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Big Bear Lake Developer Wins Huge Reversal

A federal judge's ruling blocking development of a controversial condominium project on the shore of Big Bear Lake has been thrown out by the Ninth U.S. Circuit Court of Appeals.

The Ninth Circuit ruled that the district court had no jurisdiction to consider alleged Clean Water Act violations because environmental groups' notices to the developer regarding potential violations of the act were inadequate and federal agencies were already forcing corrective action. The Ninth Circuit further rejected alleged violations of the Endangered Species Act as both bogus and moot.

The Ninth Circuit also threw out an award of $1.7 million in attorney fees to the environmental groups, a $1.3 million penalty, and a ruling that the developer was in contempt.

The Ninth Circuit ruling marks a stunning reversal in a dispute that developer Irving Okovita had previously lost on a number of levels. The ruling also appeared to be a blow at Central District of California Judge Manuel Real, the 84-year-old appointee of President Johnson who has been under investigation by both the Ninth Circuit and a congressional committee in recent years. The Ninth Circuit has removed Real from at least eight cases, according to the American Bar Association Journal. Real's rulings in the Big Bear Lake controversy drew plenty of attention, but so has the entire affair.

In 1989, Okovita and partners in the Marina Point development bought a 12.5-acre site on the north shore of Big Bear Lake in the very small town of Fawnskin. There was a recreational vehicle park, campground and marina on the site at the time. Okovita proposed building 133 condominiums and a 175-slip marina. Over the course of several years, the developer lined up all necessary local, state and federal approvals for the project. Construction was slow to proceed, however, and an Army Corps of Engineers permit for dredging in the marina expired in May 2002. The Corps allowed work to continue but in July 2003 issued a cease and desist order because a contractor was using the wrong equipment and stockpiling dredged material below the high water mark.

By that time, the project had gained prominence among local environmentalists, who contended the site provided bald eagle habitat. The groups Center for Biological Diversity and Friends of Fawnskin sued in April 2004, arguing that the developer had violated the Clean Water Act and the Endangered Species Act. Okovita responded by suing members of Friends of Fawnskin and United State Fish and Wildlife Service employees under the Racketeer Influenced and Corrupt Organization Act (RICO). Okovita claimed his adversaries had illegally conspired to halt the development project and lower the property value so they could purchase the land. Judge Real quickly threw out the RICO lawsuit and later ordererd Okovita's attorneys (who were not involved in the case at hand) to pay $267,000 for filing a frivolous lawsuit (see CP&DR In Brief, August 2006, September 2005).

Meanwhile, the environmentalists' lawsuit moved to trial, and in June 2006 Real ruled that the Marina Point developers had violated the Clean Water Act and Endangered Species Act. Real permanently blocked any development on the site without court authorization, awarded attorney fees and imposed a statutory penalty. Last year, he found the developer in contempt and issued various orders based on that finding. None of those rulings held up at the Ninth Circuit.

For a citizen to sue under the Clean Water Act, he first must provide a 60-day notice of intent to sue that describes the activity in question. "[T]he notice is not just an annoying piece of paper intended as a stumbling block for people who want to sue," Ninth Circuit Judge Ferdinand Fernandez wrote in the opinion for the three-judge panel. "The purpose is to accomplish corrections where needed without the necessity of a citizen action."

Over the course of five months beginning on June 30, 2003, the environmental groups filed four notices regarding dredging and the placement of fill material into the lake. But the Ninth Circuit determined that the notices were not detailed enough because they did not specify exactly how and when the developer violated the Clean Water Act (CWA). Plus, between the second and third notices, the Corps of Engineers issued a cease and desist order, and prior to the fourth notice the Corp authorized the developer to take corrective measures. Thus, the court determined, the environmental groups could not bring a Clean Water Act lawsuit.

""[I]n light of the defects in the notices, and in light of the fact that the Corps and Marina Point did act to cease the activities that the center claimed were wrongful and even acted to effect ongoing repairs for any problems caused by past activities, the district court did not have jurisdiction to hear the CWA action," Fernandez wrote. "It should have dismissed the action at the outset."

Regarding the alleged Endangered Species Act violations, the court found the lawsuit was moot because the Fish and Wildlife Service removed the bald eagle from the endangered species list last year. But even after declaring that part of the suit moot, when considering the award of attorneys fees, the court addressed the merits of the claim that the development would harass the raptors. The court concluded the project would not harm raptors.

"[T]aking all of the evidence together, there was no basis for a finding that there was some sort of causal connection between Marina Point's activities and any disruption of the behavioral patterns of the bald eagle," Fernandez wrote.

Although the Ninth Circuit lifted the injunction against the development, it is unclear when construction might proceed because of the troubled housing market.

The Case:
Center for Biological Diversity v. Marina Point Development Co., No. 07-56574, 08 C.D.O.S. 10204, 2008 DJDAR 12307. Filed August 6, 2008.
The Lawyers:
For CBD: Bernice Conn, Robins, Kaplan, Miller & Ciresi, (310) 552-0130.
For Marina Point: Robert Crockett, Latham & Watkins, (213) 485-1234.
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