Tag: Indispensable Parties

Sixth District Holds City’s Failure to Send Notice of Determination Did Not Excuse Plaintiff’s Failure to Name Indispensable Party Within Limitations Period

The Sixth District Court of Appeal in Organizacion Comunidad de Alviso v. City of San Jose (Feb. 9, 2021) 60 Cal.App.5th 783, held that the City of San Jose’s failure to send a Notice of Determination to a member of the petitioner organization, in violation of Public Resources Code section 21167, subdivision (f), did not excuse the petitioner’s failure to name an indispensable party in a CEQA action before the statute of limitations expired.

BACKGROUND

A light industrial center project was planned for construction on a primarily fallow farmland site in San Jose. Mark Espinoza, a member of the petitioner organization, Organizacion Comunidad de Alviso, requested that the City’s environmental project manager place him on the list to receive the Notice of Determination (NOD) for the Project.
Later that month, Microsoft Corporation purchased land from the original owner and took over as the project applicant. The San Jose City Council initially approved the project and associated EIR at an October 2017 meeting. The meeting agenda incorrectly referenced the previous landowner instead of Microsoft. Microsoft was, however, correctly referred to as the project applicant at the hearing. A second meeting was held to reconsider the project approval and EIR in December 2017. The notice for that hearing correctly identified Microsoft as the property owner, but the resolution approving the project incorrectly referenced the previous owners.

The City filed two NODs for the project. The first NOD, which was sent to Espinoza, listed the wrong project applicant. The City later realized the mistake and issued a second NOD that correctly listed Microsoft as the applicant. The City did not send Espinoza the second NOD.

The petitioner filed a petition for writ of mandate within 30 days of the first NOD, alleging violations of CEQA and the Planning and Zoning Law. The petition named the previous property owners as real party in interest, based on the information in the first NOD. Two weeks after the 30-day statute of limitations for the CEQA cause of action expired, the previous owners’ attorney notified the petitioner’s counsel that Microsoft had acquired the property and was named as the applicant in the second NOD. A month after receiving this notice—and well after the 30-day limitations period had run—the petitioner filed an amended petition naming Microsoft as a real party in interest.

Microsoft and the City demurred to the CEQA action in the amended petition, arguing that it was time-barred because petitioner failed to name Microsoft as the real party in interest before the limitations period expired. The trial court determined that the initial petition was defective for failing to join Microsoft, and consequently dismissed the CEQA cause of action as untimely.

COURT OF APPEAL’S DECISION

Failure to Name Applicant in NOD as Real Party in Interest
Under Public Resources Code section 21167.6.5, subdivision (a), in addition to naming as a defendant the agency that approved the project, a petitioner must name as a real party in interest the “person or persons identified by the public agency” in the NOD. Here, the petitioner did not dispute that Microsoft was a necessary and indispensable party under CEQA because it was named as the applicant in the NOD. Instead, the petitioner argued that its failure to name Microsoft should be excused because the NOD sent by the City named the wrong party and the City did not resend the new NOD after the error was corrected. The court disagreed.

Although the court acknowledged the City violated Public Resources Code section 21167, subdivision (f), by failing to send the second, corrected NOD to Espinoza, it concluded that CEQA contains no relief for the City’s violation. The court ruled that the City’s violation could not excuse or cure the amended petition’s untimeliness because Public Resources Code section 21167, subdivision (f), itself provides that the “date upon which [the NOD] is mailed shall not affect” the statute of limitations. The court also cited the Supreme Court’s emphasis that potential CEQA litigants must pay close attention to NOD filings before initiating litigation.

Additionally, the court reasoned that the second NOD was properly filed with the county clerk, posted at the county clerk’s office, and made available for review by all potential litigants—thereby providing constructive notice of the correct parties to name in a potential action. The court further noted that petitioner had actual notice of Microsoft’s status as the applicant because it had participated in the public hearings at which Microsoft was identified and the public notice for the City’s re-approval hearing listed Microsoft as the owner.

Because the petitioner failed to name Microsoft within the 30-day statute of limitation period after the corrected NOD was filed, the court held that the trial court’s dismissal was appropriate.

Material Defect
The petitioner also argued that the 30-day statute of limitations was not triggered because the NOD was materially defective, and therefore, the 180-day limitations period should apply. The court easily rejected this argument because the petitioner did not claim that the second NOD was insufficient or incorrect. The petitioner only claimed that the posting of two contradictory NODs essentially amounted to an NOD defect. The court disagreed, determining that the second NOD contained all required information and was therefore not defective.

Relation-Back Doctrine
The court also disagreed with the petitioner’s argument that the relation back doctrine under Code of Civil Procedure section 474 should apply. The court determined the petitioner’s ignorance of Microsoft’s status as the project applicant was unreasonable because the second NOD was correct and provided constructive notice of Microsoft’s identity. Additionally, the petitioner had received actual notice of the second NOD from the former owners’ attorney and still proceeded to wait two months to file its amended petition—a delay, which the court pointed out, was longer than even the initial limitations period.

Estoppel
Finally, the court rejected the petitioner’s argument that the City and Microsoft should have been equitably estopped from asserting the statute of limitations defense. It concluded that even if the City’s failure to send Espinoza the second NOD was intentional, the petitioner’s reliance on that failure would be unreasonable. Again, the City’s timely filing of the second NOD with the county clerk’s office gave all potential litigants constructive notice of the correct parties to name in a CEQA action.

– Veronika Morrison

Third District Declines to Exercise Original Jurisdiction over CEQA Claims and Upholds Lower Court’s Decision Denying Motion to Dismiss Claims Due to Failure to Join Necessary Party

Quantification Settlement Agreement Cases
(2011) 201 Cal.App.4th 758

In a lengthy opinion focusing on the legality of agreements concerning the allocation of Colorado River water, the Third District Court of Appeal ruled (1) it was appropriate to remand the petitioners’ CEQA claims to the trial court, rather than for the Court of Appeal to exercise its original jurisdiction over those claims, and (2) the trial court did not abuse its discretion in denying a motion to dismiss the CEQA claims by virtue of the petitioners’ failure to name as real parties in interest all of the parties to one of the challenged agreements.

In 2003, the Imperial Irrigation District (“IID”), the Coachella Valley Water District (“Coachella”), and the Metropolitan Water District of Southern California (Metropolitan) entered a “Quantification Settlement Agreement” and (along with numerous other parties) various related agreements.  The agreements served to apportion California’s share of Colorado River water, and to provide a framework for conservation measures and water transfers among the parties.  IID filed a validation action.  Various entities filed answers in opposition to the validation action, as well as separate lawsuits challenging the agreements on various grounds.  The cases were consolidated and coordinated.  In January 2010, the trial court found that a key agreement implementing the Quantification Settlement Agreement was unconstitutional.  In light of this finding, the trial court dismissed CEQA challenges as moot, since the agreements had to be rescinded for reasons other than CEQA.  Various appeals and cross-appeals followed.

In the validation action, the Court of Appeal reversed the trial court’s conclusion that the agreement was unconstitutional.  The Court of Appeal rejected other challenges to the validity of the agreement as well.  The Court affirmed the trial court’s grant of summary adjudication of an allegation that the parties had failed to comply with the “wheeling statutes.”  (Wat. Code, §§ 1810-1814.)

CEQA challenges remained.  As noted above, the trial court had dismissed those claims as moot based on its (erroneous) conclusion that the agreements were invalid on constitutional grounds.  With the agreements revived, two of the petitioners – Imperial County and an environmental group – urged the Court of Appeal to reach the merits of their CEQA claims, rather than remanding them to the trial court.  The Court of Appeal declined.  Although the Courts of Appeal do have original jurisdiction to hear CEQA claims, the Court concluded the circumstances did not justify a departure from the normal practice of having the trial court consider CEQA claims in the first instance.

Coachella, Metropolitan, and the San Diego County Water Authority argued the trial court abused its discretion when it denied a pretrial motion to dismiss Imperial County’s CEQA lawsuit because the County had failed to name the United States and certain Native American Tribes as real parties in interest.  The trial court ruled the United States and tribes, as parties to certain agreements, were “recipients of approval” for purposes of subdivision (a) of Public Resources Code section 21167.6.5, and therefore “necessary parties.”  The trial court also ruled, however, that they were not “indispensable parties.”

The threshold issue was whether the United States and Tribes were “recipients of approval” under section 21167.6.5.  They were parties to an “allocation agreement” – one of 12 agreements implementing the overall QSA.  The EIR challenged by the County was intended to cover not merely the QSA, but also its implementing agreements, including the allocation agreement to which the United States and Tribes were a party.  The Court of Appeal therefore agreed with the trial court that the United States and Tribes were “recipients of an approval.”

Next, the Court of Appeal considered whether the trial court had abused its discretion in determining that the United States and Tribes were not “indispensable parties” under the factors set forth in Code of Civil Procedure section 389, subdivision (b).  The Court concluded the trial court had weighed those factors reasonably in denying the motion to dismiss.