Court Opinion

ID: 9497079
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:42:51.022095+00
Date Added: 2024-06-11T17:57:59.435604
License: Public Domain

ALDISERT, Circuit Judge,
Dissenting:
I would reverse the judgment of, the district court and allow the City of Los Angeles to revoke the building permit. The building permit contravened the Los Angeles Municipal Code and the explicit limitations and directions of the Settlement Agreement entered into by the parties after five years of administrative proceedings and litigation in federal and state courts. Because the building permit was invalid, I would hold that the district court committed reversible error in applying the doctrine of equitable estoppel against the City of Los Angeles. See Pettitt v. City of Fresno, 34 Cal.App.3d 813, 824, 110 Cal. Rptr. 262 (Cal.Ct.App.1973); Smith v. County of Santa Barbara, 7 Cal.App.4th 770, 772, 9 Cal.Rptr.2d 120 (Cal.Ct.App.1992).
I.
Prior to signing the Settlement Agreement on September 27, 2001, the Congregation Etz Chaim and the City of Los Angeles engaged in extensive administrative proceedings and federal and state court litigation related to the City Zoning Administrator’s October 16, 1996 denial of the Congregation’s requests for variances and a conditional use permit. At the time of the denial, the Congregation already had been using the 303 South Highland Avenue residence for worship services — in violation of the Los Angeles Municipal Code — for approximately 18 months. Additionally, the property’s large fence and front-yard pavement, installed by a previous owner, violated the residential zoning ordinance.
The Zoning Administrator denied the Congregation’s application for a conditional use permit and requests for variance because, among other conclusions, a house of worship at 303 South Highland Avenue would, not “be in the best interest and convenience of the overall community and its general welfare.” The Zoning Administrator cited concerns about inadequate parking, noise and incompatibility with the surrounding single-family residential neighborhood. The Board of Zoning Appeals upheld the denial after adopting the findings of the Zoning Administrator and voicing an additional concern about potential traffic safety hazards at the site. The City Council of Los Angeles sustained the Board’s action on July 8,1997.
*1128The Congregation subsequently filed an action in the United States District Court for the Central District of California, challenging the constitutionality of the City’s conduct. On June 1, 1998, the district court dismissed without prejudice the Congregation’s claim for administrative mandamus so the Congregation could pursue that claim in the California state courts. In the meantime, the district court stayed federal proceedings on the Congregation’s other claims.
The Congregation then filed a petition for a writ of mandate in California Superi- or Court. The California Superior Court denied the petition, concluding that there was substantial evidence to support the City’s findings that led to denial of the conditional use permit. In affirming the judgment of the Superior Court,' the California Court of Appeal concluded that the' City’s action was properly taken in furtherance of a compelling governmental interest — -namely, the preservation of single-family neighborhoods.
Following the conclusion of these state court proceedings, the district court lifted the stay' of federal court proceedings, and the Congregation filed a Second Amended and Supplemental Complaint for Declaratory and Injunctive Relief. In addition to reasserting its constitutional and statutory claims, the Congregation contended that the Religious Land Use and Institutionalized Persons Act of 2000 (“RLUIPA”), 42 U.S.C. § 2000cc et seq., provided a remedy against the City’s permit denial. The RLUIPA claim alone survived the City’s motion to dismiss, and the matter was set for pretrial conference.
On September 27, -2001 the parties entered into a Settlement Agreement fully and completely disposing of the Congregation’s RLUIPA and other claims against the City. The Settlement Agreement per-, mitted the Congregation to hold prayer services at the 303 South Highland Avenue residence with various use conditions: (1) “The single family use of the property ... shall be restored and maintained, including the residential character and architecture ....”; (2) double-pane windows must be installed; (3) a proper fence must be installed and maintained; (4) the property must be landscaped and' the pavement replaced with a grassy lawn; (5) the Congregation must not post signs or flyers on the premises; and (6) the Congregation must enforce certain specified limitations on the size, type and timing of gatherings and number of cars on the property. The Settlement Agreement also required that the Congregation submit to the City within 90 days “any required plan and permit application” to restore the property to its single-family residential use. Once the City approved those plans, the Congregation was bound to use its best efforts to complete construction in a diligent and timely manner.
The Settlement Agreement stated that the district court would retain jurisdiction over both the subject matter and the parties. Finally, the> agreement included .a “Form of Notice” provision, which required that all communications made pursuant to the Settlement Agreement be made in writing and delivered to the parties’ representatives and their respective counsel:
Any notice, tender, delivery. or other communication pursuant to this Settlement Agreement" shall be in writing and shall be deemed to be properly given if delivered, mailed or sent by wire or other telegraphic communication in the manner provided in this paragraph, to the following persons:
If to [the Congregation]: Rabbi Chaim Baruch Rubin, 303 South Highland Avenue, Hancock Park, CA 90036; with copy to Susan Azad, Esq., Latham and *1129Watkins, 633 West 5th Street, Suite 4000, Los Angeles, CA 90071.
If to the City: Daniel Green, Planning Department, 201 North Figueroa Street; Los Angeles, CA 90012; with copy to Tayo A. Popoola, Deputy City Attorney, Office of the Los Angeles City Attorney, 200 North Main Street, Los Angeles, CA 90012.
Daniel Green has served for 11 years as the Associate Zoning Administrator in the City’s Department of City Planning. In that capacity, he has conducted hearings and made discretionary, quasi-judicial determinations on more than 1,800 cases involving, among other matters, conditional uses and variances. Several dozen of these cases implicated properties in the City’s Wilshire Plan area where the 303 South Highland Avenue residence is located.
At the time the parties signed the Settlement Agreement, the size of the residence on the property was approximately 3,536 square feet, 20 percent larger than the average house on the same side of the street in that block. After the parties executed the Settlement Agreement, the Congregation applied to the City’s Department of Building and Safety for an “addition of 4,423 [square feet] to existing 2 story residential house and addition of 330 [square-foot] 2-car attached garage to existing dwelling. Also remodeled [sic] the entire existing dwelling. Add 657 [square-foot] loft to second floor.” The proposed additions would more than double the size of the house.
The Congregation neither submitted its plans to Daniel Green nor notified him of the proposal, but the Congregation did furnish the Department of Building and Safety with a copy of the Settlement Agreement. On March 13, 2002, the Department of Building and Safety issued a building permit. On June 4, 2002, the Congregation began remodeling the existing structure. The “remodeling” consisted of massive destruction of the existing residence to the extent that only two exterior walls remained intact.
II.
I do not accept the majority’s characterization that “[a] commonsense interpretation of the [Settlement] Agreement indicates that the Congregation was not required to submit its building permit application to Mr. Green.” Maj. Op. at 1126. The Congregation entered into the agreement after losing in its application for a conditional use permit before the Los Angeles City Council, the state trial court, the state appellate court and — on all of its claims but one — the federal district court. A settlement is always a compromise and this one was no exception. It is important to note that' the Settlement Agreement accomplished the purpose sought by the Congregation in its 1996 conditional-use permit application — gaining official approval for property uses then taking place in violation of the Los Angeles Municipal Code — while also securing concessions from the Congregation to address the City’s concerns about parking, noise and incompatibility with the surrounding neighborhood.
Specifically, the Congregation made three concessions that addressed the concerns expressed by the Zoning Administrator in denying, the 1996 conditional-use permit- application. First, the Congregation addressed the Zoning Administrator’s 1996 concerns about noise and neighborhood-disruption by agreeing to install double-pane windows, limit gatherings to daylight hours, limit the number of people who would gather at any one time and not hold weddings, receptions, banquets, funerals or fundraising and daycare activities on the property. Second, the Congregation addressed the Zoning Administrator’s *11301996 concern about inadequate parking by agreeing to limit the number of cars that would be coming to the property to six on weekdays and zero on the, Sabbath and High Holy Days. Finally, the Congregation agreed to take steps to address the Zoning Administrator’s 1996 concern about incompatibility with the surrounding neighborhood by restoring and maintaining the single-family use of the property, including submitting any requisite plans and building permit applications within 90 days" to the City.
The critical question presented in this appeal — and .the, one that divides this panel — thus arises: Who or what agency in the City of Los Angeles had sole authority under the Municipal Code to decide whether the plans submitted in the Congregation’s 2002 building permit application met the use conditions of the Settlement Agreement — to wit, the "property “shall be restored and maintained, including the residential character and architecture”?
The Settlement Agreement’s “Form of Notice” provision must b.e understood in light of the concessions made by the Congregation to address the Zoning Administrator’s 1996 concerns that led to denial of the conditional-use permit application. Applying the teachings of People ex rel. Lockyer v. R.J. Reynolds Tobacco Co., 107 Cal.App.4th 516, 526, 132 Cal.Rptr.2d 151 (Cal.Ct.App.2003), the “reasonable and commonsense interpretation” of the Settlement Agreement is that it required the Congregation to contact Mr. Green to make the quasi-judicial determination of whether building and remodeling plans complied with the agreement. Indeed, such an interpretation is not only permissible but is compelled by the terms of the Settlement Agreement and the provisions of the Municipal Code.
The Settlement Agreement did not terminate a relationship between the City of Los Angeles and the Congregation. The agreement’s immediate effect was twofold: (1) to terminate five years of administrative and courtroom wrangling; and (2) to-provide directions as to the quantum of physical change "that would be permitted to the "existing residence. The Settlement Agreement specifically contemplated an application for a building permit for the purpose of restoring the 303 South High-. land Avenue property to its single-family use. It cannot be controverted that the" Settlement Agreement was tantamount to a deemed-approved conditional use for the Congregation to conduct activities on the 303 South Highland Avenue property that otherwise would not have been permissible ’ in the City’s R-l zone.
. Under the relevant provision of the Los Angeles Municipal Code, a conditional use is one of various specified “uses and activities [that] may be permitted in any zone, unless restricted to certain zones or locations, if approved by the Zoning Administrator as the initial decision-maker.... ” Los Angeles Mun.Code § 12.24-W (6th ed.). The Code specifically grants authority to the Zoning Administrator to allow, as a conditional use, operation of churches in R-l zones. Id. § 12.24-W.9. As a potential conditional use subject to approval of the Zoning Administrator, operation of a church in an R-l zone is “not permitted by-right.”, Id. § 12.24-A.
Like a conditional use permit under the Los Angeles Municipal Code, the Settlement Agreement, which was signed on behalf of the City by Associate Zoning Administrator Daniel Green, allowed the Congregation to use its property in a way not otherwise permissible under the City’s zoning ordinance. In the Settlement Agreement, the Zoning Administrator allowed the Congregation to operate a church in an R-l zone, much as the Zoning Administrator might have done in a conditional use permit. This use was not *1131permitted by right. The Settlement Agreement in this case was the negotiated outcome of a five-year process that began when the Congregation applied for a conditional use permit in 1996. Because the Settlement Agreement had the effect of a conditional use permit, the provisions of the Los Angeles Municipal Code relating to building permit applications on deemed-approved conditional use sites are instructive here.
When a property owner has been granted a conditional use permit, the Los Ange-les Municipal Code requires that any building or remodeling plans be approved not only by the Department of Building and Safety but also by the Zoning Administrator:
On any lot or portion of a lot on which a deemed-approved conditional use is permitted pursuant to the provisions of this section, new buildings or structures may be erected, enlargements may be made to existing buildings, and existing uses may be extended on an approved site, as permitted in Subsection L of this section, provided that plans are submitted to and approved by the Zoning Administrator, the Area Planning Commission, or the City Planning Commission, whichever has jurisdiction at the time. The Zoning Administrator, the Area Planning Commission, or the City Planning Commission may deny the plans if the Zoning Administrator or the Commission finds that the use does not conform to the purpose and intent of the findings required for a conditional use under this section, and may specify the conditions under which the plans may be approved.
Id. § 12.24-M.l (emphasis added).
The Settlement Agreement effectively allowed the Congregation to make a conditional use of the 303 South Highland Avenue. property as a house of worship in an R-l zone. See id. § 12.24-W.9 (stating that the Zoning Administrator has authority to allow churches in R-l zones). Any building or remodeling plans proposed after the Settlement Agreement should have been submitted for approval to the Zoning Administrator. See id. § 12.24-M.l. The intent and purpose behind the Los Angeles Municipal Code — that the Zoning Administrator must have an opportunity to determine whether remodeling plans conform with the written findings supporting a conditional use permit — apply equally to the Settlement Agreement. Daniel Green must have been given the opportunity to review the Congregation’s building plans to determine whether they conformed with the concessions made by the Congregation in the written Settlement Agreement.
Moreover, the Settlement Agreement specifically required that of the 47,907 employees 1 in the City of Los Angeles, one— Daniel Green, who had the authority to conduct hearings and make discretionary, quasi-judicial determinations — should receive all communications from the Congregation relating to execution of the Settlement Agreement. Copies were to go to the Deputy City Attorney who ostensibly had handled the litigation being settled. In any event, nothing in the record indicates that a clerk in the Los Angeles Department of Building and Safety had the competence or authority to conduct hearings or make quasi-judicial decisions in interpreting a conditional use agreement entered into by the Department of City Planning that settled five years of litigation in state and federal courts.
Accordingly, I do not believe that the issue is even close. The Settlement *1132Agreement is a contract that limited the extent of any renovation of the existing residence and imposed a legal obligation on the Congregation to notify Daniel Green of any written communication thereto, including a written application for a building permit. See Weddington Prods., Inc. v. Flick, 60 Cal.App.4th 793, 810-811, 71 Cal.Rptr.2d 265 (Cal.Ct.App.1998) (stating that, under California law, “[a] settlement agreement is a contract, and the legal principles which apply to contracts generally apply , to settlement agreements”)- The Congregation is in breach of the Settlement Agreement2 for bypassing Mr. Green and the Deputy City Attorney, even though a copy, of the Settlement Agreement was attached to the Congregation’s building permit application. See Jensen v. Traders & Gen. Ins. Co., 52 Cal.2d 786, 345 P.2d 1, 6 (Cal.1959) (“Parties to a contract may contract on such method of giving notice as they desire and unless public policy is contravened, the contract should be enforced as made.”) (internal quotation and citation omitted).
The Settlement Agreement did not allow the Congregation free rein in its building and remodeling plans. Rather, the Settlement Agreement constrained and limited the Congregation by requiring that the “single family use of the property ... shall be restored and maintained.” To restore is “to bring back to or put back into a former or original state.” Webster’s Third New International Dictionary 1936 (1966). To maintain is “to keep in a state of repair.” Id. at 1362. And to keep is “to cause to remain in a given place, situation, or condition,” to “maintain unchanged,” or to “hold or preserve in a particular state.” Id. at 1235.
By applying for a building'permit that far exceeded the limitations of the Settlement Agreement, the Congregation breached its implied covenant “not to do anything which will deprive [the City] of the benefits of the contract.” Harm v. Frasher, 181 Cal.App.2d 405, 417, 5 Cal. Rptr. 367 (Cal.Ct.App.1960). By circumventing Mr. Greén, the Congregation deprived the City of the Congregation’s explicit assurance that it would adhere to the concessions it made in the Settlement Agreement to address the City’s concerns about parking, noise and incompatibility with the surrounding neighborhood.
’ In light of these precepts, the district court erred when it determined that the Settlement Agreement, which was tantamount to a conditional use permit requiring any building permit application to be approved by the Zoning Administrator, did not require the Congregation to give notice to Mr. Green of the Congregation’s application for a building permit.
III.
The district court determined that the Congregation acquired a vested right to complete the renovations by virtue of the Department of Building and Safety’s issuance of a permit and the Congregation’s incurring of substantial .expenditures in reliance on the permit. Accordingly, the Congregation argues that the City can be estopped from denying the validity of the permit. We review the district court’s decision whether to apply the equitable es-toppel doctrine for abuse of discretion. Santa Maria v. Pac. Bell, 202 F.3d 1170, 1176 (9th Cir.2000). In my view, abuse of discretion is present here because the district court committed legal error by viewing the building permit as a valid one.
Equitable estoppel does not operate to prevent the government from revoking an *1133invalid building permit. “[T]he courts have ... consistently concluded that the public and community interest in preserving the community patterns established by zoning laws outweighs the injustice that may be incurred by the individual in relying upon an invalid permit to build issued in violation of zoning laws.” Pettitt, 34 Cal.App.3d at 820, 110 Cal.Rptr. 262 (emphasis in original). That is to say, although equitable estoppel may apply against the government in situations where there is an intervening zoning or legal change, it will not apply where a permit is merely issued in error. See id. at 819, 110 Cal.Rptr. 262 (“[A]s a matter of law the City cannot be estopped to deny the validity of a permit or other representations respecting the use of property issued or made in violation of the express provisions of a zoning ordinance.”).
In Pettitt, the City of Fresno’s.Planning Department mistakenly issued a permit for the conversion of a residential property to commercial use even though the municipal code prohibited such use in that location. Id. Highlighting neighboring residents’ “protectable property and personal interest in maintaining the character of the area as established by comprehensive and carefully considered zoning plans ... [,]” id. at 823, 110 Cal.Rptr. 262, the California Court of Appeal held that equitable estop-pel would not apply against the City because the permit was invalid from the beginning. Id. at 824, 110 Cal.Rptr. 262. The court stated:
To hold that the City can be estopped would not punish the City but it would assuredly injure the area residents, who in no way can be held responsible for the City’s mistake. Thus, permitting the violation to continue gives no consideration to the interest of the public in the area nor to the strong public policy in favor of eliminating nonconforming uses and against expansion of such uses.
Id. at 823,110 CaLRptr. 262.
Similarly, in Smith v. County of Santa Barbara, the California Court of Appeal held that the County was not estopped from revoking a land use permit where it issued the land use permit in error. 7 Cal.App.4th at 772, 9 Cal.Rptr.2d 120. Specifically, the County building department issued a building permit authorizing the installation of more microwave dishes per antenna support tower than it properly could under County zoning regulations. Id. at 773, 9 Cal.Rptr .2d 120. In refusing to apply equitable estoppel, the court focused on the “point ... that public policy may be adversely affected by the creation of precedent where estoppel can too easily replace the legally established substantive and procedural requirements for obtaining permits.” Id. at 775, 9 Cal.Rptr.2d 120. The government is not estopped from enforcing a pre-existing law. Id. at 776, 9 Cal.Rptr.2d 120.
In accord are the teachings of Toigo v. Town of Ross, 70 Cal.App.4th 309, 321, 82 Cal.Rptr .2d 649 (Cal.Ct.App.1998) (“In California, the developer’s right to complete a project as proposed does not vest until a valid building permit, or its functional equivalent, has been issued and the developer has performed substantial work and incurred substantial liabilities in good faith reliance on the permit.”) (emphasis added).
In the case at bar, the building permit was invalid because it was issued without authority and in violation of the Los An-geles Municipal Code and the governing Settlement Agreement. I already have concluded that the Settlement Agreement required the Congregation to submit its remodeling plans to Daniel Green and that the Congregation did not do so, thereby breaching the terms of the Settle*1134ment Agreement and its implied covenant of good faith. Moreover, the Settlement Agreement was tantamount to a conditional use permit under the Los Angeles Municipal Code. The Code requires that plans for changes to a deemed-approved conditional use site must be “submitted to and approved by the Zoning Administrator....” Los Angeles Mun.Code § 12.24-M.l (emphasis added). The Congregation did not submit its building permit application to Daniel Green.
Even without the notice problem, the building permit would still be invalid. Because the clerk in the Department of Building and Safety lacked the authority to approve the plans, the teachings of the Restatement (Second) of Agency (1958) come into play. Section 164 provides in relevant part: “[A]n agent for a disclosed or partially disclosed principal who exceeds his power in making an unauthorized contract with a third person does not bind the principal....” Cf. Terminix Co. v. Contractors’ License Bd., 84 Cal.App.2d 167, 190 P.2d 24, 27 (Cal.Apt.App.1948) (holding that the language of a written contract forbade a company’s agent from making oral representations to customers beyond the terms of the contract itself).
Even setting aside the notice requirement that the Congregation failed to meet, the Congregation’s execution of the building plans reflected in the building permit violated the specific limitations in the Settlement Agreement. It is true that the Settlement Agreement functioned as a conditional use permit to allow the Congregation to operate a church in an R-l zone. It is also true that the Settlement Agreement contemplated changes, if approved by the Zoning Administrator, to the existing structure at 303 South Highland Avenue. It does not follow, however, that the Department of Building and Safety had authority under the Settlement Agreément and the Municipal Code to issue a building permit that allowed the Congregation to destroy all but two exteri- or walls of the existing structure and then build a new structure more than double the size of the original one.. Tearing the residence down and then building a new structure more than twice as large simply does not constitute restoring and maintaining “[t]he single family use of the property ... including the residential character and architecture.”
Because the permit was issued in violation of the Settlement Agreement and the Code, the City may revoke the permit. Los Angeles Mun.Code § 98.0601(a)(2) (“The Department [of Building and Safety] shall have the authority to revoke any permit, slight modification, or determination whenever such action was granted in error or in violation of other provisions of the Code and conditions are such that the action should not have been allowed.”). Equitable estoppel does not apply.
Here, the law did not change from the time before the Department of Building and Safety issued the permit to the time when the City issued a stop-work order. Like the ordinances in Pettitt and Smith, the Settlement' Agreement predated the issuance of the building permit and remains in place 'beyond it. Significantly, in Toigo, the court stated:
Courts have yet to extend the vested rights or estoppel theory to instances where a developer lacks a [valid] building permit or the functional • equivalent, regardless of the property owner’s detrimental reliance on local government actions and regardless of how many other land use and other preliminary approvals have been granted.
70 Cal.App.4th at 322, 82 Cal.Rptr.2d 649.
The Congregation made an end-run around the notice provision and applied for a building permit that far exceeded the terms of the operational Settlement Agree*1135ment. Applying equitable estoppel “would effectively nullify a strong rule of policy, adopted for the benefit of the public.” Pettitt, 34 Cal.App.3d at 819, 110 Cal.Rptr. 262 (internal quotations and citations omitted).
Accordingly, I conclude that the Congregation did not possess a vested right in carrying through the renovations to their completion. I conclude also that equitable estoppel does not apply against the City because the public and community interest in preserving the community patterns established by the carefully drafted Settlement Agreement outweighs the injustice that may be incurred by the Congregation in relying upon an invalid building permit. The district court abused its discretion in holding otherwise.
For the foregoing reasons, I respectfully dissent.

. Los Angeles Business Journal Book of Lists 2003 Online, at http://www.labusinessjoural. com/tobol Jiabj .htm.

. I do not address the issue whether residents of Hancock Park and neighbors of 303 South Highland Avenue are third-party beneficiaries of this contract.and thus entitled to breach remedies.