On July 2, 2017, the California Supreme Court issued its opinion in Lynch v. California Coastal Commission, __ Cal.5th __ (Case No. S221980), holding that the owners of two coastal bluff properties in Encinitas forfeited their right to challenge the California Coastal Commission’s permit conditions by complying with all pre-issuance requirements, accepting the permit, and building the seawall.

Since 1986, the properties have been protected by a shared seawall, with wooden poles, at the base of the bluff and a midbluff erosion control structure.  A shared stairway provided the only access from the blufftop to the beach below.  In 1989, the Commission retroactively approved a coastal development permit for the seawall, midbluff structure, and stairway.  In 2009, the owners applied to the City to replace the aging seawall and midbluff structure with an integrated concrete wall and to rebuild the lower portion of the stairway.  The City approved the project, subject to the Commission’s approval of a coastal development permit.  But while the owner’s permit was pending, heavy winter storms caused the bluff below one of the owner’s homes to collapse, destroying portions of the seawall, midbluff structure, and stairway.

The Commission eventually approved the permit, subject to various conditions of approval.  The owners objected to three conditions during the permit review process: (1) prohibiting reconstruction of the lower stairway; (2) making the permit expire in 20 years; and (3) requiring application for a new permit, before expiration of the 20-year period, at which time the Commission could extend the approval or require removal of the seawall.  After the Commission voted to approve the permit subject to the challenged conditions, the owners filed suit.  While the litigation proceeded, however, the owners satisfied all other permit conditions, obtained the permit, and built the seawall.

The state Supreme Court held that by accepting the benefits of the permit and building the seawall, the owners effectively forfeited the right to maintain their otherwise timely objections.  The Court’s decision flows from a long line of cases involving challenges to permit conditions, and it is grounded in the equitable maxim that “He who takes the benefit must bear the burden.”  Thus, according to the Court, the owners obtained all the benefits of their permit when they built the seawall and cannot now be heard to complain of its burdens.

Importantly, the Court rejected the owner’s argument that because the objectionable permit conditions did not affect the design or construction of the seawall, it was possible to challenge the conditions while the project was being built.  In so deciding, the Court declined to extend the Mitigation Fee Act procedure by which developers may proceed with a project and still protest the imposition of fees or a possessory interest in property.  The Court stated that if such an expansion is needed, the state legislature is the appropriate body to create it.

In addition, the Court reasoned that creating an “under protest” exception would also potentially swallow the general rule that landowners must take the burdens along with the benefits of a permit, which would change the dynamics of permit negotiations and foster litigation.  The Court stated that landowners are in the best position to know how strongly they may object to a particular condition, and to weigh the chance a challenge will succeed against the costs of delaying the project.

Lynch is an important new decision addressing project conditions of approval, and it underscores the need for project proponents to carefully review such conditions and to work with agency staff to resolve any objections, if possible, before final action on the permit.  If objections cannot be resolved before the permit is approved, project proponents should consider seeking an agreement with the approving agency to preserve the right to challenge while constructing the project.  Without such an agreement, project proponents must litigate their objections prior to constructing the project or risk a judicial determination that their objections were forfeited.