Arcadia Development Co. v. City of Morgan Hill

to the urban sprawl Measure P was designed to prevent. The Density Restriction limited development on these properties to the density allowed by the Santa Clara County general plan to which they would have been subject absent annexation, effectively preventing them from competing for housing allotments at the much greater density City’s zoning regulations would have allowed. Measure P became effective on December 8, 1990, and, by its terms, is set to expire in 2010.

Arcadia owned one of the properties awaiting annexation approval when Measure P was being drafted. Arcadia’s property consisted of approximately 80 acres in the rural area of Santa Clara County, just outside City’s borders. LAFCO approved its annexation on March 19, 1990, which placed the property squarely within the timeframe to which the Density Restriction was to apply. On September 19, 1990, within the window of time between annexation of its property and passage of Measure P, Arcadia was awarded a housing allotment for an 11-acre subdivision of its parcel. City approved Arcadia’s plans for the subdivision in 1991 with the condition that “no further subdivision and or residential development of the [remaining 69 acres] shall be allowed except in accordance with the provisions contained in [City’s RDCS] (Chapter 18.78 of the Morgan Hill Municipal Code) as amended.” The Density Restriction, which was part of the RDCS, limited development of Arcadia’s 69-acre remainder parcel to a maximum of one unit per 20 acres, or a total of four homes. Absent the Density Restriction, the RDCS would have allowed Arcadia to compete for housing allotments at a density of five units per acre, or approximately 345 homes.

There were two other parcels in addition to Arcadia’s that were potentially subject to the Density Restriction. One was a 33-acre parcel known as the Half Road-Grattan property and the other a 14-acre parcel known as the Watsonville-Tersini property. At the time of its annexation, the Half RoadGrattan property was designated for industrial development so that unless it was rezoned the RDCS did not apply to it at all. The Watsonville-Tersini property was designated residential and, therefore, was subject to the RDCS. However, like Arcadia, the Watsonville-Tersini property received housing allotments after it was annexed but before the effective date of Measure P. Those allotments effectively built out that 14-acre parcel. Thus, by the time Measure P took effect, Arcadia’s property was, for all practical purposes, the only property to which the Density Restriction applied.

In early 2002, City began considering amendments to Measure P. In biweekly meetings, from July 2002 until May 2003, the Measure P Update Committee met to consider revisions to the RDCS. Among other things, City

rights. ( 42 U.S.C. §§ 1983 , 1988.) The gist of these claims was that the Density Restriction unfairly singled out Arcadia’s property and was arbitrary and unreasonable. The pleading also requested a judicial declaration that the Density Restriction was illegal and unconstitutional.

To streamline the proceedings, the trial was bifurcated with the writ petition and the liability portion of the equal protection cause of action to be determined first, leaving all other issues to a second phase. The parties agreed that the trial court should make a determination of the statute of limitations question prior to reaching the merits of the claims to be tried in phase one. The trial court had previously overruled City’s demurrer on the statute of limitations issue, concluding that it could not decide based upon the face of the pleading whether or not the statute had run. The issue was extensively briefed and tried upon documentary evidence submitted by the parties.

Following the phase one trial the court issued a brief order finding the statute of limitations to be dispositive. The judgment, entered August 31, 2007, stated, “Arcadia’s petition and complaint is barred by the statute of limitations set forth in Government Code section 65009. The statute of limitations began to run on December 8, 1990, when Measure P became effective. Pursuant to the reasoning of De Anza Properties X, Ltd. v. County of Santa Cruz (9th Cir. [1991]) 936 F.2d 1084 , the adoption of Measure C did not restart the statute of limitations.” Arcadia has timely appealed.

The parties agree that the instant action is governed by section 65009, subdivision (c)(1)(B), which provides a 90-day statute of limitations for facial challenges to a zoning ordinance. Arcadia argues that its action is timely because the 10-year extension of the Density Restriction caused it “new and substantial harm by effectively excluding Arcadia from competing for development allotments under City’s RDCS during the 10-year period from 2010 to 2020.” City responds that since the Density Restriction was enacted in 1990 and Measure C merely extended its duration, Arcadia’s challenge is untimely under section 65009. City argues in the alternative that Arcadia’s consent to the condition imposed upon its 1991 project bars the current action both on statute of limitations (§ 66499.7) and collateral estoppel grounds.

A. Standard of Review

Where the pertinent facts are undisputed, it is a question of law whether a case is barred by the statute of limitations. Accordingly, we apply the de novo

states that “no action” challenging such a decision may be maintained after the expiration of 90 days, which is not the same thing as saying that any action challenging an amendment may be brought within 90 days of the amendment. Section 65009 does not create the cause of action. It merely limits the period of time within which a cause of action may be prosecuted. Certainly, where a cause of action is barred by the doctrine of res judicata, section 65009 would not operate to revive the claim. (See, e.g., Tahoe Sierra Pres. Council v. Tahoe Reg. Planning (9th Cir. 2003) 322 F.3d 1064 , 1084 (Tahoe Sierra).) The same is true for a cause of action that is barred by the statute of limitations. Since a statute of limitations begins to run upon the accrual of a cause of action (Code Civ. Proc., § 312), the pertinent question is, when did Arcadia’s causes of action accrue? Since Measure C took effect in April 2004, Arcadia’s lawsuit filed in May 2004 would be timely only if its causes of action accrued with the enactment of Measure C.

The general rule is that a cause of action accrues “ ‘when, under the substantive law, the wrongful act is done,’ or the wrongful result occurs, and the consequent ‘liability arises.’ [Citation.] In other words, [accrual] sets the date as the time when the cause of action is complete with all of its elements.” (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383 , 397 [ 87 Cal.Rptr.2d 453 , 981 P.2d 79 ].) Arcadia concedes that causes of action like those alleged in its current pleading accrued in 1990, when City first enacted the Density Restriction. Arcadia argues, however, that extending the Density Restriction for an additional 10 years was a separately actionable wrong and that the causes of action alleged in this case arose only when those 10 years were added to the ordinance.

In our view, the question is best analyzed by determining whether there is a factual basis for distinguishing between City’s 1990 decision to adopt the Density Restriction and the 2004 decision to continue the restriction for an additional 10 years. (Cf. De Anza Properties X, Ltd. v. County of Santa Cruz, supra, 936 F.2d at p. 1086 (De Anza).) This analysis is illustrated by Barratt American, Inc. v. City of Rancho Cucamonga (2005) 37 Cal.4th 685 , 703 [ 37 Cal.Rptr.3d 149 , 124 P.3d 719 ] (Barratt), in which our Supreme Court determined that reenactment of certain development and building fees gave rise to a new cause of action even though the reenactment merely extended the duration of an existing fee schedule.

In Barratt, the trial court found that the plaintiff’s challenge to the reenactment of a building fee schedule was barred by section 66022, subdivision (a), which imposes a 120-day period of limitations for any action

challenging such fees. According to the trial court, the cause of action had arisen when the fee schedule was first enacted. (Barratt, supra, 37 Cal.4th at p. 692.) The Supreme Court disagreed. Under the applicable statutes, the city could not impose fees that exceeded the estimated reasonable costs of providing the services for which the fees were charged and it had to apply any excess revenue collected to reduce fees in the future. (Id. at p. 691.) By reenacting the ordinance without changing the amount of the fees the city was implicitly representing that the existing fee schedule met those statutory standards. (Id. at p. 703.) The factual predicate for each reenactment had to be reevaluated each time. If the plaintiff were barred from challenging the reenactments, “then the validity of all subsequent reenactments would be immune to judicial challenge or review.” (Ibid.) Accordingly, the Supreme Court held that the statute of limitations began to run anew with each new fee schedule. (Ibid.)

City distinguishes Barratt on the ground that statutory requirements like those at issue in Barratt are not present here. While there is no similar statutory requirement in this case, Barratf s reasoning is applicable. Arcadia’s entire lawsuit is based upon two constitutional principles, equal protection and takings. Equal protection requires “that persons similarly situated with respect to the legitimate purpose of the law receive like treatment.” (College Area Renters & Landlord Assn. v. City of San Diego (1996) 43 Cal.App.4th 677 , 686 [ 50 Cal.Rptr.2d 515 ].) In order to prove an equal protection violation, Arcadia would have to show that the Density Restriction discriminates and that the discrimination does not bear a rational relationship to a legitimate state purpose. “Under the traditional, rational relationship test, the court conducts an inquiry into the correspondence between the classification and the legislative goals. [Citation.] A zoning ordinance may not rely on a classification whose relationship to an asserted goal is so attenuated as to render the distinction arbitrary or irrational.” (Ibid.) It follows that City’s purpose and the surrounding circumstances are matters that bear upon Arcadia’s equal protection challenge to the 10-year extension of the Density Restriction.

City’s stated purpose for continuing the Density Restriction was the same in 2004 as it was when the restriction was first enacted in 1990, namely, to encourage development in the center of the city. It is clear, however, that City did not intend the 1990 Density Restriction to be permanent. City expected that growth would continue and that changing circumstances would drive future growth control decisions. Measure P expressly acknowledged

The temporary nature of the 1990 restriction also means that extending it for 10 additional years was a new burden upon the Arcadia property, triggering a new inverse condemnation claim. Arcadia’s inverse condemnation cause of action alleged a regulatory taking as opposed to a taking based upon the actual physical occupation of or damage to real property. Where a regulatory taking is alleged, “compensation is required only if considerations such as the purpose of the regulation or the extent to which it deprives the owner of the economic use of the property suggest that the regulation has unfairly singled out the property owner to bear a burden that should be borne by the public as a whole.” (Yee v. Escondido (1992) 503 U.S. 519 , 522-523 [ 118 L.Ed.2d 153 , 112 S.Ct. 1522 ].) Arcadia alleges the type of regulatory taking that is analyzed pursuant to the Penn Central line of cases. (Penn Central Transp. Co. v. New York City (1978) 438 U.S. 104 [ 57 L.Ed.2d 631 , 98 S.Ct. 2646 ].) The Penn Central analysis requires consideration of several factors “including the regulation’s economic impact on the claimant, the extent to which it interferes with distinct investment-backed expectations, and the character of the government action.” (Lingle v. Chevron U.S.A. Inc. (2005) 544 U.S. 528 , 528-529 [ 161 L.Ed.2d 876 , 125 S.Ct. 2074 ].) The aim is to identify regulatory actions that are “functionally equivalent to a direct appropriation of or ouster from private property” by focusing upon “the severity of the burden that government imposes upon property rights.” {Id. at p. 529.) The duration of the regulation is one of the important factors that a court must consider in determining the severity of that burden. (Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency (2002) 535 U.S. 302 , 342 [ 152 L.Ed.2d 517 , 122 S.Ct. 1465 ].)

City urges us to follow the reasoning of De Anza, supra, 936 F.2d 1084 , upon which the trial court relied below. De Anza was a challenge to a county’s mobilehome rent control ordinance. One issue on appeal was whether the takings cause of action had accrued in 1982 when the ordinance was passed or in 1987 when the county amended the ordinance to delete its sunset provision. {Id. at p. 1086.) De Anza held that since the plaintiffs had suffered the same injury from the date the ordinance was passed, no new cause of action accrued when the ordinance was reenacted without the sunset provision. According to the De Anza court, such a “durational change” may affect the plaintiffs’ damages but it did not affect accrual of the cause of action. {Id. at pp. 1086-1087.)

De Anza is inapplicable to this case because it arose in a different legal context. De Anza was based upon that court’s decision in Hall v. City of Santa Barbara (9th Cir. 1986) 833 F.2d 1270 , 1276, in which it was held for the first time that a rent control ordinance could be considered an actual physical occupation of property and, therefore, might be an unconstitutional taking. A physical occupation of property is a per se taking for purposes of the Fifth Amendment. (Lingle v. Chevron U.S.A. Inc., supra, 544 U.S. at p. 538.) The

agency treated California and Nevada parcels differently. The court explained that the inequality was enshrined in the 1987 plan and that the agency was merely implementing that plan when it made the later decisions that the plaintiff was challenging. The equal protection challenge was not viable because it could have and should have been raised in the prior litigation between the parties. {Ibid.) It is true that in this case the inequality of which Arcadia complains existed in 1990. What makes this case different is that City decided anew in 2004 to continue the inequality based upon circumstances as they existed in 2004.

We also find Buena Park Motel Assn. v. City of Buena Park (2003) 109 Cal.App.4th 302 [ 134 Cal.Rptr.2d 645 ], inapplicable. In that case, the plaintiffs challenged two ordinances. The first was an ordinance restricting motel stays to less than 30 days. (Id. at pp. 305-306.) The second, passed three years later, retained the less-than-30-day limit and added additional restrictions. (I d. at p. 306.) The plaintiffs challenged both ordinances but the appellate court held that, pursuant to the 90-day limit of section 65009, the plaintiffs were barred from challenging the first ordinance “and those portions of the related city code provision which were not altered by the later ordinance.” (Buena Park Motel Assn. v. City of Buena Park, supra, at p. 308.) Here, Arcadia is not challenging the first ordinance. Arcadia is challenging the Density Restriction in the second ordinance, which was an alteration of the first ordinance.

Our conclusion that Arcadia’s claims are not barred by the statute of limitations is not inconsistent with the purposes inherent in any statute of limitations. The fundamental purpose of a statute of limitations is to prevent litigants from asserting stale claims once evidence is no longer fresh and witnesses are no longer available. (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094 , 1114 [ 56 Cal.Rptr.3d 880 , 155 P.3d 284 ]; Davies v. Krasna (1975) 14 Cal.3d 502 , 512-513 [ 121 Cal.Rptr. 705 , 535 P.2d 1161 ].) Arcadia’s is not a stale claim for which City must rely upon faded memories or lost evidence. The claim concerns only the extension of the 1990 ordinance as considered in detail by City during the study period immediately preceding the 2004 enactment.

Nor does our decision conflict with the express purpose of section 65009, which is to provide certainty for property owners and local governments regarding decisions like the zoning ordinance before us. (§ 65009, subd. (a)(3).) It is true that by insulating local government decisions after the expiration of 90 days section 65009 promotes sound fiscal planning by government entities. (Hensler v. City of Glendale, supra, 8 Cal.4th at p. 27.) But the planning that resulted in the extension of the Density Restriction took place immediately prior to the enactment of Measure C in 2004, not in 1990

The judgment of dismissal is reversed.

Rushing, R J., and Duffy, J., concurred.