Security National Guaranty, Inc. v. California Coastal Commission, et al.

The principal question that we must resolve in this appeal is whether the
California Coastal Act of 1976, Public Resources Code section 30000 et seq. (the Coastal
Act)1 empowers the California Coastal Commission (the Commission) to declare that
property is an "environmentally sensitive habitat area" (ESHA) (§ 30240) during an
administrative appeal from a local government's grant of a coastal development permit
(CDP). Appellant Security National Guaranty, Inc. (SNG) challenges three orders of the
superior court: the denial of SNG's petition for writ of administrative mandamus, the
denial of SNG's motion to remand the matter to the Commission for further proceedings,
and the grant of summary adjudication to the Commission.
We conclude that the Coastal Act grants the Commission no power to declare
property an ESHA during a CDP appeal. Accordingly, we reverse the superior court's
denial of SNG's petition for administrative mandamus. We affirm the superior court's
grant of summary adjudication.

FACTUAL AND PROCEDURAL BACKGROUND

The SNG Site

Appellant SNG owns, and seeks to develop, a 39-acre oceanfront site located west
of state Highway 1 on Monterey Bay in Sand City. From 1927 to about 1986, the
Lonestar Company conducted one of the largest commercial sand-mining operations in
the western United States on the land now owned by SNG. Lonestar excavated and sold
sand for industrial, commercial, and consumer uses. The sand mining operations left the
site in an environmentally degraded condition, with an excavation pit near the middle of
the property.

For many years after its incorporation in 1960, Sand City was the site of a number
of businesses engaged in heavy commercial and industrial activities. Beginning in the
1970's, however, many of these businesses closed. Recognizing the city's need for
economic recovery and development, Sand City sought to provide for commercially
viable resort and recreational development on designated portions of its coastline.

Sand City's Local Coastal Program

In the early 1980's, Sand City formulated its local coastal program (LCP).2 The
LUP adopted by Sand City designated what is now SNG's site for visitor serving
commercial uses. The original LUP also identified and mapped locations that were
ESHA's. Section 4.2.4 of the LUP noted the existence of dune areas along the coast,
explaining that the dunes were divided into two distinct locations - one east of
Highway 1 and one west of Highway 1. As to the area west of the highway (and closest
to the ocean), the LUP stated that "[t]he area provides no natural habitats" and that no
ESHA's existed west of Highway 1. The only ESHA's identified and mapped in the LUP
were located east of Highway 1. No ESHA's were mapped on what is now SNG's site,
which is located entirely west of the highway. The LUP designated the property at issue
in this appeal for visitor-serving commercial uses, with a density not to exceed 650 units.

The Commission concluded that Sand City's LCP met the requirements of the
Coastal Act and certified the LCP as consistent with the Coastal Act's goals and policies.

During the certification process, the Commission proposed, and Sand City adopted, a
number of modifications to the city's LCP. After these modifications, the Commission
granted the Sand City LCP final certification on March 14, 1986.

In 1990, the Commission conducted a "periodic review" of Sand City's LCP
pursuant to section 30519.5. The periodic review resulted in the Commission making 59
recommendations to Sand City, including both LCP amendments and other actions. The
record discloses no suggestion from the Commission that the property at issue in this
appeal be designated an ESHA.

The Memorandum of Understanding

Beginning in the late 1980's, the Monterey Peninsula Regional Park District (the
Park District) attempted to amend Sand City's LCP to make parks and open space the
preferred use on all lands west of Highway 1. In addition, the Park District and the State
Department of Parks and Recreation (the Parks Department) sought to acquire coastal
land within Sand City for park purposes. Sand City vigorously resisted the Park
District's efforts, because it wished to preserve certain coastal parcels for development to
ensure a stable fiscal future for the city. Sand City eventually sued the Park District to
challenge, among other things, the Park District's land acquisition program in the city.

The controversy between Sand City and the park agencies continued for years. In
1995, then-State Senate Majority Leader Henry Mello intervened to mediate the coastal
development dispute. Senator Mello arranged a meeting between the representatives of
Sand City, the Park District, the Parks Department, and the Commission. As a result of
this initial meeting, the interested parties formed a "discussion group" in an effort to
resolve the conflict. After further meetings of this discussion group, the interested parties
agreed to settle their differences by executing a "memorandum of understanding"
(MOU).

On April 8, 1996, representatives of Sand City, the Sand City Redevelopment
Agency, the Park District, and the Parks Department signed the MOU. The Commission
was not a party to the agreement. Among other things, the MOU recognized the need for
both "appropriate development" within Sand City and for the protection of coastal views,
dunes, and public access to the beach. In particular, one of the MOU's stated objectives
was to "[e]nable appropriate public and private development . . . to occur along the Sand
City Coastline; including but not limited to visitor serving and residential uses." The
MOU also recognized that the site formerly used by the Lonestar Company was subject
to an option to purchase by a "private development company." That company was SNG.

With regard to the former Lonestar site, the MOU provided that during "the active
period of the option . . . or in the event the option is exercised, [the Parks Department],
the [Park District], and [Sand City] agree to recognize and respect the option agreement
and the option holder's right to pursue development of the Lonestar Site consistent with
the Sand City LCP." During that same period, the Park District and the Parks

Department agreed to cease their efforts to acquire the former Lonestar site. The Park
District further agreed that it would revise its application to amend the Sand City LCP to
exclude the Lonestar site from the amendment. Thus, the MOU contemplated that the
bulk of Sand City's coastline west of Highway 1 would be set aside for park uses, but that
in two specific areas, including the Lonestar site (now SNG's property), commercial and
residential uses would be permitted.

Finally, the MOU provided that Sand City and the Sand City Redevelopment
Agency would dismiss their action against the Park District. Assured by the MOU that
some commercial and residential development would be permitted along the coast, Sand
City and its redevelopment agency acquiesced to further acquisition of coastal properties
by the park agencies for park and open space purposes.

Amendments to the Sand City LCP

Prior to execution of the MOU, the Commission's staff had offered to assist Sand
City and the park agencies "in developing the [LCP] amendments which are necessary to
carry out the proposed MOU." To implement the MOU, the Park District and the
Commission agreed upon changes to proposed LCP amendment No. 1-93. Rather than
zoning all coastal properties within the City for preferred public park uses, the revised
amendment No. 1-93 excluded what is now SNG's site from the park designation, thus
permitting it to be developed. On April 10, 1996, the Commission unanimously
approved amendment No. 1-93. The amendment became effective immediately upon the
Commission's approval.

SNG exercised its option to purchase the former Lonestar site in mid-1996, and
closed on the Property in early 1997. At SNG's request, on April 16, 1997, Sand City
approved another amendment to its LCP to allow the land use designations on the SNG
site to be mixed, rather than segregated, while maintaining the uses and densities
permitted by the LCP. The Commission staff recommended that the amendment be
approved with certain suggested modifications. Although the staff's analysis of the
amendment discussed ESHA issues, it did not state or even suggest that SNG's site might
be an ESHA. In fact, the Commission's staff found that the proposed amendment "do[es]
not raise an issue of conformance with Coastal Act habitat protection policies." The
Commission then approved this amendment (No. 2-97) on June 11, 1997.

SNG's Project

SNG's proposed project is called Monterey Bay Shores Resort. As initially
proposed, the project contained 597 units, but SNG later reduced this number to 495.
The project submitted was a mixed-use development that provided for timeshare units, a
hotel, residential condominiums, and visitor serving residential units, as well as a
conference center. The project also contained plans for habitat restoration and dune
stabilization.

SNG then applied to Sand City for issuance of a coastal development permit
(CDP) for the project. On December 1, 1998, Sand City's city council adopted a
resolution approving the CDP. The CDP approval was subject to 59 conditions that SNG
would have to meet before it could begin construction at the site. The city council
specifically found that the project as conditioned was consistent with Sand City's
certified LCP.

Appeal of the CDP to the Commission

The Sierra Club and two members of the Commission appealed the issuance of the
CDP to the Commission. (See § 30625, subd. (a).) On February 3, 1999, the
Commission determined that the appeal raised a "substantial issue" as to whether the
project conformed to the Sand City LCP. (§ 30625, subd. (b).) As a result, the
Commission was required to consider the application at a de novo public hearing.
(§ 30621, subd. (a); Cal. Code Regs., tit. 14, § 13115(b).)

During the administrative appeal process, the Commission's staff reviewed the
project in detail and prepared a report that recommended that the Commission deny a
CDP for the project on the grounds that the proposed development was inconsistent with
Sand City's certified LCP as well as Coastal Act policies regarding public access and
recreation. Relying on the general policies regarding ESHA's in Sand City's LCP, the
staff report declared that the entire project site was an ESHA. The staff report made no
mention of the specific finding in section 4.2.4 of Sand City's certified LUP that there
were no ESHA's in the area west of Highway 1, the area that includes SNG's site. The
staff report went on to conclude that SNG's project did not adequately protect
environmentally sensitive dune habitat.

In addition to its ESHA findings, the Commission staff concluded that the project
did not meet LCP requirements regarding water supply. In particular, the staff report
noted that the project required a water distribution permit from the Montgomery
Peninsula Water Management District (the Water District) and that the Water District had
denied the permit on October 26, 2000.

After a hearing on December 14, 2000, the Commission voted to deny SNG's
CDP based on the findings in the staff report.3

SNG's Action

SNG subsequently filed a combined petition for writ of administrative mandamus
and complaint against the State of California and the Commission, a petition which it
later amended. Sierra Club intervened in the case. SNG's petition asserted seven causes
of action, including claims for administrative mandamus under Code of Civil Procedure
section 1094.5, inverse condemnation, breach of contract, and estoppel. The latter four
claims are before us on appeal.

On December 2, 2005, the trial court denied SNG's petition for writ of
administrative mandamus based on the Commission's findings that there were inadequate
groundwater resources for the project. Although the trial court did entertain argument on
the legality of the Commission's ESHA designation, it did not rule on that issue.

On February 8, 2006, the trial court granted the Commission's motion for
summary adjudication of SNG's claims for inverse condemnation, breach of contract, and
estoppel. As to the claim for inverse condemnation, the trial court concluded that it was
not yet ripe. Citing Toigo v. Town of Ross (1998) 70 Cal.App.4th 309 (Toigo), the trial
court noted that SNG's 495-unit project was SNG's first application for development of
its site. The trial court suggested that the Commission had not made a final decision as to
the uses to which SNG's site could be put and that the proper course for SNG was to
modify its project and reapply for a permit. (See Toigo, supra, at pp. 325-326 [no "final
decision" for takings purposes unless governmental entity has rejected a formal
development plan and denied property owner's request for a variance or exception from
controlling regulations].) Addressing SNG's estoppel claim, the trial court concluded
that such a claim is indistinguishable from a vested rights claim and that no such claim
would lie until SNG had obtained a valid building permit or its equivalent. Finally, the
trial court granted summary adjudication to the Commission on SNG's claim for breach
of contract. Noting that SNG's breach of contract claim was grounded on the terms of
the MOU, the trial court held that the MOU could not be read as binding the Commission
to approve SNG's project and that, in any event, the Commission could not be bound by
an agreement to which it was not a party.4

On February 24, 2006, SNG moved to remand the matter to the Commission based
on what it described as "newly produced evidence." (See Code Civ. Proc., § 1094.5,
subd. (e).) The alleged newly discovered evidence was a final judgment of the Monterey
County Superior Court in California American Water v. City of Seaside (Super. Ct.
Monterey County No. M66343) (Cal-Am). SNG claimed that the Cal-Am decision had
established that SNG had more than sufficient water for the project. On April 17, 2006,
the trial court denied SNG's motion to remand.

On March 1, 2006, SNG voluntarily dismissed its remaining causes of action. The
trial court entered separate judgments for the Commission and for the Sierra Club. SNG
then filed a timely appeal from those judgments.

DISCUSSION

In this court, SNG attacks three of the trial court's orders: (1) the denial of SNG's
petition for writ of administrative mandamus; (2) the denial of SNG's motion to remand;
and (3) the grant of summary adjudication to the Commission. We will address SNG's
contentions on each of these issues in turn.

I. SNG Was Entitled to Issuance of a Writ of Administrative Mandamus.

SNG contends that the trial court erred in denying its petition for writ of
administrative mandamus. SNG's principal argument on this point is that the Coastal Act
grants the Commission no statutory authority to declare SNG's site an ESHA during the
administrative appeal from Sand City's grant of a CDP.

In its responsive brief, the Commission does not address SNG's arguments
regarding its statutory authority to declare SNG's site an ESHA. Although the
Commission acknowledges that SNG has raised such a challenge,5 the Commission
declines to address the issue. Instead, the Commission argues only that a decision on this
question would amount to an "advisory opinion" and that substantial evidence supports
its "finding" that SNG's site is an ESHA.6 Regrettably, we are therefore left to address
SNG's argument's regarding the Commission's statutory authority without the benefit of
the Commission's written views.7

A. Standard of Review

Relying on various provisions of the Coastal Act, SNG contends that the
Commission has exceeded the jurisdiction granted to it by that statute. Where a party
alleges that the Commission has acted beyond its statutory jurisdiction, it may challenge
the agency's order or decision in an action for administrative mandamus under Code of
Civil Procedure section 1094.5. (State of California v. Superior Court (1974) 12 Cal.3d
237, 248.) In such an action, the court's inquiry extends to determining whether the
agency acted in excess of its jurisdiction or abused its discretion by not proceeding in the
manner required by law. (Code Civ. Proc., § 1094.5, subd. (b); Schneider v. California
Coastal Com. (2006) 140 Cal.App.4th 1339, 1343 (Schneider).)

When the determination of an administrative agency's jurisdiction involves a
question of statutory interpretation, "the issue of whether the agency proceeded in excess
o f i t s j u r i s d i c t i o n i s a q u e s t i on of law." (Schneider, supra, 140 Cal.App.4th at p. 1344.) 5 The Commission's brief is unequivocal on this point. In a footnote, the
Commission states: "Throughout its brief, SNG asserts that the Commission improperly
found that [SNG's] site was environmentally sensitive habitat[.]" (Italics added.)

As the California Supreme Court has explained, "[a] court does not . . . defer to an
agency's view when deciding whether a regulation lies within the scope of the authority
delegated by the Legislature." (Yamaha Corp. of America v. State Bd. of Equalization
(1998) 19 Cal.4th 1, 11, fn. 4 (Yamaha).) We therefore review de novo whether the
Coastal Act empowers the Commission to designate property as ESHA during the
administrative appeal from a local government's grant of a CDP.

B. The Commission's Purported ESHA Designation Is "Final" and the Matter
Is Ripe for Judicial Review.

Although the Commission does not directly confront SNG's challenge to its
statutory authority, it does contend generally that a decision on this issue would be
premature. The Commission appears to argue that its ESHA designation is not yet final
because the Commission has not made "the requisite definitive pronouncement regarding
the potential use of SNG's property." The Commission thus urges that the trial court
correctly refused to rule on what the Commission calls "specified determinations
regarding [SNG's] property." According to the Commission, "those determinations are
not final and hence not ripe for judicial review in an inverse condemnation claim."8 The
Commission relies on the doctrine of exhaustion of administrative remedies in claiming
that the matter is not ripe for review. We disagree with the Commission, because we
conclude that the agency's purported ESHA designation is both final and ripe for review.

1. Finality and Exhaustion of Administrative Remedies

Code of Civil Procedure section 1094.5, subdivision (a) permits courts to review
only a "final administrative order or decision" made in an adjudicatory or quasi-judicial
proceeding. (Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559,
566-567; see 1 Cal. Administrative Mandamus (Cont. Ed. Bar 3d ed. 2007) § 3.19, p. 60
["Under CCP §1094.5(a), a writ of administrative mandamus may be issued to review an
administrative decision only if it is final."], italics added.) The need for a "final" decision
is considered an aspect of the requirement that a party exhaust its administrative remedies
prior to filing suit. (1 Cal. Administrative Mandamus, supra, § 3.19, p. 60.) Here, the
Commission essentially contends that a decision on SNG's challenge to the
Commission's authority to designate ESHA would be premature because there has been
no final decision on the kind of development that might be permitted on SNG's site.

The Commission's argument overlooks the fact that this appeal involves two
separate administrative decisions - the Commission's purported ESHA designation, on
the one hand, and the permitting decision, on the other. The two decisions are of an
entirely different character. Amending an LCP, by declaring certain property an ESHA,
is a legislative act. (Yost v. Thomas (1984) 36 Cal.3d 561, 570-571 (Yost); San Mateo
County Coastal Landowners' Assn. v. County of San Mateo (1995) 38 Cal.App.4th 523,
537.) In contrast, where the Commission hears an administrative appeal from a local
government's issuance of a CDP, the Commission is acting in a quasi-judicial capacity.
(See, e.g., City of Coronado v. California Coastal Zone Conservation Com. (1977) 69
Cal.App.3d 570, 574; see also Pacifica Corp. v. City of Camarillo (1983) 149 Cal.App.3d
168, 177 ["the courts have uniformly held that the coastal permit process is
adjudicatory"].) That the Commission's quasi-judicial permitting process may not have
run its course says nothing about the finality of the Commission's purported ESHA
designation.9 It may be that there has been no final decision as to the uses to which
SNG's property may be put (Toigo, supra, 70 Cal.App.4th at p. 325), but there has
certainly been a final determination by the Commission that the property is an ESHA.

Even if the two administrative decisions were not entirely separate, SNG would be
excused from exhausting its administrative remedies. In this case, SNG attacks the
Commission's jurisdiction by contending that the Coastal Act grants the Commission no
authority to designate property as ESHA in the context of an appeal to the Commission
from a local government's grant of a CDP. In such cases, the courts have held that the
"administrative jurisdiction exception to the exhaustion doctrine applies[.]" (Coachella
Valley Mosquito & Vector Control Dist. v. California Public Employment Relations Bd.
(2005) 35 Cal.4th 1072, 1081-1083 (Coachella Valley); Buckley v. California Coastal
Com. (1998) 68 Cal.App.4th 178, 191 ["The rule of exhaustion of administrative
remedies does not apply where the subject matter lies outside the administrative agency's
jurisdiction."].) Our high court explained in Coachella Valley that a court may entertain
a claim that an agency lacks jurisdiction before the agency proceedings have run their
course if three factors favor review. (Coachella Valley, supra, at p. 1082.) The court
must consider: (1) the injury or burden that exhaustion will impose; (2) the strength of
the legal argument that the agency lacks jurisdiction; and (3) the extent to which agency
expertise may aid in resolving the jurisdictional issue. (Ibid.) Here, all three factors
militate in favor of entertaining SNG's claim.

First, failure to review the issue of the Commission's statutory authority will
impose significant burdens on SNG. If, as the Commission claims, SNG's site is an
ESHA, the site is subject to the development constraints of section 30240, which permits
"only uses dependent on [habitat] resources[.]" (§ 30240, subd. (a).) And, if the ESHA
designation is proper, those constraints are applicable now. A site's status as an ESHA
places very significant limitations on permissible development. (See Bolsa Chica Land
Trust v. Superior Court (1999) 71 Cal.App.4th 493, 507 (Bolsa Chica) ["the terms of
[§ 30240] protect habitat values by placing strict limits on the uses which may occur in an
would be hard to imagine when any agency rule . . . would ever be final as a matter of
law." (General Elec. Co. v. E.P.A. (D.C. Cir. 2002) 290 F.3d 377, 380.)

ESHA"]; Sierra Club v. California Coastal Com. (1993) 12 Cal.App.4th 602, 611, 617
(Sierra Club) [stating that residential development is prohibited in an ESHA].) Any
future development proposal that SNG might submit will be limited to resourcedependent
uses. Thus, whether "through increased delay or project modification, the
[ESHA designation] directly affect[s] the investment and project development choices of
those whose activities are subject to the [designation]." (National Ass'n of Home v. U.S.
Army Corps (D.C. Cir. 2005) 417 F.3d 1272, 1280 [Army Corps' decision to issue
"nationwide permits" held final where it would have effect of causing builders either to
put their projects on hold and seek individual permits, or modify their projects to satisfy
conditions of nationwide permits].) This factor thus weighs in favor of judicial
intervention.

Second, as we explain in part I.C., post, SNG makes a strong and persuasive
argument that the Commission has no statutory authority to make the ESHA designation
in the context of a permit appeal. In fact, as we will show, not only does the Commission
lack statutory authority for its action, but in making its ESHA designation, it also
intruded upon powers that the Coastal Act expressly allocates to local governments. This
factor therefore also weighs in favor of excusing exhaustion.

Finally, this issue is not one that would benefit from application of administrative
expertise. Here, "the issues are purely legal and of a kind within the expertise of [the]
courts[.]" (Coachella Valley, supra, 35 Cal.4th at p. 1083.) As we noted in discussing
our standard of review, "the issue of whether the agency proceeded in excess of its
jurisdiction is a question of law" (Schneider, supra, 140 Cal.App.4th at p. 1344), and is
one on which we do not defer to the Commission's views. (Yamaha, supra, 19 Cal.4th at
p. 11, fn. 4; see also Bolsa Chica, supra, 71 Cal.App.4th at p. 507 [court owed no
deference to statutory interpretation adopted by Commission in approving an LCP].)
This factor also favors review.

Accordingly, because all three factors favor judicial intervention at this time, any
failure by SNG to exhaust administrative remedies is excused. (Coachella Valley, supra,
35 Cal.4th at p. 1083.)

2. Ripeness

We also have no difficulty concluding that this issue is ripe for review. To
determine whether an issue is ripe for review, we evaluate two questions: the fitness of
the issue for judicial decision and the hardship that may result from withholding court
consideration. (Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d
158, 171.) We are persuaded that the issue of the Commission's statutory authority is fit
for judicial decision. As we indicated above, whether the Coastal Act grants the
Commission the power to declare SNG's site an ESHA during an administrative appeal
from the grant of a CDP is a purely legal issue. "Resolution of this issue requires an
interpretation of the [Coastal] Act, upon which the facts in this case will have little
bearing." (Hayward Area Planning Assn. v. Alameda County Transportation Authority
(1999) 72 Cal.App.4th 95, 103; see also Alameda County Land Use Assn. v. City of
Hayward (1995) 38 Cal.App.4th 1716, 1723 [action for declaratory relief ripe when the
parties "dispute whether a public entity has engaged in conduct or established policies in
violation of applicable law"].) "The legality vel non of the [Commission's action] will
not change from case to case or become clearer in a concrete setting." (National Ass'n
Home Buil. v. U.S. Army Corps (D.C. Cir. 2006) 440 F.3d 459, 464.) Such a purely legal
challenge to the Commission's authority is therefore fit for decision now. (Ibid. [purely
legal challenge to agency action is presumptively reviewable].) In addition, as we
explained in our discussion of the administrative jurisdiction exception to the exhaustion
doctrine, withholding decision would impose a significant hardship on SNG. (See id. at
p. 465 [hardship shown where agency rule would confront builders with choice of
applying for permit of activities builders claimed were beyond agency's jurisdiction or
face penalties for failing to do so].) The question is therefore ripe for judicial review.

C. The Commission Acted in Excess of its Jurisdiction.

SNG asserts that the Commission has no authority under the Coastal Act to
designate its property as ESHA in the course of a permit appeal. SNG contends that the
ESHA designation effected an amendment of the Sand City LCP and that the Coastal Act
assigns the task of drafting and amending the content of an LCP exclusively to local
government. SNG's position is that the Coastal Act grants to local governments the
power to draft their own LCP's and to determine the content thereof. SNG contends that
the Commission's role is limited to determining whether a local government's LCP
complies with the provisions of the Coastal Act. Our examination of the relevant
provisions of the Coastal Act compels us to conclude that SNG is correct.

1. General Principles

The Commission, like all administrative agencies, has no inherent powers; it
possesses only those powers that have been granted to it by the Constitution or by statute.
(See Carmel Valley Fire Protection Dist. v. State of California (2001) 25 Cal.4th 287,
299-300; State Bd. of Education v. Honig (1993) 13 Cal.App.4th 720, 750; 3 Koch,
Administrative Law & Practice (2d ed. 1997) § 12.13[1], pp. 170-171 ["Administrative
agencies derive their power from other sources . . . and hence agencies have only such
authority as is delegated by the legislature"].) "[A]n agency literally has no power to act
. . . unless and until [the Legislature] confers power upon it." (Louisiana Public Service
Comm'n v. FCC (1986) 476 U.S. 355, 374, italics added (LPSC).) That an agency has
been granted some authority to act within a given area does not mean that it enjoys
plenary authority to act in that area. (Railway Labor Exec. Ass'n v. National Mediation
Bd. (D.C. Cir. 1994) 29 F.3d 655, 670 (en banc).) As a consequence, if the Commission
takes action that is inconsistent with, or that simply is not authorized by, the Coastal Act,
then its action is void. (See Schneider, supra, 140 Cal.App.4th at p. 1348; accord, BMW
of North America, Inc. v. New Motor Vehicle Bd. (1984) 162 Cal.App.3d 980, 994 ["It is
fundamental that an administrative agency has only such power as has been conferred
upon it by the constitution or by statute and an act in excess of the power conferred upon
the agency is void."].)

Our task is thus to determine whether the Commission's ESHA designation
exceeded the Commission's statutory grant of authority under the Coastal Act. (See
Benton v. Board of Supervisors (1991) 226 Cal.App.3d 1467, 1479.) To do so, we look
to the relevant provisions of that statute.

2. The Coastal Act

The Coastal Act sets out a process by which LCP's are prepared, adopted,
certified, and periodically reviewed. It also permits their amendment. As we shall show,
the Coastal Act expressly vests in local governments, rather than the Commission, the
responsibility for determining the content of their LCP's. Thus, we conclude that the
Commission has no statutory authority to amend an LCP during the CDP appeal process.

a. Preparation and Content of the LCP

The Coastal Act requires that each local government lying, in whole or in part,
within the coastal zone prepare an LCP for that portion of the coastal zone under the local
government's jurisdiction, unless the local government asks the Commission to prepare
the LCP. (§ 30500, subd. (a).) An LCP consists of two principal components: an LUP,
and "implementing actions," such as zoning ordinances and maps. (See § 30108.6 [LCP
consists of "a local government's (a) land use plans, (b) zoning ordinances, (c) zoning
district maps, and (d) within sensitive coastal resources areas, other implementing
actions"]; see also § 30108.4 [defining "implementing actions"], § 30108.5 [defining
"land use plan"].) Under the statute, "[t]he precise content of each local coastal program
shall be determined by the local government . . . in full consultation with the commission
and with full public participation." (§ 30500, subd. (c), italics added.)

b. Submission of the LCP for Commission Certification

The local government must then submit the proposed LCP to the Commission for
certification. (§ 30510.) The local government may choose to submit its entire proposed
LCP at once, or in phases (in which case the LUP is processed first, followed by the
implementing actions), or in separate geographic units. (§ 30511, subds. (a)-(c).) The
Commission must then review the land use portion of the LCP under specified
procedures. (§ 30512, subd. (a).) If the Commission finds that the LUP meets the
requirements of chapter 3 of the Coastal Act, and is in conformance with the policies of
that chapter, then it must certify it. (§ 30512, subd. (c) [Commission "shall certify"
LUP's meeting chapter 3 requirements].) The Commission's review of the LUP is
limited by statute to the Commission's "administrative determination that the land use
plan . . . does, or does not, conform with the requirements of Chapter 3 (commencing
with Section 30200). In making this review, the commission is not authorized by any
provision of this division to diminish or abridge the authority of a local government to
adopt and establish, by ordinance, the precise content of its land use plan." (§ 30512.2,
subd. (a), italics added.) Similarly, the Commission may only reject the local
government's implementing actions "on the grounds that they do not conform with, or are
inadequate to carry out, the provisions of the certified land use plan." (§ 30513.)
Quoting with approval City of Chula Vista v. Superior Court (1982) 133 Cal.App.3d 472,
478, our high court noted in Yost that "‘the Commission in approving or disapproving an
LCP does not create or originate any land use rules and regulations. It can approve or
disapprove but it cannot itself draft any part of the coastal plan.'" (Yost, supra, 36
Cal.3d at p. 572, italics added.)

c. Delegation of Development Review Authority After

Certification

Once the Commission approves the local government's LCP, development review
authority "shall no longer be exercised by the commission over any new development
proposed within the area to which the certified local coastal program, or any portion
thereof, applies and shall at that time be delegated to the local government that is
implementing the local coastal program or any portion thereof." (§ 30519, subd. (a).)
After certification, the local government has discretion to choose what actions it will take
to implement its LCP. (Yost, supra, 36 Cal.3d at pp. 572-573.) Thus, for example, the
Coastal Act "does not dictate that a local government must build a hotel and conference
center - that decision is made by the local government. It merely requires local
governments to comply with specific policies - but the decision of whether to build a
hotel or whether to designate an area for a park remains with the local government." (Id.
at p. 573.)

Once the LCP is certified, "the Commission's role in the permit process for coastal
development [is] to hear appeals from decisions by [the local government] to grant or
deny permits." (Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346,
1354, fn. 5, citing § 30603.) The Commission's jurisdiction in such appeals, however, is
limited. (City of Half Moon Bay v. Superior Court (2003) 106 Cal.App.4th 795, 804.)
As relevant here, the Coastal Act limits the grounds for a CDP appeal "to an allegation
that the development does not conform to the standards set forth in the certified local
coastal program . . . ." (§ 30603, subd. (b)(1), italics added.)

d. "Periodic Review" and Amendment of the LCP

The Coastal Act requires the Commission to review every certified LCP at least
once every five years to determine whether the program is being implemented in
conformity with Coastal Act policies. (§ 30519.5, subd. (a).) If the Commission finds
that a certified LCP is not being carried out in conformity with the Coastal Act, it must
recommend corrective actions to the local government, which may include recommended
amendments to the certified LCP. (Ibid.) Even in these circumstances, however, the
statute gives the Commission no power either to make the amendments itself or to
compel the local government to make them. Instead, the law requires the affected local
government to report to the Commission the reasons that it has not taken the
recommended corrective action. (§ 30519.5, subd. (b).) The Commission may then
review the local government's report and "where appropriate, report to the Legislature
and recommend legislative action necessary to assure effective implementation of the
relevant policy or policies of [the Coastal Act]." (Ibid.)

The Commission's role in the amendment process is similarly circumscribed. The
Coastal Act provides for amendment of a certified LCP but once again makes clear that
the LCP "may be amended by the appropriate local government," subject to review by
the Commission. (§ 30514, subd. (a).)

3. By Declaring SNG's Site an ESHA, the Commission Exceeded its
Statutory Authority, Improperly Assumed Powers Reserved to Local
Government, and Contradicted the Terms of the Certified LCP.

Nothing in the statutory scheme outlined above grants the Commission the
authority to make changes to the content of Sand City's LCP during an appeal from Sand
City's grant of a CDP. This lack of statutory authority alone would suffice to invalidate
the Commission's action, because absent a delegation of authority from the Legislature,
the Commission "literally has no power to act." (LPSC, supra, 476 U.S. at p. 374.) But
the Commission's action in this case is even less justifiable for at least three other
reasons.

First, the Commission's action clearly exceeded an express limitation on its
jurisdiction in permit appeals. The Coastal Act limits the grounds for such an appeal to
an allegation that the development does not conform to the standards set forth in the
certified LCP. (§ 30603, subd. (b)(1).) In denying SNG's permit (at least in part) based
on its unlawful ESHA designation, the Commission imposed additional standards not
found in Sand City's LCP. SNG was entitled to have its development proposal judged by
the standards of the certified LCP in effect at the time of its application.10 (See Toigo,
supra, 70 Cal.App.4th at p. 318 [pertinent question is whether proposed development is
prohibited by the regulations and zoning in effect at time application is made].)

Second, the Commission has purported to exercise powers that the Legislature has
expressly allocated to local government, which has decreed that LCP's may be amended
"by the appropriate local government." (§ 30514, subd. (a).) By declaring the site an
ESHA, the Commission has impermissibly attempted to amend part of Sand City's LCP.
(Cf. Yost, supra, 36 Cal.3d at p. 572 [Commission cannot draft any part of coastal plan].)
Third, the Commission's ESHA designation actually contradicts the terms of the
certified LCP itself. The Commission's staff concluded that SNG's site was ESHA on
the basis of general LCP policies regarding ESHA protection. But that conclusion cannot
be reconciled with the specific findings in section 4.2.4 of Sand City's certified LUP that
there were no ESHA's in the area west of Highway 1, where SNG's site is located. The
Commission's staff cited sections 4.3.20 and 4.3.21 of the certified LUP to justify its
conclusion, but it failed to note that while LUP section 4.3.20 requires that ESHA's be
protected, it is directed specifically at the ESHA's mapped in the LCP. Nor did the staff
report mention LUP section 4.3.19, which requires Sand City to "[d]esignate general
areas as sensitive habitats as shown on the Coastal Resources Map (Figure 7)." (Italics
added.) It is undisputed that SNG's site is not shown on the Coastal Resources Map. In
fact, the Commission explicitly conceded this point below in its opposition to SNG's
petition for writ of mandate. The Commission explained that Sand City's LCP
"attempted to map ‘generalized locations' of habitat areas. [Citation.] None of those
areas are located on SNG's site, [citation] and the LCP opined that there was no natural
habitat seaward of Highway 1." (Italics added.) The Commission's ESHA designation
simply cannot be squared with the plain terms of Sand City's LCP.

4. The Commission's Contentions at Oral Argument

Finally, we address the principal points raised by the Commission's counsel at oral
argument.

First, counsel cited the Second District's recent decision in LT-WR, L.L.C. v.
California Coastal Com. (2007) 152 Cal.App.4th 770 (LT-WR) to support the
Commission's claim that it possessed the authority to make an ESHA designation in the
context of a permit appeal. In LT-WR, the court concluded that the fact that property was
not mapped as ESHA in the controlling LUP did not preclude it from being designated as
ESHA during a permit appeal. (Id. at p. 793.) LT-WR is distinguishable from the case
before us because the LUP at issue in LT-WR required the designation not only of
ESHA's that had been mapped, but also of "any undesignated areas which meet the
criteria and which are identified through the biotic review process or other means . . . ."
(Ibid.) Sand City's LUP contains no comparable provision. Furthermore, the Second
District's opinion in LT-WR does not even discuss the question presented here - whether
the Coastal Act provides the Commission with statutory authority to declare property an
ESHA when the Commission is considering an appeal from a local government's grant of
a CDP. It therefore provides no guidance on the issue of the Commission's statutory
authority.11 (See, e.g., In re M.M. (2007) 154 Cal.App.4th 897, 910 [fact that courts in
prior cases exercised jurisdiction to review particular orders provides no support for
conclusion that court actually possessed jurisdiction, because jurisdictional issue was not
considered], citing American Portland Cement Alliance v. E.P.A. (D.C. Cir. 1996) 101
F.3d 772, 775-776.)

Second, counsel for the Commission relied on Sand City's LCP amendment No. 2-
97 as support for the Commission's purported ESHA designation. Counsel for the
Commission did not claim (nor could he have) that amendment No. 2-97 actually
designated SNG's property as an ESHA. Instead, counsel asserted that the amendment
put SNG on notice that its property was "subject to review and potential identification as
ESHA." (Italics added.) Counsel thus implicitly conceded that the amendment itself did
not make SNG's property an ESHA. Indeed, any such argument would fly in the face of
the text of the amendment as unanimously approved by the Commission. The modified
amendment specifically approved the intermixing of uses on SNG's site, and it
contemplated a maximum of 375 "hotel/vacation club/timeshare" units, 100 visitorserving
residential units, and 175 medium density residential units, as well as several
acres devoted to public recreation. As the Commission's District Director explained at
the Commission hearing on the proposed amendment, "this amendment would allow the
intermixing of uses, and the types of uses that [SNG is] proposing to go forward with."

In short, the level of development expressly permitted by amendment No. 2-97 belies the
Commission's assertion that the amendment somehow presaged the Commission's ESHA
designation. (See Sierra Club, supra, 12 Cal.App.4th at p. 617 [residential development
in an ESHA is "non-resource-dependent . . . development in violation of the [Coastal]
Act"].)

Third, citing Toigo, supra, 70 Cal.App.4th 309, counsel for the Commission also
argued that the question of the Commission's statutory authority is not ripe for review.

As we have explained in part I.B.2., ante, SNG's challenge to the Commission's
authority is presently ripe. We need add only that Toigo held that a takings claim arising
out of a town's denial of a subdivision application and subsequent rezoning of the subject
property was not ripe for judicial review. (Toigo, supra, at pp. 324-332.) The takings
claim was unripe because the property owners had neither submitted a lower-density
proposal that the town might approve nor shown that such a reapplication would be futile.
(Id. at pp. 326-332.) In contrast, the Toigo court did consider the merits of the property
owners' challenge to the trial court's denial of their petition for administrative
mandamus. In its discussion of that issue, the court noted that, unlike SNG in this case,
the property owners did not challenge the statutory authority of the town to take the
actions it did. (See id. at p. 318 [property owners did assert that town failed to comply
with statutory time guidelines and had not questioned "the legality of the rezoning"].)
Unlike the property owners in Toigo, SNG here challenges the Commission's very
authority to designate SNG's property as an ESHA during the administrative appeal from
Sand City's grant of a CDP.

Fourth, the Commission's counsel contended that SNG had forfeited the statutory
authority issue by failing to challenge the Commission's factual findings in support of the
purported ESHA designation. As we explained in footnote 9, ante, before we may
address whether the Commission's purported ESHA designation is supported by
substantial evidence, we must necessarily resolve the question of whether the
Commission possessed the statutory authority to make the ESHA designation in the first
instance. Put another way, the factual evidence marshaled by the Commission to show
that SNG's site is an ESHA has no bearing at all on the legal issue of whether the Coastal
Act grants the Commission the authority to make such a designation in these
circumstances. In any event, having declined to oppose SNG's statutory authority
challenge either in its opposition to SNG's petition in the trial court or in its responsive
brief in this court, the Commission is in a poor position to claim forfeiture.

For the foregoing reasons, we hold that in designating SNG's site an ESHA in the
course of an appeal from Sand City's grant of a CDP, the Commission acted "without, or
in excess of [its] jurisdiction."12 (Code Civ. Proc., § 1094.5, subd. (b).)

D. Remedy

In its opening brief, SNG requested that we remand the case to the trial court to
compel it to make a finding on whether the SNG site was properly designated an ESHA.
Having made that determination ourselves, no purpose would be served by having the
superior court rule on the issue. Instead, we believe that the proper course is to reverse
the superior court's denial of SNG's petition for writ of administrative mandamus and to
order the lower court to issue a peremptory writ commanding the Commission to vacate
its decision and rehear SNG's permit application on the basis of the standards set forth in
Sand City's certified LCP. (See Schneider, supra, 140 Cal.App.4th at p. 1350.)
Our colleagues in Division One applied a similar remedy in Brooks v. State
Personnel Bd. (1990) 222 Cal.App.3d 1068. In that case, a university employee
challenged his termination on the grounds that the university had improperly amended the
charges against him after it issued its notice of dismissal. (Id. at p. 1071.) The court
concluded that the Education Code provided no statutory authority for the amendment of
disciplinary charges against the employee after the employee's termination had become
effective and that the state personnel board therefore had no power to hear matter based
on the amended charges. (Id. at pp. 1074-1076.) The court remanded the matter to the
trial court with instructions that it issue an order setting aside the order of the state
personnel board and directing the board to reconsider the matter based on the charges set
forth in the original notice of dismissal. (Id. at p. 1076.) We will do the same here.13

We now turn to the propriety of the superior court's grant of summary
adjudication to the Commission on SNG's claims for breach of contract and estoppel.

II. SNG's Claim for Breach of Contract

SNG also asserted a cause of action for breach of contract against the State and the
Commission. SNG based this claim on the MOU, alleging that "[t]he . . . Commission
and the [Parks Department] are components of the same entity - i.e., the State of
California. The . . . Commission is in privity with the State and is bound by the State's
contractual obligations." The trial court granted summary adjudication against SNG on
this claim. SNG now argues that this ruling was error, because SNG had a valid breach
of contract claim as an intended third-party beneficiary of the MOU.

We reject this argument for a number of reasons. First, as the quotation from
SNG's petition confirms, its argument is predicated on a single, untenable proposition -
that because both the Parks Department and the Commission are "agents of the State," a
contract entered into by one agency binds the other. This is not the law.

At the outset, we observe that SNG has cited no direct authority for the
proposition that a contract entered into by one state agency may be enforced against other
agencies that are not signatories to that contract. Instead, SNG relies on general
statements in cases such as People v. Department of Housing & Community Dev. (1975)
45 Cal.App.3d 185, 197, which noted in passing that a state department "is not a separate
entity; rather, it is an administrative segment of the state government." But an
acknowledgement that all agencies are administrative segments of the state government is
a far cry from a holding that contracts entered into by one state agency can legally bind a
wholly separate agency. In fact, the different state agencies have varied interests, and
these interests may conflict to the point that one agency may sue another. (See Westly v.
Board of Administration (2003) 105 Cal.App.4th 1095, 1105-1108 [state controller, as
agency head, had authority to sue the state retirement board, another state agency].)
Given the possible conflicts that may arise among different agencies, we are justifiably
condemnation, because that claim is based on the Commission's ESHA designation,
which we have now set aside.

More specifically, we can find no statute that would authorize the Parks
Department to contract to require the Commission to approve development. SNG would
have us find such authority in the statutes granting the Parks Department the general
power to administer the state park system. (See, e.g., §§ 5001, 5003.) There are,
however, two problems with this argument. First, the statutes upon which SNG relies
specifically limit the Parks Department's authority to "the property under its jurisdiction"
(§ 5003), and SNG's property does not fall under that jurisdiction. Indeed, one of the
express promises that the Parks Department made in the MOU was that it "agree[d] not to
acquire title to any portion of the Lonestar Site unless specifically requested to do so in
writing by [SNG]." Therefore, the statutes upon which SNG relies do not appear to
confer on the Parks Department any authority over SNG's site. Second, any such
contract would seem to contravene the declaration of legislative intent contained in
section 30400, which states: "It is the intent of the Legislature to minimize duplication
and conflicts among existing state agencies carrying out their regulatory duties and
responsibilities. [] In the absence of specific authorization set forth in this division or
any other provision of law or in an agreement entered into with the commission, no state
agency . . . shall exercise any powers or carry out any duties or responsibilities
established by this division . . . ." (§ 30400, italics added.)

Finally, even if we were to agree with SNG that the MOU constituted a promise to
permit development on SNG's site, the Commission would still have been entitled to
summary adjudication. The foregoing discussion demonstrates that the Parks Department
had no statutory authority to make such a promise. As a consequence, any attempt by the
Parks Department to "exercise control over matters which the Legislature has not seen fit
to delegate to it is not authorized by law and in such case the agency's actions can have
no force or effect." (Tirapelle v. Davis (1993) 20 Cal.App.4th 1317, 1335.) This
principle operates to limit an agency's contracting power. "‘[A] contract entered into by
a governmental entity without the requisite constitutional or statutory authority is void
and unenforceable.'" (White v. Davis (2002) 108 Cal.App.4th 197, 229 [reversed on
other grounds in White v. Davis (2003) 30 Cal.4th 528, 534-535], quoting Air Quality
Products, Inc. v. State of California (1979) 96 Cal.App.3d 340, 349 (Air Quality
Products).)

In sum, the trial court properly granted summary adjudication against SNG on its
breach of contract claims.14

III. Estoppel

SNG's final argument is that the trial court's order failed to address the entirety of
SNG's estoppel claim. SNG contends that its estoppel claim sought not only an
adjudication that SNG had the right to complete the project as proposed but also reliance
damages. SNG's position is that it "is entitled to recover from the State its out-of-pocket
expenditures made in reasonable reliance on the State's promise." We cannot agree.

First, as the Commission points out, SNG's third amended petition for writ of
mandate does not properly plead a reliance damages claim. In its cause of action for
equitable and promissory estoppel, SNG alleged that "[t]he State and the Coastal
Commission are estopped to block the issuance by Sand City of the coastal development
permit." And it is SNG's petition that measures the scope of issues material to a
summary adjudication motion. (See Williams v. California Physicians' Service (1999) 72
Cal.App.4th 722, 738.)

Second, assuming that SNG's petition had alleged a claim for reliance damages,
any such claim would fail on the merits. As we have explained previously, even if one
were to interpret the MOU in the manner SNG proposes (and we do not), the Parks
Department simply had no power to bind the Commission to approve the permit sought
by SNG. (See Air Quality Products, supra, 96 Cal.App.3d at p. 349 ["a contract entered
into by a governmental entity without the requisite constitutional or statutory authority is
void and unenforceable"].) Indeed, the case on which SNG places primary reliance, US
Ecology, states plainly that "[n]o contractual or promissory estoppel ‘liability may be
assessed against [a state agency]' if the contract or promises were not ‘statutorily or
constitutionally authorized.'" (US Ecology, Inc. v. State of California (2001) 92
Cal.App.4th 113, 132 (US Ecology), quoting Air Quality Products, supra, 96 Cal.App.3d
at p. 350.) Such is the case here.15 That SNG honestly may have believed that the Parks
Department possessed the authority to bind the Commission is irrelevant. As the
California Supreme Court has explained, "‘[o]ne dealing with public officers is charged
with the knowledge of, and is bound at his peril to ascertain, the extent of their powers to
bind the state for which they seem to act. And, if they exceed their authority, the state is
not bound thereby to any extent.' [Citation.]" (Stevens v. Geduldig (1986) 42 Cal.3d 24,
35.)

Thus, even if we were to accept that SNG had properly pleaded a claim for
reliance damages, that claim would have failed on its merits. As a consequence, SNG's
contention that it was entitled to a trial on reliance damages is unfounded.
15 Despite SNG's claims, US Ecology does not assist its argument. In that case, US
Ecology had executed a memorandum of understanding with the Department of Health
Services (DHS) for the purpose of developing a disposal facility for low-level radioactive
waste. (US Ecology, supra, 92 Cal.App.4th at p. 123.) The court held that the
memorandum of understanding could not form the basis of a breach of contract action
against DHS. (Id. at pp. 127-130.) Although US Ecology could not state a cause of
action for breach of contract, the court held that it had adequately stated a cause of action
for promissory estoppel. (Id. at p. 137.) But unlike SNG, US Ecology sought an estoppel
against the agency that had actually executed the memorandum of understanding at issue.
US Ecology does not hold that a plaintiff may estop one state agency by relying upon an
agreement executed by an entirely different agency. Moreover, the US Ecology court
grounded its decision on extremely case-specific factors, such as the nature of the
statutory scheme in question and "the unique nature of the relationship between [DHS]
and [US Ecology] . . . ." (Id. at pp. 131-135.) None of these factors is present here.

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