A lawsuit challenging a mitigated negative declaration for a conditional use permit in the City of Irvine cannot go forward because the plaintiff did not serve the city with the lawsuit within 90 days, the Fourth District Court of Appeal has ruled.

Royalty Carpet Mills filed the lawsuit after the city approved a conditional use permit for a proposed 132-unit apartment complex. However, 97 days passed before Royalty personally served the city. That was too long, the court ruled.

In 2002, Essex Property Trust applied for a conditional use permit to develop an apartment project in an industrial area of Irvine. When the city issued a notice to adopt a negative declaration for the project, Royalty submitted extensive comments objecting to construction of residences close to its carpet manufacturing plant. The Irvine Planning Commission denied the permit application and refused to adopt the negative declaration, finding that the project was incompatible with the area's industrial land uses and that the environmental document did not address issues raised by the public.

Essex appealed to the City Council, and on May 13, 2003, the council adopted a mitigated negative declaration and approved a conditional use permit. On May 21, the city filed a notice of determination for the project.

On June 20, 2003, Royalty filed its lawsuit and served by mail both the city and Essex with a notice of commencement of proceedings, a verified petition for writ of mandate, and a request for preparation of the record of proceedings. On June 27, Royalty personally served the documents on Essex. But Royalty did not personally serve the city until August 18, one working day after the city faxed a letter to Royalty demanding dismissal of the lawsuit.

Orange County Superior Court Judge Ronald Bauer ruled that Royalty had missed the deadline and he dismissed the case. Essex appealed, but the Fourth District upheld the lower court.

The issue was which statute of limitations applied. Royalty argued that a section of the California Environmental Quality Act (Public Resources Code § 21167.6, subdivision (a)) applied. Under that statute, a CEQA lawsuit must be filed within 30 days of a lead agency's decision, and the lawsuit must be personally served within 10 business days of the filing. However, the law does not mandate dismissal for failure to meet the service deadline. Additionally, the city had agreed to Royalty's request for relief from the CEQA time requirement.

The city argued - and the court agreed - that Government Code § 65009, subdivision (c)(1)(E), controlled. That law applies generally to challenges to a conditional use permit. It requires personal service within 90 days of the date of the decision on a permit, a deadline that may not be extended.

“To accomplish the Legislature's purpose of limiting the time in which a decision regarding a conditional use permit can be challenged by filing and serving a petition, in no event can service of the petition be accomplished beyond the 90-day time bar contained in the Government Code,” the court ruled. “To conclude otherwise would be to ignore the absolute limitations bar contained in Government Code § 65009.”

Royalty argued that its challenge was to the environmental review, and the company tried to amend its lawsuit. But the court did not buy it. “The amended petition would have sought the same relief - stopping the project until an EIR was prepared,” the court ruled.

The Case:
Royalty Carpet Mills, Inc. v. City of Irvine, No. G033763, 05 C.D.O.S. 524. Filed January 18, 2005.
The Lawyers:
For Royalty: Daniel Hyde, Lewis, Brisbois, Bisgaard & Smith, (213) 250-1800.
For the city: Joel Kuperberg, Rutan & Tucker, (714) 641-5100.
For Essex Property Trust: Roger Grable, Manatt, Phelps & Phillips, (714) 371-2500.