In Lynch et al., v. California Coastal Commission, the California Supreme Court this month raised a procedural hurdle for property owners pursuing challenges to unlawful permit conditions. Property owners who wish to contest a permit condition imposed by a state agency must delay any work on their project until final adjudication of the challenge.

In 2010, Barbara Lynch and Thomas Frick sought a permit to rebuild a seawall that protected their coastal homes from erosion and other natural hazards when a storm destroyed the original bluff protection. The Coastal Commission has a statutory duty to permit seawalls when necessary to protect homes and other existing structures on private property.

However, the agency imposed several conditions on its permit approval: the permit expires in 20 years; the homeowners waive the right to rely on the seawall for protection of future redevelopment on the property; and they are required to apply for a new permit before the end of the 20-year expiration to extend the life of the seawall. This latter condition was understood to provide the Commission an opportunity in twenty years to exact money or other property interests from the homeowners as a condition of maintaining the seawall.

The homeowners protested the conditions during the administrative hearings, began to rebuild their seawall after accepting the permit conditions in writing “under protest” as they believed was allowed under California law, and then sued to contest the restrictions as a violation of the Commission’s statutory duty and the unconstitutional conditions doctrine. The plaintiffs were represented pro bono by Pacific Legal Foundation.

The trial court ruled in favor of the homeowners, invalidating the conditions. The court rejected the government’s motion to dismiss the case on the grounds that the homeowners waived any right to challenge the condition once they began building the seawall. In a split decision, the Court of Appeal reversed the trial court, holding that homeowners had waived their right to challenge by their nominal acceptance of the permit and that the conditions were lawful. The dissent disagreed with both conclusions.

The California Supreme Court accepted review, ruling that the homeowners “forfeited their right to challenge the permit’s conditions by complying with all pre-issuance requirements, accepting the permit, and building the seawall.” The “crucial point” stated the Court, “is that they went forward with construction before obtaining a judicial determination on their objections.” This holding is limited to challenges to conditions imposed by state agencies. A developer has an express right pursuant to California’s Mitigation Fee Act to accept contested fees and other exactions of property interests imposed as permit conditions by municipalities “under protest” and build while litigation proceeds.

The decision effectively makes it more difficult for property owners to fight when state agencies impose unlawful conditions on permits to use or build on one’s property. The economic reality for many small developers is that they will be forced to accept unlawful conditions simply because they can’t afford to put their lives or projects on hold for years while litigation is pending.

Larry Salzman is a Senior Attorney with the Pacific Legal Foundation and Director of PLF’s Liberty Clinic Project, which sponsors a property rights litigation clinic at Chapman University’s Dale E. Fowler School of Law.