On February 13, 2019, the Fourth District Court of Appeal in Fudge v. City of Laguna Beach (Feb. 13, 2019, G055711) __ Cal.App.5th ___, joined the First and Sixth Districts in holding that the Coastal Commission’s acceptance of an appeal from a local agency’s decision on a Coastal Development Permit (“CDP”) requires parties to wait for the Commission’s decision before bringing an action in superior court. The Fourth District’s decision addressed a novel argument regarding the issue whether the Commission’s review of a local agency’s decision is truly “de novo.” This decision makes clear that challengers to a local agency’s grant of a CDP must exhaust the administrative remedy of Commission review under the Coastal Act, even when the challenge is based on the California Environmental Quality Act (“CEQA”) and the Commission’s procedures on review differ from those of the local agency. Nossaman attorneys John J. Flynn III, Steven H. Kaufmann, and David J. Miller represented the property owner and real party in interest.
This decision arose from the City of Laguna Beach’s issuance of a CDP to demolish a dilapidated existing structure on the owner’s property. Petitioner Mark Fudge challenged the City’s issuance of the CDP for demolition of the structure on CEQA grounds by appealing the matter to the Coastal Commission pursuant to Public Resources Code section 30625, and by filing a petition for writ of mandate in superior court. In March 2018, the Commission found that Fudge’s appeal raised a “substantial issue” and accepted the appeal. The standard for Coastal Commission review of an appeal is “de novo” under section 30621, subdivision (a). The trial court dismissed Fudge’s action as moot in reliance on two appellate decisions, Kaczorowski v. Mendocino County Board of Supervisors (2001) 88 Cal.App.4th 564, and McAllister v. County of Monterey (2007) 147 Cal.App.4th 253, which hold that the Commission’s review of a CDP under the Coastal Act is the functional equivalent of the EIR process, the final step in CEQA proceedings, and the only decision subject to judicial review. Fudge appealed the dismissal.
On appeal, Fudge argued that he was entitled to judicial review notwithstanding the Commission’s acceptance of his appeal because the Commission’s review would not be conducted “in the same manner” as the City’s decision on the CDP: the Commission would review the CDP for compliance with the Coastal Act under its own procedures, while the City used different procedures and was also bound by CEQA. Therefore, Fudge argued, the Commission’s review would not be truly “de novo” as defined by a 1937 Supreme Court case providing that de novo review is conducted “in the same manner” as the underlying proceeding. Fudge concluded that the Commission’s decision of his appeal would not nullify the original decision by the City, leaving something of the City’s decision to attack in court.
The Court of Appeal rejected this argument. It explained that, after its 1937 decision, the California Supreme Court in Buchwald v. Katz (1972) 8 Cal.3d 493 redefined the term “de novo,” omitting the requirement that de novo review be conducted “in the same manner” as the underlying proceeding but maintaining that de novo review nullifies the lower entity’s decision. Thus, the Court of Appeal reasoned that the subsequently enacted section 30621, which provides for the Commission’s “de novo” review of a local agency’s decision on a CDP, evinces the Legislature’s intent for the Commission’s review to displace the local agency’s decision even if the proceedings are not conducted “in the same manner.” The court found support for this conclusion in section 21080.5, which provides that when a certified regulatory program—such as the Coastal Commission’s regulatory program—requires the submission of environmental information, such information may be submitted in lieu of an environmental impact report that might otherwise be required by CEQA. The Court of Appeal also noted that the Legislature impliedly emphasized the importance of the Coastal Commission’s de novo review in section 21174 of CEQA, which says the Coastal Act takes precedence and controls where there is a conflict between the two. Therefore, the court affirmed the trial court’s dismissal of the case as moot and held that Kaczorowski and McAllister were correctly decided.
Although this decision largely applied existing law, it is significant because it rejected Petitioner’s novel argument that differences between the procedures governing a local agency’s decision on a CDP and the Commission’s review on appeal from that decision could entitle challengers to bypass the administrative process by suing the local agency before the Commission decides (or rejects) an appeal.