The Second District Court of Appeal has reaffirmed its decision to overturn a $2 million takings judgment against the Coastal Commission - even after reconsidering the case in light of a California Supreme Court ruling in another coastal case. However, the property owners' lawyers appear determined to fight on to the California Supreme Court on the very issue that caused the remand in the first place. Lawyer Thomas Banks said his client, Peggy Ann Buckley, plans to appeal the case to the California Supreme Court because the Coastal Commission's action in the case was "arbitrary and capricious" - not an honest mistake as the Coastal Commission claimed. However, in the ruling that sent the Buckley case back to the Second District, the Supreme Court ruled that a government agency's motivation cannot be the basis of a takings decision, unless the agency acted in bad faith. In an interview with CP&DR, Banks said he would argue that the ruling should be reversed because, in his view, the Coastal Commission had deliberately asserted jurisdiction knowing it did not have the power. "It was not a mistake on their part," he said. The Second District's new ruling in Buckley v. Coastal Commission is essentially unchanged from the original ruling, which was issued more than a year ago. The court concluded that the evidence on the record does not establish that the Coastal Commission's actions in denying the Buckleys permission to build a single-family house constituted a taking. The court also ruled that the Coastal Commission did not have jurisdiction over the project because it is located within a single-family zone, meaning jurisdiction lies with the Los Angeles County Regional Planning Commission. The Coastal Commission had sought jurisdiction over the rear portion of the property, which it claimed was in a designated "environmentally sensitive habitat area". In the new ruling, the Second District addressed questions raised by the California Supreme Court's ruling in Landgate v. California Coastal Commission, 17 Cal.4th 1006 (1998) (CP&DR Legal Digest, June 1998). In that case, the Supreme Court overturned a trial judge's ruling that a temporary taking occurred when the Coastal Commission erroneously asserted jurisdiction over another Malibu property owner's plans to build a home in the coastal zone. While acknowledging that the Coastal Commission did make the error, the Supreme Court concluded that it cannot consider the commission's motives and must assume that the commission made an honest mistake in asserting jurisdiction. In revisiting the Buckley case, the Second District concluded the Landgate ruling only reaffirmed its earlier decision to overturn the trial judge's takings judgment. "Similar to Landgate, the present matter essentially involved a clash of wills between the County and the Commission and, to a certain extent, the Buckleys," wrote Justice Michael G. Nott for a three-judge panel of Division Two of the Second District. "However, the record does not support a finding that there was anything improper about the Commission's position that the rear portion of the lot was indeed an environmentally sensitive habitat area. Nor is there any support for the proposition that the Commission's motives were in bad faith. Banks said that the Buckley case is "dissimilar" from the Landgate case and he disagreed with the court on the question of bad faith. The case began when Peggy Ann and John Buckley, a married couple now separated, bought a 2.75-acre lot in Malibu in 1988. The front 1.15 acres was level but the back portion, about 1.6 acres, descended into a steep ravine. In 1989, the Coastal Commission attempted to assert juridsiction. After acknowledging that L.A. County had jurisdiction because it was a single-family zone, the Commission claimed jurisdiction over the back portion of the property because it is located in an environmentally sensitive habitat area, or ESHA - a common designation in the Malibu area. Subsequently, the county issued an exemption based on the Buckleys' assertion that they would not use the back portion of the property. (Such exemptions, commonly known as "Calvo exemptions," are permitted under Public Resources Code §30610.1 and §30610.2) The county approved a plan to grade the front of the property and build a 15,000-square-foot residence. The Buckleys then decided to sell the lot. In 1990, the Buckleys applied to the Coastal Commission for a permit to grade the back portion of the property to create a garden, a riding ring, and a guest house. In 1991, the Coastal Commission denied the application based on evidence that a landslide had developed in the ravine and threatened adjacent properties. The Buckleys did not appeal the ruling and the county soon reasserted jurisdiction over the entire property. The county issued a grading permit for the front portion of the property. and the Buckleys began grading. The Coastal Commission issued a stop-work order. But the county then issued a grading permit for the back portion of the property and the Buckleys began grading it. At that point, the state attorney general claimed the Buckleys were in violation of the Coastal Act. As the landslide threat continued, engineers and geologists from the county and the Coastal Commission concluded the grading plan was inadequate. The Buckleys continued grading; the Commission filed another stop-work order. At that point, the Buckleys went to court, filing a declaratory relief action. The Coastal Commission subsequently filed an action for injunctive relief and civil penalties and fines. The Buckleys cross-complained and the cases were consolidated. L.A. County Superior Court Judge William Huss ruled that the Coastal Commission had no jurisdiction. Subsequently, a trial court awarded $1.3 million in damages for a taking and more than $800,000 in attorneys fees and other costs. On appeal, the Second District ruled that the Coastal Commission is not permitted to designate only a portion of a lot as covered by the Calvo exemption. However, the appellate court overturned Judge Huss's ruling that a taking occurred. The court concluded that the Coastal Commission's actions resulted in neither a temporary nor a permanent taking. First, the court said that Judge Huss erred in deciding that the commission's mere assertion of jurisdiction was a per se permanent regulatory taking of their property. "After the trial court ruled that the Commission had no jurisdiction over the lot, the Commission's stop work orders no longer had any effect," Justice Nott wrote. "Any taking that might have occurred was ended by that ruling." On the question of a temporary taking, Justice Nott wrote: "Because the Buckleys could have developed the front portion of the lot, or sold the lot with the County permits in place, the grading restriction imposed by the Commission, though erroneous, did not prevent all economically viable or productive use of the lot." Banks, Buckley's attorney, wants the California Supreme Court's opinion. Although Banks's viewpoint would appear to contradict the Landgate decision, the Supreme Court was deeply split on Landgate, with the Coastal Commission winning on only a 4-3 vote. The majority, led by Justice Stanley Mosk, concluded that the courts should not examine the motive of the government agency's actions but whether there is "a sufficient connection between the land use regulation in question and legitimate governmental purpose". In separate dissents, Justices Ming Chin and Janice Rogers Brown both took the majority to task for not adhering to the U.S. Supreme Court's takings rules in cases such as the landmark First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987). Justice Chin concluded that he did not consider the delays in the Landgate case - the result of a similar jurisdictional dispute between the Coastal Commission and L.A. County - to be "normal" delays as required under Lucas. Brown chastised the majority for being "unwilling to come to terms with the true meaning and operative effect of Lucas and First Lutheran". The Case: Buckley v. California Coastal Commission, 98 Daily Journal D.A.R. 12206 (issued December 2, 1998). The Lawyers: For the Buckleys: Thomas Banks, (310) 451-8831, and Eliot G. Disner, Shapiro, Rosenfeld & Close, (310) 273-6333. For Coastal Commission: Terry Furimoto, Deputy Attorney General, (213) 897-2706.