The state Supreme Court has sided with a landowner in a dispute over Santa Cruz County’s regulation of second dwelling units. But the state high court only cleared the way for the landowner to pursue his claims in court and did not rule on the merits of those claims.

The court ruled that a landowner has 90 days to challenge permit conditions, even if the challenge calls into the question the ordinance underlying the conditions. The Sixth District Court of Appeal had ruled that this amounted to a “facial” challenge of the ordinance, and that the landowner should have sued at the time the county adopted the ordinance (see CP&DR Legal Digest, September 2002). But the state Supreme Court ruled unanimously that a landowner has 90 days to sue over permit conditions, and such a suit is not “untimely merely because the theory of challenge is the facial invalidity of the ordinance upon which the permit or condition is based.”

Property rights advocates said the state Supreme Court decision returned the ability of landowners to bring “as applied” challenges of regulations. This principle was not in question until the Sixth District’s ruling, said Pacific Legal Foundation attorney Harold Johnson, who represented Santa Cruz County property owners at the state high court. The Sixth District said that, because the statute of limitations for contesting the county’s adoption of the ordinance had expired, a landowner had to show that the county was treating his property differently than others that are regulated by the same ordinance. The state Supreme Court’s ruling, said Johnson, “rescued us from an appellate decision that would have been disastrous.”

California Building Industry Association attorney Paul Campos, who filed an amicus brief in the case, agreed. The state Supreme Court decision “prevents a really radical change in the balance between finality for local governments and the ability of landowners to bring an as-applied challenge,” Campos said. If the Sixth District’s ruling had been allowed to stand, “it would have immunized a whole universe of land use regulation from judicial review after 90 days.”

Attorneys on the other side said the state Supreme Court ruling creates new opportunities for landowners to contest regulations. But Santa Cruz Assistant County Counsel Dwight Herr said the court took a middle position that gave landowners less than they requested. The court even knocked one landowner out of the case. Plus, Herr noted, the only ruling that has ever been made on the merits of the litigation was at the trial court, which sided with the county.

Land use law expert Daniel Curtin, of Bingham McCutchen, called the state Supreme Court’s ruling a “reasonable” one that cities and counties can live with — even if they would rather not. The League of California Cities and the state attorney general’s office had asked the state Supreme Court to uphold the lower court’s decision.

At issue is a Santa Cruz County ordinance regulating second units, or “granny units.” The county first adopted an ordinance in 1981 and has amended the law several times since then, most recently in November 1997. The law restricts occupancy to low-income households, seniors or family members, and controls rent based on a sliding scale.

In 1999, Steven Travis received a permit for a second unit on his property in the unincorporated community of Boulder Creek. He appealed the occupancy and rent conditions, but his appeal was denied on June 21, 1999. He and Stanley and Sonya Sokolow (who had received a second unit permit in 1998) then sued the county on September 7, 1999. Travis and the Sokolows argued that the second-unit ordinance was preempted by the Costa-Hawkins Rental Housing Act, was discriminatory, violated state planning and zoning law, was an unconstitutional taking and was invalid because the county lacked a certified housing element.

Santa Cruz County Superior Court Judge Robert Yonts ruled that the landowners’ challenge of the ordinance itself was too late, as was the Sokolows’ challenge to their permit conditions. The judge determined that Travis’s constitutional challenge was timely, but that there had been no taking. After the landowners appealed, the Sixth District Court of Appeal in a 2-1 decision upheld the lower court on slightly different grounds. The Sixth District ruled that the statute of limitations in Government Code § 65009, subdivision (c), barred all of the challenges. That statute gives people 90 days to commence legal action over the adoption or amendment of zoning ordinances. The landowners had 90 days to file suit from the time the county last amended the second-unit law in 1997, the court held.

The state Supreme Court saw things somewhat differently. The challenges to the individual permit conditions are governed by Government Code § 65009, subdivision (c)(1)(E), the court held. Paragraph (E) gives the landowner 90 days from the final administrative action to commence litigation. Travis met the 90-day statute, but the Sokolows did not, the court held.

The court rejected the county’s contention — and the appellate court’s conclusion — that Travis was challenging permit conditions generally and that he should have sued within 90 days of the ordinance’s adoption. The county and the Sixth District relied heavily on Hensler v. City of Glendale, 8 Cal.4th 1 (see CP&DR Legal Digest, September 1994), which holds landowners to strict statutes of limitations for challenging land use regulations.

“But in Hensler,” Justice Kathryn Werdergar wrote for the court, “we were not concerned with delineating the issues that could be raised in a timely challenge to a permit condition. … Indeed, elsewhere in the decision we explained that a claim of regulatory taking, arising from imposition of a ‘development restriction’ requires a showing that ‘the ordinance, regulation or administrative action is not lawful or constitutionally valid if no compensation is paid.’”

“Having brought his action in a timely way after application of the ordinance to him, Travis may raise in that action a facial attack on the ordinance’s validity,” Werdegar wrote.

“The Legislature intended § 65009 to provide certainty to local governments, but not, we think, at the expense of a fair and reasonable opportunity to challenge an invalid ordinance when it is enforced against one’s property,” Werdegar continued.

The court then considered the landowners’ contention that the Costa-Hawkins Act preempts the county’s ordinance. In general, Costa-Hawkins prohibits rent control on housing units built since 1995. The court ruled that Code of Civil Procedure § 338 gave the landowners three years to challenge the county ordinance for being in violation of Costa-Hawkins. But that three-year period began with the effective date of Costa-Hawkins (January 1, 1996) and not the date of the county’s last ordinance amendment (November 1997). Thus, the landowners were too late here, the court ruled.

The court also rejected the theory of “continuous accrual,” in which a new statute of limitations begins every time the county applies the ordinance.

In a concurring and dissenting opinion, Justice Janice Rogers Brown said that there should be no statute of limitations for the type of challenges brought by Travis and the Sokolows, who have not sought monetary damages.

The state Supreme Court returned the case to the Sixth District for further proceedings on the merits of Travis’s constitutional claims.

The Case:
Travis v. County Santa Cruz, No. S109597, 04 C.D.O.S. 6822, 2004 DJDAR 9280. Filed July 29, 2004.

The Lawyers:
For Travis: Harold Johnson, Pacific Legal Foundation, (916) 419-7111.
For the county: Dwight Herr, county counsel’s office, (831) 454-2040.