How Untimely Service can be Deadly to your Takings Claim

If you ask 10 attorneys what keeps them up at night, at least six of them will recount nightmares about missing a filing deadline. I know what you're thinking. How hard can it be? You just look in the code, find the applicable limitations period, and then you're off. However, as with all things law-related, it very rarely is that simple.

In a recent decision issued by California's Second Appellate District, the court explained why filing deadlines are not the only thing practitioners should have nightmares about. In Excelaron LLC v. County of San Luis Obispo, the court of appeal upheld the dismissal of plaintiffs' inverse claim with prejudice, because the timely filed complaint was not timely served.

Plaintiff, the owner of various mineral estates in an unincorporated area of San Luis Obispo County, applied for a conditional use permit to drill and operate oil wells on its various estates. The county, however, denied the application, and in its notice of final action stated:

Pursuant to Section 1.09.040 of the San Luis Obispo County Code, please be advised that the time within which judicial review must be sought is governed by the provisions of California Code of Civil Procedure section 1094.6 and Chapter 1.09 of the San Luis Obispo County Code (copy enclosed).

Both the County Code Section 1.09 and Section 1094.6 state that a complaint must be filed within 90 days of the final decision; they are silent on the issue of service. Within 90 days of the decision, consistent with the requirements in the county's code and 1094.6, the plaintiff filed a petition for writ of mandate and complaint for inverse condemnation. Two days later, a first amended petition and complaint was filed adding three additional petitioners and a new claim under the California Environmental Quality Act. The complaint sought approximately $6.24 billion in damages (that's with a "b").

One hundred and twenty-nine days after the final decision was issued, the complaint was served on the county. The county subsequently demurred to the entire petition and complaint on the ground that the plaintiffs had failed to comply with the service requirement in Government Code Section 65009. Section 65009, which only applies to a certain segment of land use decisions, including decisions relating to conditional use permits, states that except as provided therein, "no action or proceeding shall be maintained ... by any person unless the action or proceeding is commenced and service is made on the legislative body within 90 days after the legislative body's decision[.]" Based on the failure to comply with the service requirement in Section 65009, the trial court granted the demurrer without leave to amend.

On appeal, plaintiff asserted four arguments:

(1) the county was estopped from relying on Section 65009;

(2) Section 65009 was preempted by County Code Section 1.09;

(3) the county waived the protection of Section 65009 by enacting County Code Section 1.09; and

(4) Section 65009 does not apply to CEQA or inverse condemnation claims.

Plaintiff's estoppel argument was premised on the language in the county's final decision regarding Section 1094.6 and County Code Section 1.09. Plaintiff asserted that by specifically identifying Sections 1094.6 and 1.09, the county knowingly and willfully misled the plaintiffs into believing that the claims would be timely so long as they were served within 90 days of the final decision.

The court of appeal made short work of this argument, however, as it found that this exact argument had already been rejected in Honig v. San Francisco Planning Dept. (2005) 127 Cal.App.4th 520 and Beresford Neighborhood Association v. City of San Mateo (1989) 207 Cal.App.3d 1180. In light of these authorities, the court of appeal stated that "[a]lthough it might be better practice to include a reference to Section 65009, the county's failure to do so here provides no basis for us to deem it estopped from asserting the statute as a defense." The court similarly rejected plaintiff's waiver and preemption arguments.

Finally, the court of appeal turned to the question of whether Section 65009 applied to the CEQA and inverse claims. The court concluded that the CEQA claim was barred, relying on the plain language of Section 65009 and Royalty Carpet Mills Inc. v. City of Irvine (2005) 125 Cal.App.4th 110, since the claim "essentially and necessarily" challenged the county's decision to deny the application. The court reached the same conclusion with respect to the inverse claim, explaining that the gravamen of the claim hinged "on the validity of the county's decision to deny the application[.]" Thus, the court of appeal concluded that the inverse "cause of action is subject to Section 65009's statute of limitations."

Accordingly, because the petition and complaint was not served within 90 days, the court of appeal affirmed the dismissal of a timely filed inverse claim that had an estimated value of $6.24 billion, with prejudice. Now that is a nightmare scenario.