Martins Beach, near Half Moon Bay in the County of San Mateo, is the subject of protracted litigation on various fronts stemming from tech billionaire Vinod Khosla’s 2009, decision to change the public’s access to and use of Martins Beach by permanently closing and locking a gate to the public across Martins Beach Road, adding signs to the gate, changing the messages on a billboard on nearby Highway 1, and hiring security guards to deter the public from crossing or using the property to access the beach. From the 1930s or earlier, Khosla’s predecessor encouraged the public to use the road to access Martin’s Beach. They also erected the billboard, which invited the public to use the beach, and provided a general store, public toilets, and a parking area. For some of that time they charged a $.25 entry fee.
We wrote about one strand of the litigation last year—Friends of Martin’s Beach v. Martin’s Beach 1 LLC, 246 Cal.App.4th 1312 (2016)—in which the California Court of Appeal for the First Appellate District addressed an unincorporated association’s lawsuit seeking access to the coast at Martins Beach based on claimed rights of access under various theories. In Friends of Martins Beach, the Court of Appeal held that a plaintiff group had alleged facts sufficient to state a common law dedication claim and thus remanded that claim to the trial court. Because the Friends of Martin’s Beach case is still pending there, the existence of public access rights to Martins Beach is presently undetermined.
On August 10, 2017, the Court of Appeal for the First Appellate District issued its opinion in a separate strand of litigation regarding Martins Beach, Surfrider Foundation v. Martins Beach 1, LLC, __ Cal.App.5th __ (Case No. A144268, A145176), affirming a trial court injunction requiring Khosla to allow public coastal access at the same level that existed when he bought the property in 2008. In addition, the Court held that Khosla’s conduct constitutes “development” within the meaning of the California Coastal Act, and thus requires a Coastal Development Permit. The Court also held that his allegation the Coastal Development Permit requirement is a taking under both federal and state law is not ripe. And the Court rejected Khosla’s claim that the trial court’s injunction is a per se taking.
Under the Coastal Act, with the exception of certain emergency work, any person “wishing to perform or undertake any development in the coastal zone . . . shall obtain a coastal development permit,” in addition to any other permits required by law. Section 30106 of the Coastal Act broadly defines “development” to include any “change in the intensity of use of water, or of access thereto.”
Surfrider’s complaint alleged that Khosla’s closure of the gate to Martins Beach Road, adding a sign to the gate stating “BEACH CLOSED KEEP OUT,” painting over the billboard, and stationing security guards to deny public access constituted “development” requiring a Coastal Development Permit. In particular, Surfrider argued that Khosla’s actions were “development” under the Coastal Act because they decreased access to the water. Khosla argued that “the simple acts of closing a gate and painting a sign do not constitute ‘development’ that requires a permit.”
The Court noted that Khosla’s conduct “indisputably resulted in a significant decrease in access to Martins Beach” (emphasis in original), and held the totality of his conduct fell within the definition of “development.” Moreover, the Court acknowledged that the courts have given the term “development” an “expansive interpretation . . . consistent with the mandate that the Coastal Act is to be ‘liberally construed to accomplish its purposes and objectives.’” Thus, according to the Court, “the Coastal Act’s definition of ‘development’ goes beyond what is commonly regarded as a development of real property and is not restricted to activities that physically alter the land or water.”
Khosla also argued that interpreting the Coastal Act to require him to apply for a Coastal Development Permit would constitute an unconstitutional taking under the federal and state constitutions. Surfrider argued, in response, the claim was not ripe for review because, under Williamson Co. Regional Planning v. Hamilton Bank, 473 U.S. 172, 186 (1985), and Landgate, Inc. v. California Coastal Com., 17 Cal.4th 1006, 1018 (1998), a takings claim is not ripe until “the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue.”
In analyzing the parties’ arguments, the Court noted that Khosla’s takings claims regarding the trial court’s injunction and the Coastal Development Permit requirement are necessarily distinct. While the injunction was a final determination that required Khosla to temporarily allow the public to access Martins Beach, he had not even applied for a Coastal Development Permit, much less obtained a final decision regarding such application. The Court thus held that Khosla’s contention that the permit effects a taking is not ripe because the mere assertion of regulatory jurisdiction by a governmental body does not constitute a regulatory taking.
Finally, Khosla made the novel argument that the trial court’s injunction effected a per se physical taking exempt from Penn Central Transp. Co. v. City of New York’s multi-factor analysis because it stripped him of the right to exclude the public from Martins Beach. In other words, according to Khosla, the court’s action itself—rather than a legislative or executive act—amounted to a taking. To address this contention, the Court undertook a detailed analysis of the U.S. Supreme Court’s decision in Stop the Beach Renourishment, Inc. v. Florida D.E.P., 560 U.S. 702 (2010), in which the Supreme Court considered the applicability of the Takings Clause to judicial action that originated in legislative action. There, a group of beachfront landowners contended the Florida Supreme Court took their property when it held that a state statute providing for beach restoration projects did not unconstitutionally deprive landowners of their right to littoral accretions (i.e., additions of sand, sediment, or other deposits to waterfront land).
Justice Scalia’s plurality opinion for four Justices concluded a state court decision could effect a compensable taking if it reversed well-established property law. Four other Justices declined to reach the issue, concluding it was unnecessary to determine whether the actions of a court can effect a taking. Justice Kennedy wrote in his concurrence that the Due Process Clause was the more appropriate place to look for limitations on judicial power. And, without opining whether the action would violate procedural or substantive due process, Justice Kennedy declared that, “without a judicial takings doctrine, the Due Process Clause would likely prevent a State from doing by judicial decree what the Takings Clause forbids it to do by legislative fiat.” Thus, under the plurality’s views and under Justice Kennedy’s concurrence, a judicial act that would constitute a taking if done by another branch of government is unconstitutional.
Having analyzed Stop the Beach and taken its guidance, the Court agreed that judicial action that would be a taking if it were a legislative or executive act is unconstitutional, under either the Takings Clause or the Due Process Clause. But given the temporary nature of the trial court’s injunction, the Court was unwilling to conclude it amounted to a per se taking. Relying on the few U.S. Supreme Court decisions to recognize per se takings—Loretto v. Teleprompter Manhattan CATV Corp.; Lucas v. South Carolina Coastal Council; Nollan v. California Coastal Commission; and Dolan v. City of Tigard—the Court held that for a physical invasion to be considered a per se taking, it must be permanent. Although the Court agreed that the trial court’s injunction was a physical invasion designed to enforce the Coastal Commission’s regulatory authority, Khosla’s decision not to plead a taking under Penn Central deprived the Court of any record upon which it could undertake that analysis and thus the Court had no basis to reverse the injunction under any multi-factor test.
The 50-page Surfrider Foundation opinion is but the latest chapter in this ongoing dispute. We will continue to track future developments and report on them here.
Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.
For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.