Many in Half Moon Bay question decision not to appeal developer case

UPDATE: AB 1991 passed the Assembly Appropriations Committee by a 9-4 vote on Thursday.  

As legislation to help bail out the city of Half Moon Bay from a devastating lawsuit winds through the legislative process, many critics say the city would be better off fighting  the appellate court decision by the “wing-nut judge” and trying to get the case into the far-friendly venue of the federal 9th Circuit Court of Appeals.

The city’s attorneys and lobbyists say the city had little choice, and that they are confident the settlement bill will move out of committee and to the Assembly floor.

In November, the city lost a decision to develop Charles “Chop” Keenan. Including court fees, the city was on the hook for $41.1 million—four times its annual budget. In March, they signed a settlement that would look them avoid paying the settlement in exchange for letting Keenan build on the property at the center of the case and another nearby plot of land. But this depended on a bill skirting the Coastal Commission and other agencies, AB 1991 by local Assemblyman Gene Mullin, D-South San Francisco.
The decision to settle with Keenan remains unpopular with many. Ken Johnson, a computer consultant and local activist, characterized U.S. District Judge Vaughn Walker as a “wingnut” who has been pushing a right wing property rights agenda. Besides awarding Keenan a huge judgment via a novel take on takings law, Walker has been involved in several other controversial decisions. In 1998, Walker ruled that it was acceptable to Sheriffs deputies to swab the eyes of anti-logging protestors with pepper spray. That case, Headwaters Forest Defense vs. Humbolt County, dragged out for years and made Walker a pariah among many environmentalists.

In another well-publicized case, Walker ruled that a mobile home rent control ordinance in the city of San Rafael was unconstitutional. This case also rested on a novel interpretation of takings law, finding that the rent control law imposed on the rights of property owners.

But John Knox, an attorney representing the city with the firm Orrick Herrington, said that Judge Walker has not been reversed nearly as often as some critics would like you to believe.

“When he was first on the bench he was reversed quite a lot,” Knox said. “More recently he hasn’t been. He became much more careful about bulletproofing his opinions.”

Walker’s Half Moon Bay decision contained 380 findings, an immense number for such a case, Knox said. If the city wanted to appeal, they had very limited options. They could have tried to create a bond to hold as collateral for the judgment which the appeal proceeded. But he it is unlikely the city could find an investor to secure such a huge bond when the city didn’t have enough collateral to offer in return.

Or they could have appealed to Judge Walker to hold off on the judgment while the appeal moved forward, something Knox said he would be unlikely to do. Keenan, meanwhile, could file a writ of attachment seeking to get paid, opening up another legal battleground for the city.

The city hired Orrick in December. Knox said his firm filed a post trial motion arguing among other points that the statute of limitations should have run out long before Keenan sued. They were denied, and the city opted for the less-risky settlement option.
Others have pointed to a 9th Circuit appeal won by the nearby city of Pacifica against another developer earlier this month. But that was an equal protection claim—the developer claimed they had been treated differently than other parties when they were denied some of their development rights—and the judgment was a far-smaller $700,000.

“There are some similarities,” said Lee Rosenthal. “The trial judge issued an opinion that a lot of people thought was off the wall.”
Rosenthal agreed that the 9th Circuit does have a history of reversing lower court property judgments against cities. But the similarities pretty much end there, he added. And he refused to question Half Moon Bay’s decision not to appeal.

“It’s very nice for an environmentalist to sit back and say ‘This ought to go to the 9th circuit and it will be overturned,’” Rosenthal said. “But if they’re wrong, they’re not the ones paying the bill.”
Knox said that anyone who thought the Pacifica case had any bearing on Half Moon Bay’s chances on the 9th Circuit doesn’t “deserve to be a lawyer.”
“It’s not apples to oranges,” Knox said. “It’s like a pea and Jupiter.”
Johnson questioned how much the city is paying Orrick, and what they’re getting for their money. He showed invoices available on the city’s website showing they’d paid the firm about $350,000 from December through March, figures Knox said sounded “about right.” According to the latest city spending figures, the city has probably passed the $1 million mark between payments to Orrick and the firm California Strategies, he said, which is lobbying on behalf of AB 1991.
“With they talent they [Orrick] came with, I strongly supported the concept of an appeal,” Johnson said. “But it’s an absolute waste of time for a bill that’s doomed.”

Sarah Christie, governmental affairs director for the California Coastal Commission, has lambasted the decision not to appeal despite offers of help from her agency and the Attorney General’s office. She also questioned the content of the settlement agreement they signed.

“There’s wacky court decisions against municipalities all the time,” Christie said. She added: “The city walked into the negotiation saying they have no money to appeal. The city left the only leverage they had outside the room.”

Mike Ferreira, a former Half Moon Bay mayor who lost his bid for reelection in 2005 by eight votes, questioned whether the city even really seriously considered an appeal. He noted that Orrick registered as lobbyists for the city in mid-January, six weeks before the appeal was signed. Ferreira is among several pro-environmental local politicians that have clashed for years with the pro-development group that now controls four out of five city council seats.

Now that an appeal is no longer possible, the city claims AB 1991 is their only chance. A coalition of 19 environmental groups are opposing the bill, saying it would poke holes in California environmental law. Another local critic of the deal, Francis Drouillard, said he spoke to the staff of Appropriations chair Mark Leno, D-San Francisco, and was told he “opposes the bill as written.”
But a spokesperson for California Strategies says they think they have enough votes.

“We feel pretty optimistic about how we’re moving forward in the Assembly.”

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