Half Moon Bay Ordered to Pay Property Owner $36.8 Million

By: Legal - Law News

A federal court judge has awarded a property owner $36.8 million in damages against the City of Half Moon Bay, finding the City liable for creating wetlands on a parcel of vacant land. Manatt, Phelps & Philips, the national law and consulting firm, secured the $36.8 million judgment on behalf of client Charles J. Keenan, the owner of a 25-acre parcel located on Highway 1, known as the Beachwood property.

Mr. Keenan spent over 15 years trying to develop 83 residences on the land. The City of Half Moon Bay approved the development in the early 1990s, but then imposed a building moratorium due to a sewer capacity shortage. Once the moratorium was lifted seven years later, the City reversed its position, finding that wetlands had developed on the property, so residences could not be built there.

But in his strongly-worded 167-page decision, Chief Judge Vaughn R. Walker ruled that the City itself had actually created the wetlands. In the 1980s, the City built a storm drain project on and around the Beachwood property, disrupting the natural flow of stormwater. As a result of the City's construction, stormwater was trapped on the property. Ultimately, the trapped stormwater formed wetlands, thereby stopping the planned development.

Judge Walker wrote that the City employed "a pattern of shifting consultants and shifting definitions" in order to find wetlands on the property where and when the City wanted to. Although the City's expert witness testified that the wetlands on Beachwood pre-dated the City's storm drain project, Walker rejected the City's theory as "implausible, unsupportable and contrary to the facts." Instead, he found that the City's project caused the wetlands to develop, and "what was once an approved 83-home subdivision is now a wetlands preserve," created by the City.

Mr. Keenan's attorney, Edward G. Burg of Manatt, Phelps & Phillips, hailed the ruling. "The City damaged Beachwood and then told the owner the land couldn't be developed because it was damaged. This was a case of government heavy-handedness to the extreme. Government cannot damage private property without paying for it "

According to Mr. Burg, the Court's decision was the latest in a 10-year legal fight over the property, located north of Highway 92 on the inland side of Highway 1. In 2001, a state court ruled that the wet areas on the Beachwood property were not actually wetlands, and ordered the City to allow Mr. Keenan to proceed with the development. That ruling was reversed by an appellate court in 2005, setting the stage for the current suit over what caused the wetlands to form. “The City had the chance to settle the case for nothing in 2001 by simply allowing the subdivision to be built,” Mr. Burg noted, “but it refused.”

The Court's decision harshly criticized the City for its litigation tactics, finding the City had tried to rewrite its 2000 decision which found the property littered with wetlands, and that its conduct "smacks of bad faith." The damages awarded, $36,795,000, was the exact amount that Mr. Keenan sought and the City will be liable to pay Mr. Keenan's attorneys fees. The Court also issued an injunction preventing the City from collecting a special assessment it had placed on Keenan's property to fund the expansion of the City's sewer treatment plant.

About Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP, provides legal and consulting services to a global client base from offices in Los Angeles, Orange County, Palo Alto, San Francisco, and Sacramento, California; New York City and Albany, New York; and Washington, D.C. Manatt includes Manatt Health Solutions, a healthcare policy and strategic business advisory group, and ManattJones Global Strategies, LLC, a wholly owned subsidiary that develops and implements strategies to expand client businesses and facilitate their effective competition in global markets

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