A city's erroneous denial of a lot line adjustment application did not qualify as a temporary taking, the First District Court of Appeal has ruled. The court ruled that the City of Lafayette had legitimate reasons for handling the application the way it did and that the delay in approval of the application — which eventually was ordered by a trial court — was not unreasonable. The appellate court relied heavily on Landgate, Inc. v. California Coastal Com., (1998) 17 Cal.4th 1006 (see CP&DR Legal Digest, June 1998), in which the state Supreme Court held that the erroneous handling of a development application was not a temporary taking unless the government acted unreasonably. "This case fits like a hand in a glove with the rule established by Landgate," Presiding Justice James Marchiano wrote for the unanimous three-judge panel of the First District, Division One. "Resolution of the threshold issue of the legality of the lot line adjustment was a normal delay in the process of obtaining a permit pertaining to land use." The property owners in this case, Peter and Helen Loewenstein, built a house on a 3-acre parcel in Lafayette during the mid-1980s. A few years later, they investigated ways to build a second unit. The conditions of approval that went with the original four-lot subdivision that created their lot prohibited establishment of another parcel. So in early 1996, the Loewensteins purchased a 4,500-square-foot parcel where the East Bay Municipal Utility District had maintained a water tank. A corner of that parcel touched a corner of the Loewensteins' parcel. Then they reached an agreement to acquire a small portion of a neighbor's parcel so that that tank parcel would share a common boundary with their original lot. In September 1997, the Loewensteins applied for a three-way lot line adjustment to create a 1.07-acre parcel for their home, and a 2.12-acre parcel that included portions of three existing lots. The city's planning manager denied the application, a decision the Planning Commission upheld. The City Council conducted three hearings before adopting a resolution denying the application. The council determined that, by adjusting the lot line to make a fifth developable lot, the Loewensteins triggerred the city's subdivision regulations and the Subdivision Map Act. (The Map Act does not apply ordinarily unless one parcel is being divided into at least five new parcels.) The council reasoned that the fifth lot would be serviced by infrastructure constructed for the original four-lot subdivision. In September 1998, the Loewensteins sued, seeking to overturn the denial and to get damages for inverse condemnation. The case went through lengthy court proceedings overseen by no fewer than three Contra Costa County Superior Court judges. Ultimately, the court ordered the city to rescind its denial of the application, found that the city used the wrong standard to evaluate the proposed lot line adjustment, ruled that the city denied the Loewensteins "substantially all economically viable use of their property," and awarded the applicants $611,000, plus attorneys' fees. In November 2000, the city rescinded its denial. The city also appealed the judgment for damages and attorneys' fees, which the appellate panel reversed in part. The Loewensteins cited two cases: San Dieguito Partnership v. City of San Diego (1992) 7 Cal.App.4th 748 (see CP&DR Court Cases, August 1992), and Ali v. City of Los Angeles, (1999) 77 Cal.App.4th 246 (see CP&DR Legal Digest, February 2000). In San Dieguito, the court ruled that the city had used the wrong basis for rejecting a lot line adjustment application that reconfigured five parcels in a nine-lot subdivision. In Ali, the court ruled that a temporary taking had occurred because the city's refusal to grant a demolition permit was arbitrary and unreasonable. Loewensteins further argued the they qualified for the Landgate exception for unreasonable delays, pointing to the fact that the city had approved more than 200 lot line adjustments over 16 years. But the appellate court ruled that San Dieguito and Ali did not apply, that Landgate was the controlling precedent and that the Loewensteins' case did not qualify for the Landgate exception. "The city's reasons for rejecting the lot line revision application, as expressed in the official resolution, were based on concerns that the reduced area of the new parcels would not conform to the minimum lot size requirements for hillside lots, and that the application created a fifth lot in a duly restricted subdivision with improvements and utilities designed for four lots," Justice Marchiano wrote. "Even if the city incorrectly maintained that lot size and subdivision restrictions applied, the monitoring of the density and hillside slope requirements are legitimate government interests." The court also expressed skepticism at the Loewensteins' approach. "To avoid the city's concerns about building a fifth home, the Loewensteins argued they were not merging the tank parcel into the subdivision lot, but were pulling a section of the original lot out of the subdivision and placing it into the tank parcel," Marchiano wrote. "These fine distinctions, although accepted by the trial court's ruling that the city's view was wrong, do not make the city's valid concerns either legally unreasonable nor logically deficient." The Loewensteins argued that under the Penn Central takings criteria (Penn Central Transp. Co. v. New York City, (1978) 438 U.S. 104), the city's action qualified as a compensable taking because the delay interfered with their reasonable investment-backed expectations. But the court ruled that if Landgate applied, Penn Central could not. "A landowner can have no reasonable expectation that there will be no delays or bona fide differences of opinion in the application process for development permits," the court ruled. The court overturned the $611,000 takings judgment but allowed the Loewensteins to keep the attorneys fees awarded by the lower court. The First District did not consider the lower court's order to approve the lot line adjustment. The Case: Loewenstein v. City of Lafayette, No. A093590, 02 C.D.O.S. 11130. Filed November 13, 2002. The Lawyers: For Loewenstein: David Bowie, Bowie & Bruegmann, (925) 939-5300. For the city: E. Clement Shute Jr., Shute, Mihaly & Weinberger, (415) 552-7272.