Two environmental groups that sued the City of Rancho Cucamonga and developers to gain ownership of 86 acres of habitat mitigation land have failed to persuade an appellate court to reverse a devastating lower court ruling.
A unanimous three-judge panel of the Fourth District Court of Appeal rejected the argument put forth by The Habitat Trust for Wildlife and Spirit of the Sage Council that the city, developers and San Bernardino County had collaborated to deny the environmental groups' right to own the property.  In so doing, the court said that there was nothing improper about the city's method of deciding who could own mitigation land; that the environmental groups had no constitutional right to the land; and that the developers had not breached a contract it had with the groups. The judges also upheld an award of $954,000 in attorney fees and legal costs to the developers.
Spirit of the Sage has sued Rancho Cucamonga developers and the city numerous times to mitigate the loss of wildlife habitat because of real estate development. The litigation resulted in the formation of a 308-acre wildlife preserve in Etiwanda Canyon.
Developers Henderson Creek Properties and SPS Development Services sought approval for a 123-house, 65-acre subdivision. The Rancho Cucamonga City Council approved the project in June 2004. Among the mitigations was a requirement that the developers donate at least 54 acres of off-site land to a "qualified conservation entity" for permanent open space and habitat preservation.
To head off litigation by Spirit of the Sage and Habitat Trust, the developers signed an agreement to turn over 86 acres adjacent to the preserve in Etiwanda Canyon to Habitat Trust. They also agreed to provide a $430,000 endowment to fund property management and $125,000 to cover administrative and attorney costs.
The developers then asked the city to designate Habitat Trust as a qualified conservation entity. But in early 2005, the city balked because the environmental organization did not put together a habitat management plan, lacked adequate financial and personal resources, did not provide audited financial records and was not accountable to the public. The city reached this conclusion after San Bernardino County Supervisor Paul Biane urged the city to ensure a county agency gained the mitigation lands. Biane and other county officials say habitat lands should be managed for public recreation in addition to wildlife needs, an approach opposed by the environmental groups. After the city's decision, the developers turned over the land and money to a county service area.
The groups then sued the city, the county, Henderson, SPS, and Granite Homes, which had assumed Henderson's interest in the project. The groups sued the  developers for breach of contract and breach of the covenant of good faith and fair dealing. The groups argued the city denied them due process and adopted standards for establishing a qualified conservation entity that conflicted with state and federal law. Meanwhile, Henderson and SPS filed a cross-complaint against Spirit of the Sage and Habitat Trust to rescind the 2004 contract, based upon failure of consideration, mutual mistake and duress.
San Bernardino Superior Court judges granted summary judgment to the city, the county and the developers on every issue. The court also awarded $667,000 in attorney fees to Henderson and SPS, and $287,000 in attorney fees and costs to Granite. The environmental groups appealed, but the Fourth District, Division Two, rejected every argument.
On the issue of due process, the court ruled the groups had failed to show why they were entitled to due process, as no constitutional right was implicated in the matter. Even if due process rights applied, the groups were aware of the city's proceedings and were given the opportunity to address the City Council, the court concluded.
Regarding the choosing of a qualified conservation entity, the court found the city's criteria acceptable and not in conflict with any state or federal laws.
On the breach of contract issues, the court ruled that the environmental groups had not proven their case. Essentially, the 2004 agreement fell apart when the city refused to name Habitat Trust a qualified conservation entity, contrary to the contract's assumptions. The purpose of the contract was the satisfaction of a mitigation condition. When the city made its decision regarding Habitat Trust, the developers rightly turned over the land and money to the county to comply with the condition, the court found.
Because it upheld the lower court's summary judgment rulings, the Fourth District also upheld the award of attorney fees and costs.
Earlier this year, the Superior Court ordered an auction of Habitat Trust's 308-acre preserve to help pay off the award. In April, Henderson Creek  and SPS won the auction, acquiring the property for $255,000. They intend to use the site, which is covered by a conservation easement, as a mitigation bank.

The Case:
Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga, No. E042229, 2009 DJDAR 10813. Filed July 21, 2009.
The Lawyers:
For Habitat Trust: Craig Sherman, (619) 702-7892.
For the city: Mitchell Abbott, Richards, Watson & Gershon, (213) 626-8484.
For SPS Development Services and Henderson Creek Properties, Alan Kessel, Manatt, Phelps & Phillips, (714) 371-2500.
For Granite Homes: Daniel Friedlander, Jackson, DeMarco, Tidus and Peckenpaugh, (805) 230-0023.
For San Bernardino County: Mitchell Norton, county counsel's office, (909) 387-5455.