HMB loses $36 million judgement

Updated

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Thu, November 29, 2007


Plaintiffs were awarded more than $36 million in damages today in the case of Joyce Yamagiwa v. The City of Half Moon Bay and the Coastside County Water District, according to city attorney Adam Lindgren.

You can download the complete judgement from Coastsider.

There was a special closed session of the city council Thursday night at 5pm for the city council to consider its options and next steps. The city has one month to decide what to do next. Council member Jim Grady was out of town for the meeting and it was implied that no decisions would be made Thursday. The next schedule city council meeting will be Tuesday. We will have video of the public comment portion of Thursday’s meeting shortly.

The County Times has a very good summary of the case, with quotes from the winning side. For example:  "Keenan said he is open to discussing "creative" means of payment to ease the burden on the city. He said he would consider accepting the development rights for some other property in lieu of payment of some or all of the huge judgment."

UPDATE: Darin Boville has video of the public comment portion of Thursday night’s meeting over at Montara Fog. Darin says the mood of the city council and audience was somber.

Click below for a copy of the city’s press release outlining the history of the lawsuit from the city’s perspective.

City of Half Moon Bay
501 Main Street
Half Moon Bay, CA 94019


November 29, 2007: For Immediate Release


On November 28, 2007, Judge Walker of the Federal District Court for the Northern District of California ruled that the City of Half Moon Bay is liable for damages to plaintiff Joyce Yamagiwa’s (trustee) property caused by the growth of wetlands on the Property.  Judge Walker found for Yamagiwa on all grounds and awarded Yamagiwa $36,795,000 in damages and further ordered that Yamagiwa would no longer be required to pay property assessments into the Sanitary Sewer Assessment District. 

This decision is the latest entry in a long history in which Plaintiff Joyce Yamagiwa ("Yamagiwa") and several former owners attempted to develop a 24-acre property known as the Beachwood Subdivision (the "Property") boarded by Terrace Avenue to the south, Highway 1 to the west, Grandview Terrace to the north and Pacific Ridge development to the east.

The City was initially, and for many years, supportive of the proposed development of the Property.

The City approved a tentative map for residential development in 1976.  In 1984, at the request of the owner of the Property at that time, the City also formed the Terrace Avenue Assessment District ("TAAD") to finance and construct storm drain improvements on the Property.  The purpose of the TAAD improvements was to support future development and alleviate significant flooding problems in the area.

In 1990, after the first tentative map expired, the City approved a vesting tentative map for residential development on the Property.

In California’s coastal cities, land use and development projects are required to comply with both local city laws and the State Coastal Act.  The entire City of Half Moon Bay is located in the Coastal Zone and subject to the requirements of the Coastal Act.  Under the Coastal Act, no property owner can develop property in the Coastal Zone until it obtains a discretionary Coastal Development Permit ("CDP"), regardless of whatever preliminary approvals it has received from a city.  Until 1996, the primary authority to issue CDPs was held by the California Coastal Commission.  In 1996, the City’s Local Coastal Program was approved, and the City became responsible for issuing CDPs, with the Coastal Commission often considering appeals of the City’s decisions to issue CDPs. 

The Beachwood project had a City-issued vesting tentative map, but it needed to get a Coastal Development Permit to be able to obtain a final subdivision map and build the project. 

Yamagiwa entered the story in 1993, when, acting as trustee for the Keenan family trust, she purchased the Property.  Yamagiwa bought the entire 24-acres in a foreclosure sale for only $1 million dollars. 

In 1993, the City was under a development moratorium due to the lack of available sewer capacity.

After that moratorium was lifted, in 1998, Yamagiwa applied to the City for new approval to construct an 83-unit residential subdivision.  By then, however, when the City was considering the application for the CDP, two important things had changed.  First, as noted before, the City was now responsible for considering development proposals under the requirements in the Coastal Act.  Second, and of importance to Yamagiwa’s development proposal, a new case, Bolsa Chica Land Trust v. Superior Court, 71 Cal.App.4th 493 (1999) ("Bolsa Chica"), held for the first time that the Coastal Act does not allow residential development of protected wetlands in the Coastal Zone.  Before Bolsa Chica, the Coastal Commission and others had interpreted the Coastal Act to allow residential development of protected wetlands with appropriate mitigation.  The Coastal Commission’s interpretation before Bolsa Chica was similar to the way mitigation standards are applied by other agencies to wetlands outside of the Coastal Zone. After Bolsa Chica the Coastal Commission has not allowed residential development of wetlands protected by the Coastal Act under any circumstances.  The Coastal Commission now absolutely prohibits residential development of wetlands in the Coastal Zone.  During the processing of the CDP, the City’s wetland consultants determined that wetlands existed on the property, under the applicable legal standards in the City’s LCP.  As a result, on May 2, 2000, the City Council denied the CDP because there were wetlands on the Property.

In response, Yamagiwa filed two lawsuits.  The first lawsuit filed in State Court in 2000 challenged the City’s denial of the CDP, and argued that the City had misinterpreted the City’s own LCP definition of wetlands in finding wetlands on the Property.  Initially, Yamagiwa was successful in convincing the trial court that there were not wetlands on the Property and the trial court ordered the City to issue Yamagiwa a CDP, which the City did, subject to the outcome of an appeal of the trial courts decision.  Before the appeal of the trial court’s decision could be heard, however, the Coastal Commission considered an administrative appeal of the City’s decision to issue the CDP as ordered by the trial court.  The Coastal Commission decided to overturn the CDP.  Yamagiwa appealed the Coastal Commission’s decision directly to the State Appeals Court, who ruled that the Coastal Commission did not have the authority to overturn a CDP issued because of a court order.  Finally, after nearly five years of litigation, the State Appeals Court considered the original issue in this first lawsuit of whether the City had appropriately determined that protected wetlands existed on the Property, and, agreeing with the City that such wetlands did exist, upheld the City’s decision to deny the CDP.

The second lawsuit against the City was also originally filed in State Court in 2000.  In this suit, Yamagiwa claimed that if there were protected wetlands on the Property, the wetlands were created by the City’s actions in constructing the TAAD storm drain improvements on the Property.  The second lawsuit sought damages under State and Federal law from the City resulting from the formation of the wetlands.  Specifically, Yamagiwa wanted the City to compensate her, as trustee for the Keenan family trust, for the difference in the value of the Property with Yamagiwa’s proposed subdivision and the value of the Property without.  This second lawsuit was held back pending the resolution of the first.  The issue of damages for forming the wetlands could not be decided until the first lawsuit decided whether or not there were wetlands.  This second suit was reactivated with the conclusion of the first lawsuit in 2005 that determined that, yes, there were protected wetlands on the property that required the City to deny the CDP.  The City moved the second case from State Court to Federal Court on the basis that Yamagiwa’s claims at that time included issues that were within the jurisdiction of Federal rather than State courts.  The November 28 decision was a decision by the Federal Court on Yamagiwa’s second lawsuit.

This is a court decision on actions taken by previous city councils.  It has cost Half Moon Bay 5 million dollars over the past 15 years.  The City Council now must make a policy decision on how to proceed.  The Council will receive its initial briefing on this complex decision at a Special City Council meeting on November 29 at 5:00 p.m. at City Hall, 501 Main Street Half Moon Bay.  The Council has until December 28 to decide if they want to appeal this decision to the 9th Circuit Court of Appeals.

If you have questions about this press release, please contact the City Manager Marcia Raines at 650.726.8793.


Comment 1
Thu, November 29, 2007 3:04pm
Ray Olson
All my comments

Are the case exhibit documents also available online?

According to the City’s press release:

“The City approved a tentative map for [the Beachwood] residential development in 1976…In 1990, after the first tentative map expired, the City approved a vesting tentative map for residential development on the Property…This is a [$36 million] court decision on actions taken by previous city councils.”

So, the $36 million question is this: Who was on City Council back in 1976 and 1990?

Was our present Mayor Naomi Patridge on the City Council back then?

Comment 3
Fri, November 30, 2007 6:01am
Ken Johnson
All my comments

Kevin,

The irony and true issue, to your question, is who voted for the VTM that provided the asserted liability and whether they will also vote as to whether the judgment shall be appealed. You are correct, as I recall. At the time, I argued the VTM decision was discressionary and not ministerial; and should be denied. My recollection is that today’s Mayor Naomi Patridge voted then for the VTM.

That given, I am not willing at this time to forejudge what Mayor Naomi Patridge actions will be on deciding to appeal this decision to the 9th Circuit Court of Appeals. The list of who might join on the City’s side and amicus curiae briefs would / will be interesting.

Ken Johnson

I used to work as a word processor in the litigation department for an extremely large San Francisco law firm, a firm in which Judge Walker was then a partner.

He was one of the few attorneys who treated the staff with respect and was always pleasant to us.  That being said, he was and is also extremely conservative and pro-corporate.  We had mega corporations as clients.  There was one rather appalling project that the litigation department worked on for a mining corporation that set forth the opinion that strip mining was good for the environment.  (I don’t quite remember if Walker was on that one, but this is given as an example of pro-corporate focus of this law firm.)

Given his history, why was he not preemptively challenged and disqualified to hear the case because of his anti-environmental bias?  Surely this could be a partial basis for an appeal of his decision.

Comment 5
Fri, November 30, 2007 10:43am
Darin Boville
All my comments

Here’s a point I’m confused on.

According to the SF Chronicle, the Keenan bought the property in 1993. But the city projects that he claims led to the man-made wetlands occurred in the early 1980s—ten years earlier.

Is that right?

So the wetlands existed at the time Keenan bought the property?

—Darin

Comment 6
Fri, November 30, 2007 6:31pm
Joe Falcone
All my comments

A friend of mine in Sunnyvale forwarded me the story from SFGate and I thought I was seeing some sort of April Fools joke.  Unfortunately, it is not.  To answer some questions: property can carry development rights - and as noted - the original rights under the tentative map of 1976 expired and the city then approved a vesting tentative map in 1990.  This 1976 date is key because it predates the storm drainage and roadwork that the court feels created the wetlands as opposed to there being at least some natural wetlands in that area. 

When the current owners bought the property, they also bought the development rights in that vesting tentative map.  Its a tough situation - we “won” in that the habitat was legally declared a wetland (in court) and because of Bolsa Chica can’t be built on period - and we “lost” in that the landowner got a court to agree that the city had given development rights with the vesting tentative map with one hand while de facto denying development rights by creating a legal wetland with the other.

The unfortunate thing is that the city (being small and largely unimportant for most of its existence) has had poor historical record-keeping so it is no surprise that the documentation of this drainage work (if it really was done) on Beachwood was either non-existent or very difficult to track down.  I can tell you that finding any city records from 20 years ago is difficult anywhere.  So how these guys managed to prove to a court that the city really created the wetlands and that wetlands did not pre-exist on the site is pretty impressive.  It is a bit hard to believe. 

When I called my wife to tell her about this, the only way I could see out of this for the city is either to appeal and hope for a more sympathetic judge, or do some sort of land swap / development rights deal as Keenan as suggested. The tough question there is what neighborhood wants another 83 houses and the construction noise, traffic congestion, environmental damage, etc.

Comment 7
Fri, November 30, 2007 9:55pm
Suzy Kristan
All my comments

Joe did you read the entire judgment? In addition to the testimony of Gary Whelen, he had extensive written and other documentation that stood up to the court litmus test of credibility proving that there was not a wetland there BEFORE the city initiated the TADD project. The work did indeed take place. This was common ‘local’ knowledge back then (I’m not trying to pull the “how long have you lived here” card). Quite frankly the city should have set aside the sewer connections just to demonstrate ‘good faith’ back then as recommended by Todd Graff, then asst. Planning director. Instead the city took 1 million dollars from the Yamagiwa/Keenan trust towards the sewer expansion and then worked to deny development of the parcel based on the now neglected storm drain runoff turned wetland area.

Please don’t misunderstand me and think I advocate more development…quite the contrary (don’t me get started on the county rubber stamping every frick’in new home in the unincorporated areas of the coast). However I believe we should acquire these properties straight forward and above board for fair market value to keep them open space. Otherwise we run into these “deep pockets” lawsuits that can go the distance and prevail.

PS to Ray Olson…I’m quite sure the exhibit/documents related to this case, number in the vicinity of several BOXES of material having worked for civil litigators in the past. I’m sure they could be available to view but doubt anyone has scanned them all for viewing online. Oh and I found the judgment to be one of the most readable judgments/pleadings I’ve read in long time. It was not weighed down by pages after page of legalese.

Any new development project that arises out of some swap/settlement agreement between the developer and the City would still have to comply with the City’s LCP and the Coastal Act. That means: 100 foot setbacks from any wetlands, wherever they exist.

Comment 9
Sat, December 1, 2007 12:13am
Frank Long
All my comments

It’s a mess, for sure, and one I’m still trying get a grasp of. What I don’t understand is that after the first map expired in 1990 and the City issued its vesting tentative map, it’s my understanding that the Coastal Commission was still in control of the permitting process, such that by 1993, a full three years before the city took over that responsibility, Yamagiwa should have had no realistic expectations that any development would take place, unless she was counting on greasing the project through some legal slight of hand. At $12,000 per lot in 1993, who wouldn’t try to snag that as a potential investment opportunity?

The problem is that, at the time of her purchase, I don’t see any realistic expectation that the Coastal Commission would change its stand on wetland assessment (a gamble, maybe), and unless she had some inside informational track on HMB acquiring its own permitting process some three years later, how could anyone rightly expect this investment to actually pay off?

The whole thing reeks of caveat emptor. Now she wants to have her cake and eat it too. I can’t see it. If anything, toss her a $2 million bone and put her butt on the next train. HMB should have said that it would approve the development pending a court ruling on Beachwood’s non-conformity to Bolsa Chica. Now, it appears that the Coastal Commission has left HMB holding the bag.

If anyone wishes to clarify this, dive right in. I’m still a newbie, here.

Comment 10
Mon, December 3, 2007 1:28pm
Ray Olson
All my comments

I gotta believe that the city will be appealing this decision. This is completely ridiculous. How could they determine that the land was NOT a wetland at the time of Yamagiwa’s purchase? Especially since the definition of a wetland is so subjective?
Maybe the city should sue the Coastal Commission for getting us into this position of trying to define what exactly is a wetland.

To Suzy - I didn’t read the judgment but I assumed that the Keenan side must have found some good evidence that this work did take place to convince the judge.  Having said that, Michelle raised a good issue about Judge Walker as my brother-in-law (who works for the State Supreme Court) forwarded me the 12/3/07 article on this case written by Rebecca Beyer of the Daily Journal legal newspaper. 

In that article there are the following quotes from John D. Echeverria, executive director of the Georgetown Environmental Law & Policy Institute at Georgetown University Law Center, who said he believed Walker did not have jurisdiction over the case and said that the ruling may be vacated on appeal.

    “This is an egregious example of an activist federal judge reaching out to decide a case that properly belongs in state court,” Echeverria said. “Under well-established Supreme Court precedent [this case] needed to go forward in state court.”

    He said the federal court did not have jurisdiction over the takings issue “unless and until state court remedies had been exhausted.”

Sounds like good news to me…

Comment 12
Tue, December 4, 2007 3:48pm
Ray Olson
All my comments

I was just on the talkabout item related to this issue and wanted to point out something. Discussions on the coastsider website are so much more informative and constructive since people cannot post anonomously. I think I wasted 10 minutes of my time trying to read through the talkabout post to try and find what other people really think. Sorry for the digression.

My brother-in-law the attorney sent me this note…
“It looks like there’s grounds for appeal since it is by no means an open and shut case.
Indeed it has an incredibly tortured and complex procedural history.
At some point I may print out the 100+ page statement of decision and look through it.”

Joe I found it worked great to just to download the document and read at my leisure rather than adding to my stacks paper I already plow through in any given day. Just a thought.

A shout out to Darin Boville for taking the time to downlaod all the PDF files of related documents, etc., avaiable on MontaraFog.com It’s big job I know! Thanks!

Comment 15
Sat, December 8, 2007 11:18am
Joe Falcone
All my comments

What can I say - that was a quote from my brother-in-law (staff attorney at State Supreme Court - but not with the part of the court that might review the case) and attorneys love paper - although he does use several handhelds to read documents on occasion. 

I thought it was interesting that he felt it had “an incredibly tortured and complex procedural history” which is typically fodder for appeals to higher courts like the one where he works.

I also think that resolution of the case may be very complex.  If the award in the case can be reduced on appeal, it is possible to perhaps get one of the wealthier environmental patrons to buy out Keenan’s (implicit) development rights in the same way that they buy the development rights from other landowners.

Ray - BTW, I was “accused” once (by some very nice people) of posting on Talkabout.  Nasty crowd, dumb comments, uninformed speculation.  Why does anyone even bother to read it.  We let our subscription to the HMB Rag (the name that can not be spoken) months ago and I think my blood pressure has dropped 10-20 points.  Why bother - it’s like watching Fox news (so I am told)!

Comment 16
Mon, December 10, 2007 2:24pm
Joe Falcone
All my comments

Heard on the street that someone is trying to resolve this whole mess by tying the Pacific Ridge development, the Foothill Blvd bypass, and the land at Highway 1 & North Main in front of the High School into some sort of mega-project with housing, retail, roads, etc.  Doesn’t sound like a solution to me…