Feduniak et al., v. California Coastal Commission (2007) 148 Cal. App. 4th 1346.

By Michael R. Leake

The Sixth District Court of Appeals of California overturned a trial court decision and rejected the claim of a Monterey County coastal property homeowner that the Commission should be estopped from requiring the removal of a three-hole, pitch-and-putt golf course from the property and restoration of the area to its original landscape of native dune vegetation because the Commission failed to take any action regarding the existence of the golf course in violation of restrictions placed on the property by the Commission despite the fact that the golf course was easily visible and had been there for 18 years.

In 1983, as part of the permitting process to tear down the prior dwelling and construct a much larger residence, the previous owners had acquiesced to the Commission’s requirement that most of the property be restored to the original landscape of native dune vegetation.  In accordance with the conditions for the issuance of the building permit, the previous owners recorded an irrevocable offer to dedicate the majority of the property as an open space easement.  However, shortly after this dedication and without submitting it to the Commission and in violation of the permit and the recorded open space easement, the previous owners modified the original landscape to include the golf course.

The Feduniaks purchased the property in 2000.  In purchasing the property, the Feduniaks relied on a title report issued by a title company and a disclosure statement from the previous owners, both of which failed to disclose the development restrictions on the property.  In 2001, the Del Monte Forest Foundation notified the Feduniaks that the property was subject to an open space easement, and then, in 2002, the Foundation notified the Commission that the property was not in compliance with the permit approved by the Commission.  In December of 2002, the Commission notified the Feduniaks that the golf course violated the recorded easement and requested that the Feduniaks submit a removal and restoration plan, which the Feduniaks refused to do.

At the trial on the matter, the court found that under the unique facts of the case, the Commission should be estopped from enforcing its orders against the Feduniaks because, “the Commission should have known that the golf course violated the easement and permit restrictions because (1) the golf course was easily visible, (2) it had been there for 18 years, and (3) the Commission did not inspect the site for compliance until 2002.”

The appellate court disagreed.  The appellate court noted that under California law, the existence of estoppel is generally a factual question in which four elements must be present in order to apply the doctrine of equitable estoppel:  (1) the party to be estopped must be apprised of the facts; (2) such party must intend that his or her conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) the other party must rely upon the conduct to his or her injury.  The appellate court further noted that the government is not immune to the doctrine of equitable estoppel and may be bound in the same manner as a private party when the elements requisite to such an estoppel against a private party are present and the injustice that would result from a failure to uphold an estoppel is of sufficient dimension to justify any effect upon public interest or policy that would result from the raising of an estoppel.

With regard to the private party equitable estoppel analyses, the appellate court concluded that the Commission’s knowledge of the golf course’s existence was not the same as knowledge that the golf course was a violation, and that the Commission had no duty to inspect the site for ongoing compliance.  The appellate court noted that under California law in order to find that the Commission, as a governmental body, was subject to the doctrine of equitable estoppel, it would be necessary to find under the present circumstances that (1) estopping the Commission would not nullify a strong rule of policy adopted for the public’s benefit and (2) the injustice to the Feduniaks without estoppel would outweigh, and therefore justify, any effect upon public interest or policy resulting from estopping enforcement of the Commission’s order.  Citing precedent, the appellate court then noted that due to the strong public policy interest generally present in the land use context, “estoppel can be invoked in the land use context in only the most extraordinary case where injustice is great and the precedent set by the estoppel is narrow.”

Given the facts of the case, the appellate court found that the public policy reasons for permitting a governmental body to be estopped were not present, since (1) the Feduniaks may have legal remedies against both the previous owners and the title insurance company that could mitigate the cost of complying with the Commission’s order; and (2) estopping the Commission would “injure the public, which has a strong interest in a scenic natural coastline with native vegetation, because it would indefinitely postpone the restoration of the site to that state, a restoration that has already been delayed for over 20 years.”

For more information please contact Michael Leake.  Michael Leake is an associate in the Real Estate Practice Group in the firm’s Del Mar Office.