Stonehouse Homes v. City of Sierra Madre, ___ Cal. App. 4th ___ (Oct. 9, 2008, Case No. B195552)

The California Court of Appeal found developer Stonehouse Homes’ (Stonehouse) challenge to an April 2006 moratorium resolution adopted by the City of Sierra Madre (City) did not present a justiciable controversy. The moratorium resolution directed staff to prepare recommendations and zoning amendments for consideration by city council and provided notice to the public of such contemplated legislative actions. The court found Stonehouse’s legal challenge not ripe for litigating because the City had not yet adopted the land use ordinance contemplated by the moratorium resolution.

In 2005 the City passed a moratorium by ordinance establishing specialized requirements for development in the steep hillside areas of the San Gabriel Mountains. The moratorium area was designated as a “Hillside Management Zone” (HMZ) and all proposed development in the HMZ area was subject to the moratorium requirements (i.e., slope severity effected HMZ lot size determinations).

In a March 2006 pre-approval meeting between Stonehouse and the City, specific requirements were identified for a 25-acre residential project Stonehouse was planning within the HMZ. Following the meeting, Stonehouse re-submitted its conditional use permit and vesting tentative map applications for the project. About a month after the moratorium resolution was passed, the City informed Stonehouse its applications were still incomplete. A number of new and different items were requested by the City which were inconsistent with the requirements identified by the City at the parties’ meeting in March 2006. Stonehouse’s appeal of application of the new requirements to its project was denied by the planning commission. Thereafter, Stonehouse sued for declaratory relief and also appealed the planning commission’s denial to city council.

Stonehouse’s lawsuit sought a judicial declaration as to the validity of the moratorium resolution and its effect on standards that could lawfully be applied to Stonehouse’s pending applications. The trial court sustained the City’s demurrer to Stonehouse’s complaint with leave to amend and because Stonehouse did not amend, the action was dismissed. Stonehouse timely appealed the dismissal. The appellate court noted that if a demurrer is sustained with leave to amend and a plaintiff fails to amend, it is presumed the complaint already states the strongest case possible (citing Reynolds v. Bement (2005) 36 Cal. 4th 1075, 1097; Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal. 2d 305, 312).

Stonehouse alleged the City was trying to deprive it of a safe harbor provision of the Subdivision Map Act (Government Code section 66474.2(a)). The safe harbor provision requires a local government agency to process a tentative map application under the laws existing when the application is accepted as complete by the local agency. (Id.). However, the court noted that the safe harbor provision does not apply before an application is found complete if the local agency has: (1) initiated proceedings by resolution, motion or ordinance; and (2) notified the public of the proposed land use changes (citing Government Code section 66474.2(b)). In dismissing Stonehouse’s complaint, the trial court noted the City’s actions were precisely the type contemplated by subsection (b) of Government Code section 66474.2 that would prevent application of the safe harbor provision.

The appellate court’s review of the justiciable controversy requirement for declaratory relief explained that such cases must involve an actual controversy to be justiciable (citing Code Civ. Proc. § 1061). Justiciability has two elements, ripeness and standing. Ripeness is evaluated under a two-prong test: (1) whether the dispute is “sufficiently concrete that declaratory relief is appropriate; and (2) whether withholding judicial consideration will result in the parties suffering hardship.” (citations omitted).

The court found the first prong was not met because to determine the legal rights of the parties with regard to the validity of the moratorium resolution would have required the court to improperly engage in speculation as to what legislation (if any) the City might ultimately adopt. The court observed that the moratorium resolution was not itself legislation but merely requested City staff to prepare final recommendations regarding land use legislation the City was considering for the HMZ area. The passing of the resolution did not implicate the rights of Stonehouse and merely provided notice to the public about potential HMZ land use changes being evaluated by the City.

As to the second prong of the ripeness test, the court found to be pure conjecture Stonehouse’s contention that it was being deprived of a safe harbor provision under the Subdivision Map Act because it was undisputed that Stonehouse’s tentative map application had not yet been deemed complete. The court commented that mere disagreement as to the moratorium resolution’s application and meaning does not constitute a justiciable controversy. The appellate court found Stonehouse’s complaint failed both prongs of the ripeness test which is designed to prevent court’s from issuing purely advisory opinions. Since the complaint failed the ripeness test, the court did not reach the standing requirement. The appellate court affirmed the trial court’s order of dismissal.