First District Court of Appeal Holds That a Necessary and Indispensable Party is Not Bound to a Tolling Agreement That It Did Not Sign

In Save Lafayette Trees v. East Bay Regional Park District (June 30, 2021, A156150) __ Cal.App.5th __ [2021 WL 2677595], the First District Court of Appeal held that PG&E, a necessary and indispensable party in the case, was not bound to an agreement to toll the CEQA statute of limitations executed by only the petitioners and the respondent public agency.

FACTUAL AND PROCEDURAL BACKGROUND

On March 21, 2017, the East Bay Regional Park District’s (District) Board of Directors issued a resolution accepting funding from PG&E as compensation for the removal of 245 trees on District property near PG&E’s natural gas transmission pipelines. PG&E issued this funding as a part of its “Community Pipeline Safety Initiative.” The District and PG&E later signed an MOU for the implementation PG&E’s initiative and ongoing maintenance and monitoring of the area near the natural gas pipeline. On June 27, 2017, the District filed a Notice of Exemption after finding the MOU and related activity categorically from CEQA.

On July 31, 2017, Save Lafayette Trees, Michael Dawson and David Kosters (Appellants), and the District entered into a tolling agreement to toll all applicable statutes of limitations for 60 days. PG&E did not consent to this agreement. On September 29, within the 60-day tolling period, Appellants filed a petition for writ of mandate challenging the District’s approval of the MOU under CEQA, as well as for violations of local ordinances and state constitutional due process rights. The action named PG&E as a real party in interest. PG&E demurred to the CEQA cause of action as time-bared by both the 35-day and 180-day statute of limitations periods under Public Resources Code section 21167. The trial court sustained the demurrer.

THE COURT OF APPEAL’S DECISION

Upholding the trial court’s decision, the Court of Appeal determined that PG&E was not bound to the tolling agreement between Appellants and the District. The court concluded that PG&E was both a necessary and indispensable party in the litigation, and therefore, was entitled to assert or waive the statute of limitations defense. The court noted that CEQA does not statutorily authorize tolling agreements, which means that they are not a statutory right. Rather, tolling agreements are private agreements between parties that have no effect on parties not in privity. Citing Salmon Protection & Watershed Network v. County of Marin (2012) 205 Cal.App.4th 195 (“Salmon Protection”), the court explained that CEQA does not prohibit tolling agreements to extend the limitations period, but to be effective they must include the recipient of an approval (the project proponent), the public agency, and the would-be petitioner. Because PG&E was a necessary and indispensable party, it was not bound to the tolling agreement to which it was not a signatory.

The court further reasoned that binding an indispensable party like PG&E to a tolling agreement to which it did not consent would defeat the purpose of the limitations period in Public Resources Code section 21167 to “protect project proponents from extended delay, uncertainty and potential disruption of a project caused by a belated challenge to the validity of the project’s authorization.”

The court also rejected Appellants’ argument that the 180-day limitations period had not run because they did not have constructive notice of the project. Appellants claimed there was no constructive notice because the removal of the trees was not included in the Board’s agenda for the project nor the accompanying description of the Board’s resolution. Public Resources Code section 21167 provides that the 180-day period begins after the agency’s decision or commencement of a project. The court noted that the Supreme Court has held that a public agency’s formal decision to carry out or approve a project is deemed constructive notice for potential CEQA claims. In this case, the court determined that the MOU for funding the tree replacement was consistent with the Board’s resolution and the project as outlined in the staff report, and did not, as Appellants asserted, constitute a “substantial difference” that would not provide constructive notice. The court explained that any flaws in the project approval process do not delay the applicable limitations period where, as here, the public agency gave notice of the very approval Appellants challenged.

The court concluded that the 180-day limitations period thus began to run on March 21, 2017, when the Board made its final decision and expired on September 18, 2017, eleven days before Appellants commenced their action. Therefore, the court held that the CEQA cause of action was properly dismissed as untimely.

– Veronika S. Morrison