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City May Not Grant Conditional Use In Lawsuit Settlement, Court Rules

A settlement agreement between the City of Los Angeles and an Orthodox Jewish congregation that permits operation of a synagogue in a residential district has been invalidated by the Ninth U.S. Circuit Court of Appeals.

The court ruled that the settlement agreement was essentially a conditional use permit that was granted without giving affected people — namely, the neighbors — notice and an opportunity to be heard. The lack of process violated the Los Angeles Municipal Code, which a settlement agreement may not do, the court concluded.

Congregation Etz Chaim's synagogue has been litigated in federal and state court for a decade. In the mid-1990s, the congregation applied for a conditional use permit to use a house on Highland Avenue in Los Angeles's Hancock Park neighborhood for worship and services. After the city denied the application, the congregation filed a federal court lawsuit alleging a violation of civil rights, and filed a separate suit in state court. The Los Angeles County Superior Court and the Second District Court of Appeal upheld the city's denial.

The congregation then returned to federal court. Citing the state court rulings, a District Court judge tossed out all of the congregation's claims except those concerning the Religious Land Use and Institutionalized Persons Act (RLUIPA), which Congress had only recently passed. In September 2001, the city and the congregation settled the lawsuit. The settlement agreement authorized the congregation to use the Highland Avenue property for worship, subject to a number of restrictions.

This time, the neighbors sued, arguing that the settlement agreement violated their due process rights and local zoning ordinances. A District Court judge ruled for the congregation and the city. When neighbors appealed, the Ninth Circuit sent the case back to District Court for reconsideration in light of a state appellate court ruling in Trancas Property Owners Ass'n v. City of Malibu, 138 Ca.App.4th 172 (2005).

In Trancas, the court invalidated a city's settlement agreement with a developer that approved the developer's tract maps (see CP&DR Legal Digest, November 2005). The court ruled that the city had contracted away its police power, which it may not do. The court also ruled that the agreement's exemption from density limitations amounted to a variance, which may not be granted without the city following prescribed administrative proceedings and adopting findings.

The District Court found that the Congregation Etz Chaim case was different from Trancas and again ruled against the neighbors, who then went back to the Ninth Circuit. This time, the appellate court said the cases were indistinguishable.

"The congregation sought, and the settlement agreement granted, permission to operate a synagogue on the Highland property. In an R1 zone, congregational worship is considered a ‘conditional use' under [Los Angeles Municipal Code] § 12.24, and requires a permit," Judge Barry Silverman wrote for the court. "Before allowing such a use, the city was required to comply with the ordinance's procedural formalities. Because the city did not satisfy those formalities when it entered into the settlement agreement, the agreement is invalid and unenforceable under state law."

The district court found the cases were different because Trancas involved tract maps that apply to property, while the settlement agreement here was between the city and the congregation. Still, the Ninth Circuit said Los Angeles had improperly bargained away its police power "so long as the congregation is in existence."

The Ninth Circuit rejected the argument that the city charter permits the city to circumvent zoning procedures to settle litigation. "Trancas clearly holds that such exemptions are illegal," Silverman wrote.

The District Court also had upheld the settlement agreement because the city's rejection of the congregation's plan might have violated RLUIPA. That was not good enough for the Ninth Circuit. A federal court can uphold a settlement agreement authorizing a state or municipality to disregard its own laws only if the court finds "there has been or will be an actual violation of federal laws." But in the settlement agreement, the city specifically disclaimed any admission of liability under RLUIPA.

The decision puts the congregation's record in the Ninth Circuit at 1-1. Three years ago, the court ruled that the city could not revoke a building permit that was based on the settlement agreement, even though the congregation did not process its building plans as required by the settlement (Congregation Etz Chaim v. City of Los Angeles, 371 F.3d 1122 (2004) (see CP&DR Legal Digest, July 2004). 

The Case:
The League of Residential Neighborhood Advocates v. City of Los Angeles, No. 06-56211, 07 C.D.O.S. 9816. Filed August 21, 2007.
The Lawyers:
For the league: Leslie Werlin, McGuire Woods, (310) 315-8200.
For the city: Tayo Popoola, city attorney's office, (213) 978-8068.
For Congregation Etz Chaim: Susan Azad, Latham & Watkins, (213) 485-1234.

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