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Too Late for Second Thoughts
by Ron Davis

Did pressure on the part-owners of a California shopping center to consent to residential construction on their property violate their free-speech rights?

The shopping center, located in Mission Viejo, is owned by two separate entities. Originally the property was zoned for retail and commercial uses only. But the owners of 25 percent of the property wanted to change the center’s restrictions to include residential construction there.

At first, the owners of 75 percent of the property seemed to agree to the change. The property’s president and the general manager both spoke publicly in favor of allowing the residential construction.

With that backing, the city of Mission Viejo then rezoned for that purpose to clear the way for the change. That left only the 75-percent owners to agree officially to a change in the property restrictions.

But those owners unexpectedly had second thoughts about allowing the residential construction. And when they ultimately nixed the plans, the owners of the 25 percent of the property sued them.

At trial, the 25-percent owners pointed out that the actions of the other part-owners were “inequitable, unfair, obsolete, unreasonable, and contrary to public policy.” They claimed that the other part-owners had “publicly acknowledged” that the property restriction was “overridden” by the benefit of using land for a residential purpose. And they added that thwarting the residential construction was inconsistent with the public policy of Mission Viejo and California to provide affordable housing to the public.

In response, the 75-percent owners argued that the statements they made favoring the zoning change were a free-speech activity protected by the California and U.S. constitutions.

A California court rejected that argument and ruled in favor of the 25-percent owners, thereby clearing the way for rezoning of the property. The 75-percent owners appealed.

A California appellate court upheld the lower-court ruling, explaining, “The [75-percent owners] vigorously contend the complaint is based on their public statements and thus the action arises from their free speech. Not so. The complaint is plainly based on the claim they ‘unreasonably refused’ to amend or grant a variance to [allow the zoning change]. This is not protected activity.... Because they did not show the complaint arises from their exercise of free speech, they did not shift the burden to [the 25-percent owners].” (M.F. Mission Viejo, LLC v. Mission Foothill Associates, LP, 2009 WL 795208 [Cal.App. 4 Dist.])

Decision: March 2009
Published: April 2009



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