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Decisions by Simply Doing Nothing
by Michael Blahy

What is the statute of limitations when it comes to decisions on mixed-use, commercial, retail, residential construction projects made during a housing crisis?

At the intersection of Witmer Street and 7th Street in Los Angeles, California is a property owned by Sheng Cheng Chen, Sheng-Jen Chen, and Hsiu-Hsin Helen Chuang. 7th and Witmer, L.P. (7th and Witmer) proposed to develop the property with a multi story mixed use building with ground floor commercial retail and affordable housing units in the upper levels.

On the next block, is 1305 Ingraham, LLC (1305 Ingraham), who had issues with the project concerning traffic and parking in the area.

In mid October 2015, 7th & Witmer filed applications for their mixed-use project with the City of Los Angeles’s Planning Department.

In Mid June 2016, the city issued the required permits, subject to a 15 day appeal period. On June 30, 2016, the final day of the appeal period, 1305 Ingraham filed an appeal challenging “the requested incentives in the Determination.

Apparently, a hearing was set for July 28, 2016, but the Area Planning Commission was not informed, so the hearing was not held. The project was approved on August 1, 2016 and a week later, a Notice of Determination was posted with the Office of the County Clerk. Shortly later, 7th & Witmer commenced work on the project.

On May 10, 2017, 1305 Ingraham filed for declaratory relief, alleging:

  • that the city “failed to comply with CEQA before approving the project”

  • that the city “never responded nor held a hearing to determine the merits of [appellant’s] appeal”
And 1305 Ingraham demanded:

  • the city “to rescind all approvals for the project”

  • [the City] to comply with CEQA”

  • an injunction barring further action on the project “until such time as they have complied with CEQA”

  • a declaration that the Determination was invalid

On October 17, 2017, 7th & Witmer, the property owners and the city were served. In a demurrer filed by 7th & Witmer on October 20, 2017 they asserted that a 30 day limitation existed on the CEQA claims and that a 90 day limitation existed on the claims that the city did not hold the appeal hearing.

An expedited hearing date for the demurrer was set for November 7, 2017.

1305 Ingraham filed an amended petition on October 31, 2017, dropping the CEQA claim, but doubling down on claims that its due process rights were violated by the city and demanding rescinding of all permits and a halt to the project until the resolution of it’s appeal.

7th & Witmer and the city responded that the claims should have been filed within 90 days of the legislative body’s decision, pointing to LAMC section 16.05.H.4, which says that the decision of the planning director becomes final “[i]f the Area Planning Commission fails to act within the time specified”. The 90 days started after the commission failed to hear the appeal.

1305 Ingraham argued that its amended petition alleged a violation of a statute - LAMC section 16.05.H.1 - and therefore was governed by the three-year statute of limitations in section 338(a), which applies to “[a]n action upon a liability created by a statute, other than a penalty or forfeiture.” It also argued that it would be absurd to allow the city to skirt its statutory obligations to hear appeals by allowing it to reach a final decision simply by doing nothing.

The trial court concluded that the 1305 Ingraham action was time-barred and that allowing the petition to move forward “would undermine Section 65009’s purpose of providing certainty for property owners and avoiding lengthy delays to housing projects.”

1305 Ingraham appealed.

The court of appeal of the State of California analysed Government Code section 65009 and acknowledged:

  • “ ‘In construing a statute “[courts] begin with the fundamental rule that a court ‘should ascertain the intent of the Legislature so as to effectuate the purpose of the law.’ ” ’ ‘[W]here the language [of the statute] is clear, its plain meaning should be followed.’ ”

  • In enacting the statute, the Legislature found and declared “that there currently is a housing crisis in California and it is essential to reduce delays and restraints upon expeditiously completing housing projects.”

  • that legal actions challenging “the implementation of general plan goals and policies that provide incentives for affordable housing, open-space and recreational opportunities, and other related public benefits, can prevent the completion of needed developments even though the projects have received required government approvals.”

  • established a short, 90-day statute of limitations, applicable to both the filing and service of challenges to a broad range of local zoning and planning decisions, which is triggered by a decision, but “decision” is not defined.

  • Contains clause If the Area Planning Commission fails to act within the time specified, the action of the Director shall be final.” This section, by its plain terms, states that the Commission’s failure to act in a timely fashion renders the Director’s decision the final one. Here, appellant alleges the Commission failed to adjudicate appellant’s appeal and render its own written decision. The Director’s determination - which no one disputes constitutes a “decision” - thus became the final “decision” from which the statute of limitations began running 15 days after the scheduled July 28, 2016 hearing date.

As for the statue of limitations, precedent states, “ ‘a specific statute of limitations takes precedence over a general one, even though the latter “ ‘would be broad enough to include the subject to which the more particular provision relates. ’ ” ’ ” And, “[a]s a general principle, if two statutes of limitation apply to a particular claim, then the shorter period controls over the longer one, unless the statutes can be harmonized.”

In this case, [t]he three-year general statute of limitations in section 338(a) cannot be harmonized with the shorter, more specific limitations period in section 65009(c)(1). The latter controls.

The court of appeal of the state of California concluded “The judgment of the trial court is affirmed. Respondents are awarded their costs of appeal.

(1305 Ingraham, LLC v. City of Los Angeles et al. (California Courts of Appeal, Docket: B287327(Second Appellate District)))

Decided: February, 2019
Published: March, 2019

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