Environmental and Natural Resources

by Rick McNeil and Colin Higgins

Protect Agricultural Land involved a CEQA and a “reverse validation” challenge to the approval by the Stanislaus County Local Agency Formation Commission (“LAFCO”) of the proposed annexation by the City of Ceres of approximately 960 acres of land described in the West Landing Specific Plan (and also the modification of the city’s sphere of influence).

As explained by the Fifth District Court of Appeal, a reverse validation proceeding is one in which a member of the public may challenge the validity of “any change of organization, reorganization, or sphere of influence determination” made by a LAFCO.

In this case, the petitioner failed to comply with procedural requirements applicable to CEQA and the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (“Reorganization Act”), which applies to validation actions.

As to the CEQA challenge, the Ceres City Council approved the final EIR and filed a notice of determination in June, 2011, and Protect Agricultural Land failed to challenge the CEQA approval within 30 days.

As to the Reorganization Act challenge, Protect Agricultural Land filed a petition for writ of mandate under the Reorganization Act but failed to comply with mandatory service and publication requirements applicable to reverse validation actions.

In addition, the trial court found that there was no basis for a finding of good cause under Code of Civil Procedure 863 to excuse the failure to comply with the applicable procedural requirements defects because Protect Agricultural Land’s counsel conducted inadequate legal research.

The Fifth District agreed that Protect Agricultural Land failed to follow the reverse validation procedures and also agreed that the legal research conducted by its counsel was inadequate and that, therefore no good cause of the failure to comply with the requirements had been established.

In this regard, the Court of Appeal noted that Protect Agricultural Land’s attorney only consulted a 2006 treatise that did not explain that a challenge to a LAFCO action must be made through validation procedures.

By contrast, the November 2011 California LAFCO guide to the Reorganization Act included an index and notes discussing Section 56103 and the topic of determining the validity of LAFCO-approved changes. Furthermore, existing case law and a number of other treatises likewise explained the need to comply with the validation act statutes when challenging the validity of an annexation.

Basic Facts:

The Stanislaus County Local Agency Formation Commission approved an application submitted by the City of Ceres for the approval of the West Landing Specific Plan Reorganization. The reorganization proposed to modify the City’s sphere of influence and proposed to expand the City’s boundaries so as to annex a 960 acre of land that previously was in an unincorporated part of the County to the southwest of the City.

The City acted as the lead agency for the project’s CEQA review. The City prepared an EIR and adopted a resolution certifying the EIR. The City also adopted resolutions approving the specific plan and authorizing the submission of an application to the Stanislaus LAFCO for the modification of the City’s sphere of influence and the annexation of the 960 acre area by the City.

After these resolutions were adopted, the City filed a notice of determination, triggering the CEQA 30-day statute of limitations, which expired without the plaintiff having filed an action to challenge the approvals.

However, after the Stanislaus LAFCO adopted resolutions approving the proposed reorganization and annexation, the plaintiff filed a petition for writ of mandate asserting a cause of action under CEQA and a cause of action under the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (“Reorganization Act”).

The trial court granted the defendants’ demurrer (which it deemed to be a motion for judgment on the pleadings), without leave to amend, based on its determination that the plaintiff failed to comply with mandatory service and publication requirements applicable to reverse validation actions. Furthermore, the trial court found there was no basis for a finding of good cause under Code of Civil Procedure 863 that would excuse the failure of the plaintiff to comply with the applicable procedural requirements defects (specifically citing to inadequate legal research on the part of counsel for the plaintiff).

Appellate Decision (Affirmed):

Cortese-Knox-Hertzberg Local Government Reorganization Act

First, respecting the standard of review applicable to the granting of the motion for judgment on the pleadings, the Court of Appeal noted that “[a]ppellate courts review the grant of a motion for judgment on the pleadings by applying the same rules that govern review of an order sustaining a general demurrer [and] independently determine whether a cause of action has been stated.” A court reviewing the sustaining of a demurrer in the CEQA context follows the same standard of review that applies to other contexts, namely, a de novo examination of the pleading to determine whether the facts alleged were sufficient to state a cause of action (those facts being assumed to be true for purposes of review).

Second, the Court provided a brief background description of the Reorganization Act, of LAFCO’s and of certain requirements applicable to lawsuits challenging LAFCO determinations. In this regard, the Court observed that the Reorganization Act was enacted to encourage “planned, well-ordered, efficient urban development patterns with appropriate consideration of preserving open-space and prime agricultural lands.” In order to effectuate this policy, the legislature found that there should be a “logical formation and modification of the boundaries of local agencies ….” LAFCO’s are administrative bodies created to oversee urban development that have the power to approve (or disapprove): “(1) petitions for annexation, (2) proposals for changes of organization or reorganization, and (3) requests by cities for an amendment to their sphere of influence.”

Reverse Validation Actions

A LAFCO annexation determination is quasi-legislative and may be challenged – before it becomes final – by a petition for ordinary mandamus pursuant to Code of Civil Procedure 1085. However, once the determination has become final, its validity can only be challenged by an in rem proceeding under the validating statutes or by a quo warranto proceeding filed by the Attorney General (the latter type of challenge not having been made in this case). In this regard, Section 56103 of the Government Code provides:

“An action to determine the validity of any change of organization, reorganization, or sphere of influence determination completed pursuant to this division shall be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of the Code of Civil Procedure.” [Code of Civil Procedure Section 860 provides that a public agency may test the legal validity of certain of its acts by filing an in rem validation action within 60 days.]

If (as was the case here), the public agency does not file such an action, Code of Civil Procedure Section 863 authorizes any interested person to file a “reverse validation action” in order to challenge the validity of the public agency’s action. However, such an action must follow specific procedural requirements, which include the requirements that the summons must be in a prescribed form, must be directed to all interested persons and the public agency, and must be published as set forth in the statute. In this case, the plaintiff failed to comply with these requirements and, therefore, the plaintiff’s claim was subject to dismissal.

Excusable Neglect by Counsel

As noted above, where (as was the case here), the procedural requirements were not followed, the lawsuit shall be dismissed “unless good cause for such failure is shown by the interested person.” As noted by the Court of Appeal, in City of Ontario v. Superior Court, 2 Cal. 3d 335, 85 Cal. Rptr. 149, 466 P.2d 693 (1970), the California Supreme Court equated “good cause” under Code of Civil Procedure Section 863 with “excusable neglect” under Code of Civil Procedure Section 473.

In this regard (again citing City of Ontario), the Court of Appeal noted that whether a mistake of law was excusable is a factual question. The Court of Appeal further explained that the standard of review in this case was “abuse of discretion,” meaning that the Court of Appeal would review the trial court’s findings of fact under the “substantial evidence” standard and that it would review the trial court’s resolution of questions of law under the independent (de novo) standard.

The Court observed that while some mistakes of law may be excusable (for example, an honest and reasonable mistake regarding a complex and debatable issue) others are not excusable (for example, ignorance of the law coupled with negligence in ascertaining it).

In this case, the trial court determined that the plaintiff’s counsel’s legal research fell into the latter category. Specifically, the Court of Appeal observed that the only research conducted (based on the declaration submitted by the plaintiff’s attorney) was the chapter on LAFCO’s in the 2006 edition of Curtin & Talbert, California Land Use and Planning Law that did not (it was asserted) explain the requirement that a challenge to a LAFCO action must be made through validation procedures.

However, a declaration submitted by defense counsel advised that the most recent version (November 2011) of the California LAFCO guide to the Reorganization Act (which is published and available on the internet) includes an index and include notes that discuss Section 56103 and the topic of determining the validity of LAFCO-approved changes. In addition, defense counsel cited a case that also discussed the necessity of an unincorporated association testing the validity of a completed municipal annexation only by an in rem action under the validating statute. (That case was Hills for Everyone v. Local Agency Formation Commission, 105 Cal. App. 3d 461, 164 Cal. Rptr. 420 (1980), which also is applicable to this case because it also held that a CEQA claim seeking to set aside a LAFCO’s approval of an annexation also must comply with the requirements for reverse validation actions).

Lastly, the Court of Appeal noted on its own that the requirement that certain LAFCO actions be pursued as reverse validation actions is discussed in a number of other treatises and practice guides, including Manaster & Selmi’s California Environmental Law & Land Use Practice guides and Kostka & Zischke’s Practice Under the California Environmental Quality Act. For these reasons, the Court of Appeal concluded:

“Based on the foregoing, we conclude that the trial court’s finding of inadequate legal research is supported by the evidence in the record and our own independent research. Therefore, the court’s ultimate finding of no good cause does not constitute an abuse of discretion. Consequently, we will affirm the trial court’s decision to dismiss [the plaintiff’s] cause of action under the Reorganization Act.”

Protect Agricultural Land v. Stanislaus County Local Agency Formation Commission, 223 Cal.App.4th 550, 167 Cal.Rptr.3d 343 (Cal. App. 5 Dist.) (January 28, 2014)

Trial Court Judge:

William A. Mayhew, Stanislaus County Superior Court

Appellate Panel:

Franson (Cornell and Poochigian, concurring)