cause of action for inverse condemnation. Agins are entitled to trial on the factual issues relating to the marketability of their property and the City's precondemnation activity. As indicated above, the City's demurrer on the cause of action for declaratory relief was properly sustained.

Finally, we turn to two procedural matters. The City contends that Agins must be barred from any recovery as they failed to exhaust their administrative remedies by seeking applications for permits or variances. Both Eldridge, supra, 57 Cal.App.3d 613, 129 Cal.Rptr. 575, and Dahl, supra, 372 F.Supp. 647, have dealt with and disposed of an identical issue as follows: The court in Dahl stated, at page 649: “Plaintiff has, however, made a claim for inverse condemnation in accordance with California Government Code s 905. The only other remedy referred to by defendant is plaintiff's failure to apply for a variance. It is highly improbable that a variance would, or legally could, be granted where as much land as here is involved (291 acres) and where development would be completely contrary to the goal of preserving the land in its natural or near natural state. The Court will not require such a useless course.” Here, Agins have made their claim under Government Code section 905. We require no more.

The City also contends that the statute of limitations should completely bar any recovery to Agins. The City bases this defense on Government Code section 945.6, which requires a party with a potential claim against a public entity to bring his action within six months after his claim under Government Code section 905 is rejected. The record here indicates that the City rejected the claim of Agins on November 12, 1973, setting the last day for initiating suit at May 12, 1974. However, the City initiated its own condemnation proceeding on December 4, 1973, which remained pending until May 20, 1975, a period of almost a year and a half.

It is clear that in a situation such as this, the statute of limitations is tolled on the basis of the sound judicial policy to avoid chaos in the administration of justice and the avoidance of multiplicity of actions (Olson v. County of Sacramento, 38 Cal.App.3d 958, 113 Cal.Rptr. 664). The mischief and inequities attendant in ruling otherwise are obvious. We find the statute of limitations defense in this case inapplicable.

The judgment of dismissal on demurrer without leave to amend on the inverse condemnation cause of action is reversed. The judgment of dismissal on declaratory relief cause of action is affirmed. Agins are awarded costs on appeal.

FOOTNOTES

1.  The complaint erroneously alleged that the claim was filed on October 15, 1972.

2.  Contrary to the allegations of the complaint, the ordinance does not incorporate by reference either of the 1972 reports on which it was based.

3.  The cause of action for declaratory relief set forth numerous additional grounds for the invalidity of the ordinance; however, only the statutory ground was argued on this appeal. In any event, Eldridge v. City of Palo Alto, supra, 57 Cal.App.3d, page 631, 129 Cal.Rptr. 575, held that if the purpose of the ordinance is permissible, the ordinance is valid and beyond attack, except in an action for damages by inverse condemnation. Here, the purpose of the ordinance is sanctioned by the state law pursuant to which it was enacted.

4.  Government Code section 65560, subdivision (b), reads:“(b) ‘Open-space land’ is any parcel or area of land or water which is essentially unimproved and devoted to an open-space use as defined in this section, and which is designated on a local, regional or state open-space plan as any of the following:“(1) Open space for the preservation of natural resources including, but not limited to, areas required for the preservation of plant and animal life, including habitat for fish and wildlife species; areas required for ecologic and other scientific study purposes; rivers, streams, bays and estuaries; and coastal beaches, lakeshores, banks of rivers and streams, and watershed lands.“(2) Open space used for the managed production of resources, including but not limited to, forest lands, rangeland, agricultural lands and areas of economic importance for the production of food or fiber; areas required for recharge of ground water basins; bays, estuaries, marshes, rivers and streams which are important for the management of commercial fisheries; and areas containing major mineral deposits, including those in short supply.“(3) Open space for outdoor recreation, including but not limited to, areas of outstanding scenic, historic and cultural value; areas particularly suited for park and recreation purposes, including access to lakeshores, beaches, and rivers and streams; and areas which serve as links between major recreation and open-space reservations, including utility easements, banks of rivers and streams, trails, and scenic highway corridors.“(4) Open space for public health and safety, including, but not limited to, areas which require special management or regulation because of hazardous or special conditions such as earthquake fault zones, unstable soil areas, flood plains, watersheds, areas presenting high fire risks, areas required for the protection of water quality and water reservoirs and areas required for the protection and enhancement of air quality.” (Added by Stats.1972, ch. 251, s 2, urgency, eff. June 30, 1972.)

5.  We note that the first opinion in Eldridge, supra, 57 Cal.App.3d 613, 129 Cal.Rptr. 575, was vacated after HFH and remanded for reconsideration in the light of HFH. After the publication of the second opinion, quoted above, our Supreme Court denied a petition for a hearing four to three.

6.  The majority opinion in Eldridge, at page 623, 129 Cal.Rptr. 575, quoted verbatim a lengthy passage from the Palo Alto planning staff report on the preservation of foothills open space. In this report, the staff concludes: “ ‘One important consideration that cannot be overlooked in any zoning proposal is the effect on the property owner. It is most important that he be allowed a reasonable use of his land. The long established 1-acre (R-E) and 5-acre (A-C) zones appear to meet this criteria without any question. At 10, 20, or 40 acres the restriction on the property owner increases.’ ” Thus, this reference to the reasonableness of a five-acre minimum was not a conclusion of the court, only of the Palo Alto planning staff.

7.  We are aware of the vigorous dissent in Eldridge, supra, at page 652, 129 Cal.Rptr. 575, by Justice Sims, who concludes that if there is any remedy available to the landowners, it is by attacking the validity of the ordinance as confiscatory. A recent law review note agrees with the dissent (Eldridge v. City of Palo Alto: Aberration or New Direction in Land Use Law? 28 Hast.L.J. 1569 (1977)). In addition, it can be argued that the actual “taking” in Eldridge was not the down-zoning but the path and trail system. We also note that HFH, supra, 15 Cal.3d 508, 125 Cal.Rptr. 365, 542 P.2d 237, has been criticized and the damages remedy recommended (R. C. Ellickson, Suburban Growth Controls: An Economic and Legal Analysis, 86 Yale L.J. 385, 507-511).

TAYLOR, Presiding Justice.

KANE and ROUSE, JJ., concur.