First District Holds that Substantial Completion of a Development Project During an Active Lawsuit Moots Challenges to City Council Resolutions Approving the Project

On April 27, 2011, the California Supreme Court denied a petition for review of the appellate court’s decision in Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559. In the appellate decision, the First District Court of Appeal reversed a judgment of the trial court and found that challenges to city council resolutions approving a retail-cinema redevelopment project had become moot during the trial because the project had been substantially completed before the trial court entered judgment. The court also held that a challenge to the potential future use of the city’s eminent domain authority was not ripe.

In 1982, the City of Redwood City adopted a redevelopment plan that involved building a retail-cinema, office, and parking project on two blocks (Block 1 and Block 2). The City entered into a disposition and development agreement (DDA) with Western Innisfree Ventures, LLC (Developer), and certified an EIR for this original project. In January of 2003, the City and Developer entered into an amended DDA (ADDA), which revised the project by eliminating the office building originally envisioned on Block 2 and adding an underground parking garage to the retail-cinema development on Block 1. Attached to the ADDA, was a non-binding Retail/Cinema Parking Business Points, providing that the City would “use its best efforts” to acquire parcels on “Block 2” for a parking lot.

At a public hearing on December 9, 2002, Donald Wilson of the law firm Wilson & Wilson (Wilson), which owns property on Block 2, raised concerns about using public funds to build a parking structure for the exclusive use of a theater project. Neither Donald Wilson nor any other person objected to the EIR Addendum the City issued for public review. At the end of the December 9, 2002, hearing, the City Council and Redevelopment Agency adopted resolutions approving the ADDA and the EIR Addendum (Resolutions). On February 24, 2003, the City was authorized to use eminent domain to take properties on Block 1.

In February 2003, Wilson filed a complaint against the City, seeking to invalidate the ADDA, alleging CEQA violations, and requesting declaratory relief regarding the City’s potential future use of eminent domain on Wilson’s property. Wilson did not, at any time, ask for a stay or injunction to halt construction of the project. Although the trial began on April 26, 2004, a hearing did not occur until June 15, 2007. By June of 2007, the project had been substantially completed, and the City argued that the case was moot. Nonetheless, on April 25, 2008, the trial court filed a statement of decision, invalidating the Resolutions without ordering the City to take any corrective action. The City then appealed to the First District Court of Appeal.

The First District addressed Wilson’s CEQA claims in a footnote. The court recited the City’s arguments that Wilson failed to meet several statutory prerequisites to bringing a CEQA challenge, including the requirement to exhaust administrative remedies. The court concluded that it did not need to explore the consequences of Wilson’s failure to satisfy CEQA’s prerequisites because it was going to find the trial court had abused its discretion by entertaining a nonjusticiable action.

The court next turned to the discussion of justiciability. First, the court found that the substantial completion of the project rendered the challenge to the validity of the Resolutions moot, citing Roscoe v. Goodale (1951) 105 Cal.App.2d 271. The court rejected Wilson’s counterarguments that invalidation of the Resolutions caused title to the air space and retail-cinema portion of the project to revert to the City, that the action cannot be considered moot because the project is not entirely complete, and that validation actions are exempt from rules of justiciability.

Second, the court found that Wilson’s challenge to the City’s potential future use of its eminent domain power was unripe. Since the project was substantially completed before the trial court entered judgment and the City made no attempts to take Wilson’s property, the court found that Wilson did not qualify for declaratory relief. The court drew an analogy to Silva v. City & County of San Francisco (1948) 87 Cal.App.2d 784, where the court held that no actual controversy existed because the board of supervisors had only established the plaintiff’s land would be taken through condemnation proceedings “when necessary” without taking any steps to acquire the property. In conclusion, the court stated that Wilson could pursue legal remedies if and when the City does finally act to condemn Wilson’s property, but the current challenge was not ripe.