Government Liability Update

Proportionality Rules for Exactions Apply to Decisions Denying Development Permits and to Requests for Money

In Koontz v. St. John's River Water Management District, published June 25, 2013, the U.S. Supreme Court held that the requirements set forth in Nollan v. California Coastal Comm'n (1987) 483 U.S. 825 and Dolan v. City of Tigard (1994) 512 U.S. 374 for  goverment demands for property from landowners or developers seeking a development permit -- that there be a nexus between the demand and the proposed development's impact, and that the demand be "roughly proportional" to the impact -- apply not only to demands imposed in connection with granting a permit, but also to decisions denying a permit on the ground that the permit seeker refused to comply with the demand.  In both cases, the majority held, the doctrine barring unconstitutional conditions on exercising a constitutional right forbids coercively withholding benefits from those who exercise their rights.  Denying a permit because of improper conditions works a taking of the developer's property interests.  The majority further held that the Nollan/Dolan requirements apply whether the government seeks an actual easement on the permit-seeker's property, or money to offset the impact of the development.  The court declined to rule on the merits of this case, and remanded it to state court.   Four justices dissented. 

Public Employees Absolutely Immune from Tort for Legislative Decision-Making; City Council Members' Promises Not Enforceable by Mandamus

In Freeny v. City of San Buenaventura, published June 4, 2013, the Second District Court of Appeal, Division Six, affirmed dismissal of a lawsuit brought by two landowners against a city and its councilmembers.  The plaintiffs alleged that after they worked with city staff to develop a living facility for senior citizens, and the planning commission approved the project, the city council approved the appeal of neighbors of the property and rejected the project.  It invited them to submit a redesigned project.  The plaintiffs petitioned for a writ of administrative mandamus seeking approval or a new hearing.  They also sued the council members and the city for fraud, misrepresentation, and elder abuse.

The appellate court held that the council members were absolutely immune from liability under Government Code sections 820.2 (discretionary immunity), 821 (immunity for failing to adopt enactment) and 821.2 (immunity for denying permits).  They were public employees (Gov. Code, section 811.4), and were sued for their discretionary legislative decision not to grant the application for building permits and variances.  The court rejected the plaintiffs' argument that the exception in a separate immunity statute, Government Code section 822.2 (public employee immunity for misrepresentations), for guilt of actual fraud, corruption, or actual malice applied to the other immunity statutes.  Unhappy constituents should not be allowed to bypass legislative immunity by simply pleading that a legislator's policy decision was motivated by fraud, malice, or corruption.  The court avoided the question of whether the immunities applied to the plaintiffs' claims for denial of due process, because tort damages are not available under California law for procedural due process violations.  The city could not be held vicariously liable, because it shared its employees' immunity, and was absolutely immune from liability for misrepresentations (Gov. Code, section 818.8.)

The court also upheld dismissal of the plaintiffs' mandamus petition.  Although the tort immunities do not apply to mandamus, the plaintiffs were not entitled to the relief they sought.  Their argument that the council members had promised to grant their application was not a basis for mandamus, because estoppel does not lie against the government for such promises.  Their procedural due process argument for a new hearing failed, because they had no property interest in a permit or variance at the time the application was rejected.  Finally, their allegations that the defendants did not follow legal standards, without specifically pleaded facts, did not overcome the presumption that public agencies follow their official duties.